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Understanding and Implementing Oracle Advanced Collections R12

By Ravi Balakrishnan

Prisio Technologies LLC

Introduction

With the advent of Oracle E-Business Suite R12, customers are challenged with the question of whether to continue
the use of legacy collections bundled with AR or Advanced Collections. In this paper, features of Oracle Advanced
Collections are explained and contrasted against legacy collections. Tips, techniques and the criteria to be adopted
when making this decision will be presented. Differences between Dunning plans and Collections strategies and
pointers in selecting the best implementation method will be discussed.

Collections in Receivables 11i

The Collections Workbench delivered with Oracle Receivables 11i was intended for AR clerks who performed
collections activities. These clerks performed account management, cash application, transaction management and
other accounting related activities in the receivables department.

The Collections Workbench comprises several related Oracle functions which helps the AR clerk to Pull
information from Oracle and make specific, targeted decision on how to handle the specific customer account or
transaction. From the Workbench users could:

Schedule Customer Call through the Scheduler Screen
Record Customer Call
View Aging by Account
View Communications (Calls, Statements and Dunning Letters)
View Transactions

Oracle Receivables based collections,

Did not include any decision-making capabilities
Did not aid in corporate wide strategy for collections
Required the users to navigate to different screens to understand the overall state of the customer account
Did not support Metrics (think DSO)
Was a Pull based mechanism where the agents had to request data from the system
Where the Dunning letters were report based
Needed switching responsibilities for multi-org access


What did Release 12 bring?

Release 12 obsoletes the legacy collections workbench and the enhanced functionality required for:

Providing Collectors with accurate and complete data about transactions and delinquencies
Prioritizing the Collectors workload by targeting high dollar, highly delinquent customers and transactions
Pushing tasks to the collections agent is the new paradigm in Release 12.

Release 12 Advanced Collections provides the following features:

Integrated Collections Flow
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Work Prioritization using Universal Work Queue
Simpler access to transaction entry like electronic payment processing, Promise to Pay
Better monitoring of collections delinquencies, broken promises etc.
Provides two broad implementation options for customers to select from. Each providing better ways of
managing collections activities.

The integrated Collections Agent flow is shown in Figure 1.



Figure 1. Integrated Collections Agent Flow
Work Prioritization

Universal Work Queue: The Collectors work queue or the Universal Work Queue provides a single screen access
to all Collectors work items like Tasks, Customer and Transaction delinquencies and strategy work items.

The Universal Work Queue nodes are configurable through Profile options (IEU) that can be set at user level and the
metadata functionality allows for sorting, rearranging the columns without the need for deep technical expertise.
From the Universal Work Queue, a user can double click and go to the relevant section in the Collectors
workbench. A screen capture of Universal Work Queue is shown in Figure 2.

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Figure 2. Universal Work Queue


Collectors Workbench

The Collectors Workbench provides a 360
o
view of the customer information as related to collections. The
workbench provides seamless integration to e-Business Center for Collectors to change customer, address and
Contact information. When a Collector is setup with a Sales role and assigned the required permissions, double
clicking on the Organization Name field takes the user to the e-Business Center.

The Customers Collection status, Score as determined by the Collection strategy and scoring engine as well as the
overall customer exposure is shown in this screen. By the setting Profile Options, the default tab which opens with
the Collectors workbench can be set. In the next few sections, some salient features of the Collectors workbench
are discussed. Collectors workbench and the Profiles tab is show in Figure 3.



Figure 3. Collectors Workbench
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Profile Tab: Profile tab displays metrics as well as data from the Customer Profiles setup in Oracle Receivables.
Advanced Collections R12 is supplied with several seeded Metrics but additional Metrics can be created with SQL
functions. Metrics can be created at Customer, Accounts and Bill to levels. Metrics can be created and updated in
the Collections Administrator responsibility. Metrics once created can be tested by passing a parameter on the Setup
screen and validated for accuracy.

Metrics are updated using the IEX: Refresh Metric Summary Table program. This program should be run
periodically to update the metric values. A screen capture of Metrics definition screen access from Collections
Administrator responsibility is shown in Figure 4.



Figure 4. Metrics creation screen

History Tab: The History tab displays customer Interactions, Disputes, Adjustments, Payment, Promise and
Correspondence previously initiated from the Collectors workbench. The History tab in effect displays all Post
Invoice/Credit Memo transactions. The Type of transaction to be displayed as default as well as the date range can
be configured using profile options or by using the setup checklist on the Collections Administrator responsibility.

