Adobe Captivate - Oracle
Slide 3 - Oracle Financials Cloud Release 11
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Hello, my name is Raj. Welcome to training for Release 11. In this session we will talk what’s coming in Oracle Advanced Collections Cloud for Metrics.
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Slide 4 - Agenda
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For the enhancements covered in this training, we’ll give an overview, followed by more detail to explain how you can use them, and what business value they bring.
Finally, we’ll explain what you need to consider before enabling these features in your business, and what you need to know to set them up.
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Slide 5 - Enhancements Overview
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The metrics are a series of measures calculated based on industry standard formulas. Oracle Fusion Collections delivers 22 Metrics, or “Key Performance Indicators,” to help facilitate collections recovery. The delivered metrics can assist you not only in recovering overdue invoices, but help align your best collectors to your most difficult customers. Overall the metrics assist in improving your collections organization efficiency.
Each metric is specifically designed for analyzing delinquent customer patterns. The Collections Metrics focus on processing and collections efficiencies, such as the Days Sales Outstanding, Collections Effectiveness Index, Weighted Average Days Paid, and Weighted Average Days Delinquent.
The Advanced collections metrics calculates 22 metrics over time. The metrics can be aggregated across Customer, Account, Site, Business Unit among many more dimensions.
These metrics are stored historically so you can see how a particular metric is getting better (or worse) over time.
The Collections Manager Dashboard now includes a view to query the metrics across Customers, Accounts, Sites and Business Units. Periodic comparisons can be quickly viewed on the Manager Dashboard as well.
The Collections Agent will also be able to see these metrics within the context of a single customer, account or site. The Agent will be limited to viewing metrics for those customers to which they are assigned.
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Slide 6 - Enhancements Overview
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Metrics are calculated using 2 new batch routines. The first is named “Initialize and Load Collections Metrics.” It is required for first time metrics calculation. The other is called “Incremental Load Collections Metrics.” It’s used for daily / weekly recalculation. The calculations capture transactions, receipts, cash application, any document that affects customer balance. Once the balance is captured more complex metrics can be calculated. In addition, kept and broken promises are captured by these routines.
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Slide 7 - Collections Metrics
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The metrics are built on a technology called Essbase. Essentially customer data is stored in an essbase “cube” which is a highly scalable, allows for rapid queries and the data can be aggregated across many different dimensions. The dimensions are both time and location based. If you are familiar with Excel Pivot Tables you can think of the dimensions as criteria that you can “pivot” on. For example, if you would like to know what the Days Sales Outstanding (DSO) is for an entire business unit (across many customers) this can be known.
The supported dimensions are:
Business Unit , Customer, Account, Site, Year, Quarter and Month.
The metrics are NOT customizable.
The metrics are calculated according to industry standard formulae.
There is also a tool include for ad hoc reporting called SmartView. This is a spreadsheet based plug-in that will allow you to create custom / ad hoc queries on the metrics. This will allow you get view and calculate new metrics should your organization require different calculations.
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Slide 8 - Collections Manager View
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A new Metrics tab on the Collections Manager Dashboard allows managers to slice and dice the metrics across certain criteria. We call these criteria “dimensions”
With the Metrics, Collections managers can see a snapshot of current information at a glance, helping them prioritize and determine the “hot customers” they need to work on.
On this dashboard the metrics can be viewed in periodic comparison. Month to month change, Quarter to quarter and year over year. These comparisons are both in nominal and percentage terms. Here you will be able to clearly see customers performance getting better or worse over time.
Understanding the metrics enables Collections and Credit Managers to gain comprehensive overview of customers.
With these metrics
You can identify customers with high past due receivables balance
You may plan or adjust collection strategies as customer “health” changes
You can better fine tune credit policy based on timely information
You may reassign collectors for your most difficult customers.
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Slide 9 - Collections Agent View
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Collections Agents will also have access to the metrics in the profile tab in the collections work area. This view is within the context of a single customer, account or bill to site. Collections agents will not have insight across customers and will not have access to the Metrics tab on the dashboard. This is reserved only for Collections Managers.
With this information the Collections agent can get a quick view of the health of a customer. Typically this “health check” is done while researching or before contacting the delinquent customer.
