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SAP FSCM Interview Questions

SAP FSCM Interview Questions

Q. Why should I use SAP FSCM?

If you are using standard FI-AR to manage your credit collections process, SAP FSCM provides tools to enhance your process. The tools in isolation will not solve any problems or add any direct benefit. However, the various modules will improve control and visibility, and enable the team to process more customers with a common process.


Q. What version of SAP do I need to be on?

If you are using SAP ERP 6 then the core processes and functionality can be accessed. However, it should not be overlooked that new functionality has been released in the latest Enhancement Packages. Some customers can see the benefit of implementing SAP FSCM immediately and will work with their existing Enhancement Package version. Others will recognize some of the new functionality and wait until their ERP system is on the relevant Enhancement Package.


Q. Is my business too small/ big to use SAP FSCM?

As I mentioned before if you currently manage your Credit Collections process utilizing the SAP FI-AR module then you can use SAP FSCM. The size of your business should not be seen as a blocker to move to SAP FSCM. In some cases, having large volumes of customers or large volumes of invoices increases the potential benefits. The real measure is to look at the potential process improvements. If you want to perform credit checking and scoring in a more efficient manner SAP FSCM will improve your existing process.
SAP has recently released an RDS to provide an efficient process to implement SAP FSCM, reducing the cost of implementation. This is targeted at smaller customers wanting an accelerated implementation. Please note this is only available for customers on Enhancement Package 5 and beyond.


Q. What module(s) should I start with?

Collections Management is the most popular and most simple module to implement. However, to fully see the benefits of Collections Management the other 3 modules should be implemented as well.
When asked the question, I normally turn this around and try to align the customer’s strategic objectives from the implementation to decide the scope of the implementation. Customers who have high volumes of customer invoice disputes will obviously look towards Dispute Management – however aligning this with Collections Management joins the gaps between disputes and credit collections. Where a customer has bad debt issues and pays significant attention to Credit Limits and Credit Exposure, Credit Management will be more appealing – however the Credit Risk Class and Credit Exposure can be used to influence the Collections Worklist.


Q. What are the Major benefits of SAP FSCM?

 The process improvement that can be achieved can be broken down into a number of different streams.
Process efficiency and controls can be seen within the Credit Collection teams and other associated teams.
The Collection work list ensures the correct customer is called at the right time within the Collection process. This will enable more customers to be called, as the volume of effort to record a customer contact is simplified into a single transaction.
Logging disputes removes manual offline processes, and reducing the time spent to log and process disputes will directly improve the cash collection process leading to more cash being received in a quicker time frame.
The new version of Credit Management provides more accurate credit data using internal and external data, reducing the potential risk for bad debts.


Q. Where is reporting found for SAP FSCM?

As with most new SAP functionality, reporting in core ERP is limited within SAP FSCM. Implementing just the core SAP FSCM modules alone will leave a gap in terms of business reporting. Within SAP BW there is some good business content which is simple to implement. Reporting should be part of the initial build within the project. Some customers who do not use SAP BW will design their own ABAP reports which is must better than using the standard content. Any project that does not consider reporting will find it almost impossible to measure the performance of the various teams.


Q. How do you implement SAP FSCM?

It is really important to note that a SAP FSCM project is 80% process re-design and 20% software implementation. It is therefore imperative that any business implementation of SAP FSCM aligns to these percentages. An implementation team cannot work in isolation from the business as the screens, terminology and processes are considerable different to core SAP FI-AR.
A business cannot input into any solution unless they understand the full capability of a system, otherwise they are over reliant on the implementation partner to make decisions for them. With this in mind, running business workshops on a proof of concept within the customer’s landscape enables the customer to make decisions with a better understanding. In turn this will reduce the subsequent phases including, build, test and training.


Q. Do I need to have PI to use SAP FSCM Credit Management?

The simple answer here is no if you have Enhancement Package 5. However you need to implement WS-RM to replace the job PI does. If you have a PI server it does not make sense to look at the WS-RM option. If you do not have PI and want Credit Management it is worth considering WS-RM (if you have Enhancement Pack 5). To be fair this is more of technology question for your BASIS team to decide the landscape approach they plan to adopt.