Profile Option Name Purpose Example
IEX: Default Date Range Span Defines the number of
days of history to
display

IEX: Default End Date Range
Span
Defines the end date
of the history
To show all
history through
today, enter 0
and for history
till the previous
month, enter 30.
IEX: Default History Type Defines the type of
history to display by
default
Promise will
display only
promise
transactions

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Figure 5. History Tab on Collectors workbench

Transactions Tab: The Transaction tab on the Collectors workbench is shown in Figure 6. The Transactions tab
displays the Customer Transactions originating from Oracle Receivables module. The type of transaction that will
default when navigating to the tab can be set by the profile option IEX: Default Transaction Type or through the
setup checklist.



Figure 6. Transaction Tab on Collectors workbench

From this tab, users can open the Transaction Details and also record Payment through Payment Processing window.
From Advance Collections, payment can be received through Credit Card through integration with Oracle Payment
module. For non-electronic transactions, promise to pay can be entered using the Payment processing screen.

Promise to Pay: Collections users can enter Promise to pay through the Payment Processing window. The Payment
processing screen is shown in Figure 7. Two modes of Promise-to-Pay entries are possible: Mass Promise or
Individual Transaction level Promise. The user is required to enter a Promise to Pay date and amount. Optionally a
Promise confirmation letter can be defined and sent through Fax, Email or Print to the customer during Promise-to-
Pay entry. Promise confirmation letter is defined using Oracle BI Publisher.

A promise is considered broken if the Promise to pay date is past. The customer is also given a grace period beyond
the Promise date as defined in the Profile Option IEX: Promise Grace Period.

The following profile options control the Promise to Pay functionality:
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Profile Option Name Purpose
IEX: Activity enabled in Promises Enables Interaction history recording when
Promise to pay is entered.
IEX: Approval required for Promise Defines if Promises can be recorded after
approvals
IEX: Callback Days for Broken Promise Defines the number of days after the promise
date a call back task will be created
IEX: Item Type of Promise Workflow Defines the Approval workflow for Promise to
Pay
IEX: Maximum Promise To Pay Range Defines the days from the current date that the
promise to pay should fall within
IEX: Promise Grace Period Grace period beyond the promise date given
to customers before the promise is considered
broken.





Figure 7. Payment Processing Window
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Strategy Tab: The strategy tab shows the strategy work items, complete strategy related tasks, send Dunning letters
and change strategies if setup to all strategy changes.

Aging Tab: The aging tab shows an overview of the customers aging with collectible amount by Aging buckets.
From here, users can drill down to the transactions view screen. The Aging tab is shown in Figure 8.



Figure 8. Aging Tab on Collectors Workbench


Notes Tab: Provides the view to all historical notes attached to the specific customer as well as notes associated
with the customer account, organization, strategy work items etc. This area leverages the Oracle CRM Foundation
Notes module. Notes tab is shown in Figure 9.



Figure 9. Notes Tab on Collectors Workbench

Tasks Tab: The Tasks tab leverages Oracle CRM Foundation tasks functionality which can be used for managing
strategy related tasks, as well recording and monitoring other collections related activities like customer call back,
manual generation of dunning letters, reminder letters etc.

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Figure 10. Notes Tab
Implementation Options

Oracle Advanced Collections provides two major implementation options: Dunning Plan and Collections Strategy.
Before we discuss the mechanics of these options, an understanding of Scoring Engine and Scoring Components is
essential.

Scoring Components: Scoring Components are used to score a specific object (Transaction, Customer, Account or
Bill to). The Scoring Component is simply a Select statement that gathers information from the Object and reports a
score or a numeric value back.

For example, a scoring component for a customer account can be the number of delinquent transactions. In this case,
the Object being scored on is the Customer Account. The scoring component can also include database functions to
return a value.

It is important to notes that the Scoring Component is applied against a specific Object. To refresh the scoring
tables, it is imperative to run concurrent programs for each of the object being scored on.

Advanced Collections Release 12 has several seeded scoring components, which in general is deemed adequate for a
typical implementation, but additional scoring components can be created as needed. Creating Scoring components
requires a fair amount of SQL and PL/SQL knowledge. Scoring Components are created using the Collections
Administrator responsibility.