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Slide 10 - Collections Metrics Batch Processes
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Initialize and Load Collections Metrics
This process captures every document affecting customer balance. The program also captures all promises. The past date to be used for calculations (aka “inception date) will determine how much history will be stored for calculating the metrics. The farther back in time you enter, the more you can examine metrics in the past. However, depending on the number of transactions in your system it could take some time for the Initialize and Load Collections Metrics process to run. Typically customers enter a date 1 to 2 years in the past.
Any document with an open balance prior to that point in time (aka the inception date) will be calculated as if that balance started at that time.
For example, if you have set the inception date to Jan 1, 2015 and there is an invoice with a $1000 open balance due in Dec 1, 2015 the balance will be reflected as if due on Jan 1, 2015.
In the event the metrics data becomes “stale” (parties are merged or renamed, etc) it is recommended to re-run the Initialize and Load Collections Metrics process.
It is recommended that this routine be run once and that the inception date be set to a reasonable date not too far into the past.
Incremental Load Collections Metrics
This process captures every document affecting customer balance and promises that has been created or changed since the prior run. This routine will capture the change in balance over time. With these changes in balance it will be possible to calculate the 22 metrics as of any date going back to the inception date.
This job should be run frequently, the recommendation is to schedule it to run daily. However, it can be run less frequently with any gap of time and still capture all relevant documents.
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Every document that is captured in metrics is associated with a specific period of time. This time is generically called the “Activity date”
Ths date drives what bucket of time the document is grouped into our metrics.
For Invoices, Credit Memos and charge backs the activity date is the due date of the document.
For Receipt Applications the activity date is the application date.
Credit memos the activity date is the credit memo approval date
For adjustments the activity date is the creation date of the adjustment
For unapplied receipts the activity date is the general ledger date of the receipt.
For promises the activity date is the date of the promise.
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Slide 11 - Primary Metrics
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These 5 measures are fundamental to the metrics calculations. Using the primary metrics we can then derive many of the more complex metrics. The metrics can be calculated for any point in time going back to the inception date. Remember we can calculate these metrics going back at any point in time up to the inception date.
Beginning Balance: Total outstanding open receivables at the beginning of the period.
Ending Balance: Total outstanding open receivables at the end of the period.
Credit Sales: Revenues generated by an entity that it allowed to the customers on credit, less all sales returns and sales allowances.
Current Receivables: Is the current amount of receivables transactions not in dispute or past due.
Over 90 Days Delinquent: The total amount that is past 90 days due.
Using the balance calculations we can derive some simple analytical measures of the organizations’ revenue collections effort.
Collections Effectiveness Index: (CEI); measures collection effectiveness, amounts that are collectible, and the ones actually collected. This metric can be used to evaluate collectors efficiency in getting late customers to pay outstanding receivables. N is the number of days in the period being analyzed. This is the actual number of days in the period. January will have 31 days, February 28 days and so forth.
Percent Current: Percentage of total outstanding receivables not overdue.
Percent over 90 Days Delinquent: Receivables greater than 90 days Overdue / Ending balance * 100
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Slide 12 - Primary Metrics (continued)
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Next I will walk thru an example with the following example of data for a hypothetical customer.
We will examine a single month calculation. (Number of Days or “N”=30) Using the given data in the table on the left.
With this data and according to the formulas listed
The Collections Effectiveness is 71.15%
The Percent current is 80%
The Percent over 90 days delinquent is 6.67%
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Slide 13 - Days Sales Outstanding Metrics
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Days Sales Outstanding: A measure of the average number of days that a company takes to collect revenue after a sale has been made. Measures receivables recovery from time of sale
Essentially DSO is a measure of customer balance divide by customer credit sales. The balance can be measured in many differing ways.
A low DSO value means that it takes a company fewer days to collect its accounts receivable. A high DSO number shows that a company is selling its product to customers on credit and taking longer to collect money.
There are 5 measures of DSO provided: Days Sales Outstanding (DSO), True DSO, Best Possible DSO, Average Days Delinquent and Sales Weighted DSO.
DSO
This example expresses the average time, in days, that receivables are outstanding. It helps determine if a change in receivables is due to a change in sales, selling terms, or other factors.
An analyst might compare the days' sales outstanding with the company's credit terms as an indication of how efficiently the company manages its receivables.
The formula for DSO is the Ending Balance for the Period times N, the number of days in the period, divided by Credit Sales in the Period.