Q. How do I design a global template for SAP FSCM?

Before designing the processes to support the Credit Collections team, the organizational units need to be defined. Collections and Credit Management have separate organizational units to represent the various levels within a Company. Where measure are to be common, organizational units can be shared, and where differences are required unique values are required. Breaking out the full implementation into smaller chunks enables the solution to be rolled out and enabling quick wins.


Q. Can the concept of Financial Supply Chain Management reduce the amount of cash corporations need to hold? Is the parallel with ERP useful?

There are two facets of the comparison that are particularly pertinent. First, there is no doubt that one of the keys to successful cash management is accurate information on what the future outgoing cash requirements will be and of incoming cash. Second, the enabling technology base is now in place. In the last three years, the Internet has become a truly cost effective solution for interorganization communications and a trusted infrastructure for business processes, secure enough to carry forward the technical advances being made in e-payment systems.

The heavy investment in e-procurement in recent years has not fed through into automation of the payment process and there remains currently a lack of progress in the automation of payment systems. Problems include:

Fragmented point solutions with very limited integration

Limited interorganizational integration and automation

Manual processes of dispute resolution, reconciliation and payments

But the biggest impediment most solutions fail to address is that 80 percent of the processes today are still paper driven. So automation solutions have to start by:

Digitizing paper where possible so paper intensive processes do not slow down the processes.

Doing so without getting bogged down in complexity of business process re-engineering.

To address the needs of the marketplace, the fragmented point solutions available today must address both these weaknesses and re-invent themselves.

As many observe, although e-ordering now takes seconds and goods can be delivered next day, it still takes months for the money to be moved. The good news is that now money can be moved swiftly, and the processes of invoice receipt, tax calculation, invoice approval, payment and cash management are ripe for automation.

Some visionary companies are building systems to address these issues, automating the entire billing and payments process and enabling contact down the supply chain with resultant benefits in:

Cash Flow: ability to take early discounts and improved price terms for e-payments

Operating efficiencies: self-service vendor management and reduced cost of invoice processing and reconciliation

Internal controls and visibility: improved period-end accruals and elimination of payment duplication.

Implementing Financial Supply Chain management


Q. So, how are these benefits achieved, and what are the processes of implementing Financial Supply Chain management?

The implementation can be seen in four stages:

Convert paper documents to electronic. This can be achieved with a high degree of automation, including OCR, and does not involve extensive keying. Electronic invoices can be more easily reconciled with purchase orders, circulated for approval and swiftly passed through the system using standard workflow processes, devoting time only to the exceptions containing errors that involve resolution of disputes. For the percentage of instances where OCR does not work, it needs to be augmented by manual approaches for exception management located out of low-cost geographies like India.

Automate financial transactions. The move from manual to e-payments gives full control over the payment process, paying when you want to pay. E-payment does not necessarily shorten your payment cycle; if you want to maintain 30-day payment terms, then e-payment enables you to pay on exactly that last day. However, with e-payments, companies can negotiate improved terms for shorter payment periods based on their newfound ability to meet payment dates with full reliability. E-payments can be made precisely on time. The biggest myth that needs to be debunked here is the perceived benefit of float built into the delays caused by paper processes. For most companies, the benefits derived from operational efficiencies when paired with the capability of scheduling payments at-will more than compensates for any real loss in float revenue. Also, with automation it is more practical to implement strategies like controlled disbursements to optimize cash positions.

Automate liability management. Sarbanes-Oxley has imposed new compliance burdens onto an already onerous area of operation. Requirements for accurate, rapid and transparent reporting cannot be realistically achieved without end-to-end automation solutions. Furthermore, the thousands of sales/use tax jurisdictions and rates, and the hundreds of changes each year, make tax compliance an increased cost and an increased worry. Again the benefits of automation can provide savings and, just as important, corporate confidence in compliance.

Implement working capital management. Once the processes are automated, contact with the supply chain financial departments is improved and most of the uncertainties are taken out of the payment chain, companies can begin to optimize their cash management. This may be a purely internal process, managing cash against precise knowledge of daily payables and receivables, and improving credit decisions. There is also the option to explore external finance sources, such as factoring, which can be obtained at advantageous rates once the evidence of the effectiveness of the financial supply chain can be presented.


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