Figure 11. Scoring Component Screen

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Scoring Engine: Scoring engines are used to score either a customer or delinquency and aids in the selection of an
appropriate Dunning Plan or Collections Strategy. A scoring engine consists of one or more scoring components
each with an assigned weight.
Let us say the requirement is to score a customer account on three different components:
Customer Since: where one would want to consider how long the customer has been doing business with
the organization and treat them differently based on the length of the relationship.
Number of delinquent transactions: where the count of delinquent transactions is considered in determining
the appropriate collection action.
Delinquent amount due: where the amount of delinquent transactions is considered in determining the
collection action.
For example, consider the following setup of a scoring engine called Global Scoring Engine, the first step is to
determine the range of values and the score associated with the range.
Setup of number of delinquent transactions is shown below:
Range Low Range High Value
0 6 100
7 20 50
21 9999999999 1

Setup of Customer Since is shown below:
Range Low Range High Value
-999999999 1950 100
1950.1 1975 75
1975.1 1990 50
1990.1 99999999 1
Delinquency Amount for account setup is shown below:
Range Low Range High Value
-999999999 0 100
1 1000 90
1001 5000 80
5001 25000 70
25001 50000 60
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Range Low Range High Value
50001 75000 50
75001 100000 40
100001 500000 30
500001 1000000 20
1000001 999999999 1

The next step is to assign a weight for each of the Scoring Components:
Scoring Component Weight
Customer Since 0.1
Number of delinquent transactions 0.4
Amount due (delinquent amount) 0.5

Scoring is done based on the above scores and weights. Consider the following customer scenario:
Customer Component Value Value*Weight Component
Score
Total Customer
Score
ABC
Corporation
5 Delinquencies 100 100*0.4 40
Customer Since
1996
1 1*0.1 0.1 (round down
to 0)

$55,000 in
delinquent
amount
50 50*0.5 = 25 25 65

The score computed for the customer is used to derive the appropriate Dunning Plan or Collection Strategy. We will
now discuss these two implementation options.

Dunning Plans

Dunning Plans are relatively simpler way of implementing Advanced Collections. If Dunning letters are used as
part of the standard collection process, the Dunning Plans in Release 12 helps achieve the same result but adds more
functionality by combining the score calculated using the scoring engine to pick the correct Dunning letter format.
This implementation option also lets users create call back tasks in addition to sending the Dunning letters.

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Dunning Letters in Release 12 are defined in the BI Publisher. Figure 12 is an example dunning plan showing the
link between the aging bucket, the score and the Dunning letter template to be used in each scenario. Call back tasks
with scheduled delay can be defined with this setup.

In the example below, if a customer transaction is between 61-90 aging bucket, and the score as determined by the
scoring engine is say 85, the Dunning Soft Letter 1 is sent to the customer, through Print. Since callback is not
defined a callback task is not created. If the Customer score is say, 65 as in the example of ABC Corporation, the
Dunning Hard Letter 1 is sent to the printer and a callback task is created 10 days after the Dunning letter is printed.



Figure 12. Dunning Plan setup

Collection Strategies

Collection Strategy provides a very robust method for setting up collections operations by combining the scoring
engine and work items or tasks that allows users to really tailor the actions that best suits the specific customer
situation. A strategy is in effect an assemblage of automated and manual tasks that will be executed in sequence to
influence the customer in paying the delinquent invoice(s). The backbone of Collections Strategy is the work items
which will be discussed in the next section.

Work Items: Work Items can be simple tasks such as calling a customer to more complex activities like triggering a
workflow. Several seeded work items are provided with Oracle Advanced Collection R12 and more can be added as
required.

Work Items can be generally classified into Automatic, Manual or Workflow. The table below shows the Work Item
type and Category type associated with the work item type.

The work type can either be mandatory or optional and can be preceded and following by execution wait times.
Work Item Type Category Type Work Item Type Description
Automatic Email
Print
Fax
This is used mainly for sending
reminder and dunning letters
delivered by one of the category
types.
Manual Personal Visit
Phone Call
These create tasks on the Collectors
workbench for the Collector to
execute.
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Review
Workflow Workflow Used when complex workflow has to
be launched. This is used to trigger
special approval processes as a result
of the delinquency.


Strategy Setups: As explained previously, strategies are an assemblage of work items and it provides a sequence in
which to execute the strategy based on score and segmentation. Segmentation is a concept introduced here for the
first time this simply means one can execute collection processes for specific segments of customer population.
For example, a separate strategy could be used for customers in US (with US address) or customers in the Chemical
Industry sector. The segments are created using SQL queries mainly through views on the Oracle TCA tables.