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True DSO
This uses an average balance over the period rather than Ending Balance snapshot to calculate DSO.
The average balance is simply the beginning balance + ending balance divided by 2. This is not an average daily balance.
The formula for True DSO is the Beginning Balance for the Period plus Ending Balance for the Period times divided by 2 times N, the number of days in the period, divided by Credit Sales in the Period.
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Best Possible DSO looks only at the current receivables to calculate the best length of time you can turn over those receivables.
The formula for Best Possible DSO is the Current Receivables times N, the number of days in the period, divided by Credit Sales in the Period.
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Average Days Delinquent calculates, in days, the average time from the invoice due date to the paid date, or the average days invoices are past due.
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Sales Weighted DSO is the average time, in days, that receivables are outstanding weighted by the age of the receivables
The formula for Sales Weighted DSO is
Period Credit Sales Aging Current $10,000 $8,0001-30 $15,000 $5,00031-60 $15,000 $3,00061-90 $20,000 $2,00091+ $100,000 $1,000Sales Weight DSO = [ ( Current Aging / Current Credit Sales ) + ( 1to 30 Aging / 1 to 30 Credit Sales ) + ( 31to 60 Aging / 31 to 60 Credit Sales ) + ( 61 to 90 Aging / 61 to 90 Credit Sales ) + ( 91 and over Aging / 91 and over Credit Sales ) ] X 30Sales Weight DSO = [ ( $8,000 / $10,000 ) + ( $5,000 / $15,000) + ( $3,000 / $15,000 ) + ( $2,000 / $20,000 ) + ( $1,000 / $100, 000) ] X 30Sales Weight DSO = [ ( 0.8 ) + ( 0.33 ) + (0.20) + ( 0.10 ) + (0.01) ] X 30Sales Weight DSO = [ 0.72 ] X 30Sales Weight DSO = 21.6
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Slide 14 - Days Sales Outstanding: Example
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Next I will walk through an example with the following example of data. Using the beginning, ending balances and credit sales from the previous example.
We will examine a single month calculation. (Number of Days or “N”=30) Using the given data in the table on the left.
Using this data and according to the formulas listed:
Days Sales Outstanding is 187.5
True DSO is 218.75
Best Possible DSO is 150
Average Days Delinquent is 37.5
Sales Weighted DSO is 75.35
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Slide 15 - Promise Metrics
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Collections supplies 6 metrics to measure how well promises are being kept or broken.
Promise Count: The number of promises made in a period.
Promise Amount: The total amount of promises made in a period.
Broken Promise Count: The number of promises broken in a period.
Broken Promise Amount: The total amount of promises broken in a period.
Broken Promise Percent: The percentage of promises broken in a period.
Broken Promise Amount Percent: The percent of total promise amount broken in a period.
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Slide 16 - Promise Metrics: Example
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Next I will walk thru an example with the following example of data.
10 promises for $1000 each made. 4 promises were kept, 6 broken.
The Promise Count is 10
The Promise Amount is $10,000
The Broken Promise Count is 6
The Broken Promise Amount is $6,000
The Broken Promise Percent is 60%
The Broken Promise Amount Percent is 60%
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Slide 17 - Weighted Averages Metrics
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Weighted Average Terms calculates the average number of days allowed for a customer before invoice is due that is weighted according to the item amount. The calculation is based on the amount of the installment and the terms offered. Only closed and fully paid transactions are included in the calculation.
This answers the question: Of all credit items, what is the average terms given weighted by the credit amount?
Weighted Average Days Late is the number of days late weighted by invoice amount. Days late are the number of days between the due date and the accounting date of the item activity that closed the item. Only fully closed invoices with at least one late payment are included in the calculation. Invoices that are fully paid on time are excluded.
This answers the question: Of the invoices paid late in full, how late are they paid weighted by invoice amount?
Weighted Average Days Paid is the number of days a customer takes to make payments. The average is weighted by the payment amount, on the assumption that a larger payment is more significant than a smaller payment. This only applies to closed invoices with at least one late payment. Invoices that are fully paid on time are excluded.
This answers the question: Of the invoices paid late in full, how late are they paid weighted by payment amount?
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Slide 18 - Weighted Averages: Example
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We will use the following table of data to give example of how the weighted averages are calculated.