The following table shows the setup of a strategy and how it links to the work items and scoring engine.


Strategy
Name
Scoring Engine Scoring Components Lowest
Applicable Score
Work Items
Customer
Soft
Collections
Strategy
Global Scoring
Engine
Customer Since
Number of delinquent
transactions
Delinquent amount
80 Call Customer
Send reminder
Email
Customer
Medium
Collections
Strategy
Global Scoring
Engine
Customer Since
Number of delinquent
transactions
Delinquent amount
50 Send Medium
Dunning Letter
Call Customer
Send reminder
email
Customer
Hard
Collections
Strategy
Global Scoring
Engine
Customer Since
Number of delinquent
transactions
Delinquent amount
0 Send Hard
Dunning letter
Call Customer
Send legal notice
letter

Based on the score for Customer ABC Corporation, with a score of 65, the Customer Medium Collections
Strategy will be assigned and the appropriate work items are executed automatically or manually.

Collector Assignment

Collections data like customer accounts, delinquencies and strategy items can be displayed either globally or only to
assigned collectors. Advanced Collections module is independent of how collectors are assigned. The collector
assignments can either be through Territory management or through Customer profiles.

Territory Management is not discussed at length in this paper, however it should be noted that if the Organizations
collection strategy is at the customer level, then territory management is the only option to assign collectors as the
Customer screen in AR does not allow collector assignment at customer (or Party) level.
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Some Additional Features

Oracle Telesales Integration: Advanced Collections integrates with Oracle Telesales to provide seamless integration
from Collectors workbench. Hence Oracle Telesales product should be installed for Advanced Collections to work
correctly. The collectors also have to defined with the appropriate roles to access e-Business Center.

Skills based strategy assignment: Strategy items can be assigned to specific collectors using skills defined in Oracle
HRMS.

Oracle Payment Integration: Through integration with Oracle Payments, Credit Card and EFT payments can be
received and processed from the Collectors workbench.

Automatic Fulfillment: Through integration with Fax server and email integration, communication like Dunning
letters and Invoice copies can be sent to customers automatically.

Implementation Consideration

With Advanced Collections R12, users of Oracle e-Business Suite are challenged with several questions: Is
Advanced Collections really required? Should I use Dunning Plans or Collections Strategy? Should I automate my
correspondence? In this section, we will touch upon these topics to give a general guideline on what to look for and
the general criteria in making the best possible decision.

Advanced Collections vs. Legacy Collections

Criteria Advanced
Collections
Legacy Collections
Our Collectors are spending too much
time looking for information


Unable to track Metrics


Aging Reports in Oracle Receivables
does not give me all the information
and hard to modify


Our Receivables is growing and we
have a large number of customers


We spend too much time in processing
Dunning letters


Our Collections activities are falling
through the cracks, we do not know
who to call and when.


We have a very small customer base

Our customer relationship is strong and
we are constantly in touch with our


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Criteria Advanced
Collections
Legacy Collections
customer through other channels
(Project Managers on site etc.)
Scoring Engine etc. may be overkill for
us.



Dunning Plan vs. Collections Strategy

Business Process Dunning Plan Collections
Strategy
Our Collections process is rather
simple, we send only Dunning letters
now.


We follow a uniform policy for
collections determining by Aging
alone.


We would like to evolve into using
strategies


We would like treat our strategic and
loyal customers differently


We need the ability to tailor our
collection processes by allowing our
Collectors to add and remove tasks
from a list as they deem fit.



Other Considerations

The other most frequently discussed question is whether to use automated methods of delivering correspondence
like Dunning letters. This decision is based on volume and the stability of the Collections process. If scoring can be
trusted to deliver predicable results and the data quality is pristine, then Automation can be implemented. In general,
customers prove out processes before moving to automated means of delivering letters.

Also, scoring engine needs some real customer data to test and refine. In several occasions, this could be an iterative
process. Once setup the scoring may have to be revised to adapt to current business and market conditions.


Conclusion

In this paper, some salient features of Oracle Advanced Collections were discussed. Though this paper does not
delve into all the features of the product, attempt has been made to highlight the important features based on past
implementation experience. As Oracle moves towards a new generation of applications, the features in Advanced
Collections will become the de-facto standards and the limited function available in Oracle Receivables will be
obsolete. Customers of Oracle e-Business suite should consider this when deploying Oracle R12 + in their
organizations.