The first 2 receipts 1a and 1b are applied to Invoice 1
The second receipt is applied to Invoice 2
Now I will walk thru an example using the given data in the previous slide.
With this data and according to the formulas listed
For the 2 invoices being analyzed the Weighted Average terms is 32.9
The Weighted Average Days Late is 31.8
And finally the Weighted Average Days Paid is 28.8
Navigation: Customer > Metrics
Related Help Topic: Calculating Weighted Average Metrics
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Slide 19 - Collections Metrics
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Collections metrics will help you maximize your collections efforts and efficiency.
These metrics will help your organization better understand your outstanding receivables and the risks associated with uncollected debt.
With the primary metrics you can see how customer balance / behavior changes over time and compare to previous period(s).
The DSO metrics gives you an idea of how long it will take to collect your outstanding debt.
Promise Metrics will tell you how likely a customer is able to make / keep their promises.
Finally, the weighted averages gives you insight into both the credit terms and lateness of customers.
Taken together these metrics will allow you to streamline your resources and strategies to maximize collections efficiencies. Intelligent Collector assignment and strategy re-assignment are two of many actions you can adjust with respect to better understanding your customer metrics.
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Slide 20 - Collections Metrics: Preview
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After running the concurrent process Initialize and Load Collections Metrics a the Collections Manager can navigate to the Collections Dashboard and click on the “Metrics” tab. Here he can see the metrics calculated for a Customer, Account, Site or Business Unit.
The table shows how the metric compares over different time periods. The current month to the previous month, current quarter to the previous quarter and current year to previous year.
The table also indicates with colored arrows whether or not a particular metric is getting worse (red color) or getting better (green color) from current period and previous period.
The colors, not direction, of the arrows indicates whether a metric is getting better or worse.
For example, in the table above
Broken Promise Amount is up 15% from the previous month. So it has a red up arrow.
Percent Current has fallen over 11% from the previous month. So it has a red down arrow.
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Slide 21 - Summary of Enhancement Capabilities
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Here is the summary of the features I have talked about today
Collections Metrics are calculated using 2 new processes. The metrics illustrate how a customer is performing over time (getting better or worse) Taken together these measures can help you understand your customer base and risk to outstanding receivables. They can also help you re-align your resources to maximize collections efforts.
Collections Managers and Agents can monitor these metrics over time to measure the overall credit and collections health of customers.
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Slide 22 - Implementation Advice
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In this implementation advice section we will go through what you need to consider before enabling these features in your business, and what you need to know to set them up.
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Slide 23 - Feature Impact Guidelines
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This table depicts key upgrade information for the new features covered in this training.
It details:
• The metrics are automatically available after the upgrade
• Access to metrics tab in Manager Dashboard are available to shipped job role Collections Manager
• There are 2 setup options to configure, the Common Currency and the Inception Date
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Slide 24 - Implementation Decision Points
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Implementation considerations:
It is recommended that the Initialize and Load Collections Metrics process be run once and that the inception date be set to a reasonable date not too far into the past. The further in the past you set the inception date, the longer the Initialize process will take to complete.
The Common Currency is typically the currency used where the organization is physically headquartered.
The incremental metrics process should be run frequently. Our recommendation is daily, but the process can be run with any gap of time and still capture all relevant documents.
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Slide 25 - Setup Summary
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The setup for Metrics is achieved by navigating to the Define Collections task list within the Financials Offering.
Select the Manage Collections Preferences task to then set the Inception Date and the Common Currency for the metrics.
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Slide 26 - Metrics Setup
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The metrics feature is enabled with minimal configuration. There are 2 preferences that you will need to set up.
Common Currency: Is a single currency that the metric uses for reporting and is defined when configuring the Collections Preferences. The default is USD.
Inception Date: Is the date the customer balance begins for calculations. No balance is calculated prior to the inception date. This date is set in Collections Preferences. When calculating metrics the first time, any unpaid open transaction that is prior to the inception date falls on this date.
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Slide 27 - Job Roles
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This table details the shipped job roles that will access the new capabilities covered in this training.
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Slide 28 - Business Process Model Information
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The business processes associated with the new capabilities covered in this training are detailed here.
The high level business process is Manage Collections with activities Manage Collections Work.
This concludes this presentation, thank you for listening. You can easily pause and rewind any of these slides if you require additional time to take in the detail.
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