All Order-To-Cash Indicators at A Glance

All order-to-cash indicators at a glance
From missing VAT IDs within the EU to cancelled

incoming payments, this whitepaper contains all the
indicators you need to automatically audit
order-to-cash processes.
Do you have any questions? Feel free to send me an email:

Alexander.Ruehle@zapliance.com
Alexander Rühle, CEO
Order-to-cash
Table of contents
Basics .............................................................................................................................................................. 4
What are indicators? ............................................................................................................................................................. 4
How do indicators work? ..................................................................................................................................................... 4
What is the connection between indicators and the internal control system? .................................................. 4
What are the results based on? ......................................................................................................................................... 5
How is the relationship between indicators and processes? ................................................................................... 5
Are indicators synonymous with findings? .................................................................................................................... 5
What are the indicators? ...................................................................................................................................................... 5
Process Area: Master Data ............................................................................................................. 6

Missing VAT IDs in customer master data ..................................................................................................................... 6
Critical customer due to potential export restrictions................................................................................................. 6
Customers without credit limit ........................................................................................................................................... 6
Adhoc address changes in customer master data ...................................................................................................... 7
Rare combinations of country and VAT Key in customer master data ................................................................. 7
Missing customer ................................................................................................................................................................... 7
Process Area: Payments................................................................................................................... 8

Postings to bank and revenues ......................................................................................................................................... 8
Indications for duplicate paid credit notes ..................................................................................................................... 8
Customer changed between invoice and payment ..................................................................................................... 8
Customer paid after term of payment ............................................................................................................................. 8
Late customer payment........................................................................................................................................................ 9
Reversed incoming payments ............................................................................................................................................ 9
Process Area: Sales Document................................................................................................... 9

Sales doc payment terms changed after sales doc creation .................................................................................... 9
Process Area: Process Plausibility .......................................................................................... 10

Customer credit limit changed during sequence ...................................................................................................... 10
Customers used in foreclosure proceedings .............................................................................................................. 10
Transactions with blocked customers .......................................................................................................................... 10
Sales doc creation date after FI document creation ................................................................................................. 10
FI documents without sales reference contrary to expectations ......................................................................... 11
Customers with multiple bank account changes ...................................................................................................... 11
Sales doc changed after creation date of a referencing FI document ................................................................ 11
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Transfer postings among customers ............................................................................................................................ 11
Process Area: Sales Delivery ...................................................................................................... 12

Sales delivery prior to sales order .................................................................................................................................. 12
Delivery not invoiced .......................................................................................................................................................... 12
Deliveries of dangerous goods to problematic countries (beta) .......................................................................... 12
Process Area: Sales Document................................................................................................. 13

Intra-community supply of goods or intra-community supply of services without VAT-ID ....................... 13
Intra-community supply or service with entered VAT (EU)................................................................................... 13
Customer changed between sales and FI document .............................................................................................. 13
Outgoing invoice with VAT in corporate group ........................................................................................................ 14
Accounts receivables items for foreign customers without clearing in the fiscal year ................................. 14
Missing or inappropriate payment terms in sales invoices .................................................................................... 14
Reversed accounts receivables ....................................................................................................................................... 15
Revenue without an outgoing invoice .......................................................................................................................... 15
SD invoice prior to sales delivery ................................................................................................................................... 15
SD invoice prior to sales order ........................................................................................................................................ 15
Sales invoices without payment terms ........................................................................................................................ 16
SD invoice without sales order ....................................................................................................................................... 16
SD Invoice without FI Invoice .......................................................................................................................................... 16
VAT-ID in customer master data and invoice do not match ................................................................................. 16
Rare reconciliation account in customer master data.............................................................................................. 17
Delayed declaration of VAT after delivery (beta) ...................................................................................................... 17
Suspicion of missing provision for specific doubtful debts (beta) ....................................................................... 17
Service or supply to customers in third countries (no-EU-member countries) with VAT (beta) ............... 18
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Basics
What are indicators?

An indicator addresses a specific question that is of interest to an auditor or to the
special department.
Examples are:
• Lost discounts
• Possible duplicate payments
• Poorly maintained terms of payment in invoices
• Postings by super users
• Unusual offsetting accounts in accounting documents
How do indicators work?

An indicator is structured in such a way that criteria can be used by an algorithm to
decide whether a document is affected by the indicator or not. In this respect, an
indicator paints the world black and white. A question represented by an indicator must
therefore always be formulated in such a way that a document can be marked with the
indicator or not. An indicator is always business oriented.
What is the connection between indicators and the internal

control system?
Because indicators always evaluate individual business transactions, zap Audit is a tool
for auditing the internal control system, as it is predominantly focused on the
implementation of processes and business transactions.
If an indicator hits at a document, it is an indication of a mistake in the process or

business transaction being audited. Indicators therefore do not confirm the functioning
of internal controls ("positive" view) but are rather an indication of deficiencies in the
internal control system ("negative" view).
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Order-to-cash
What are the results based on?

Indicators evaluate the original data in your SAP system that were previously loaded
into a local database. The results are therefore based directly on empirical facts of the
documents and processes. No ABAP source code must be installed in your SAP system,
because zap Audit is executed independently of SAP.
How is the relationship between indicators and processes?

In addition to the evaluation of the indicators, the financial process mining is carried out.
Financial Process Mining is our algorithm, which groups documents into a sequence in a
related process flow. Thus, it is clear for each document in which sequence it belongs. If
indicators are applied to a document, the procedural context is also known, which helps
the user to clarify the displayed deficiencies and enables a deeper understanding of the
facts. Accounting documents (SAP FI), purchasing documents (SAP MM), sales
documents (SAP SD) and change documents are taken into account by the Financial
Process Mining Algorithm. Changes to the master data used in the documents (for
example, vendors, customers) are also included.
Are indicators synonymous with findings?

As the name suggests, these are "merely" indications for defects. The auditors’
professional judgement is still needed in order to substantiate an indication for a finding.
What are the indicators?

We distinguish between the purchase-to-pay, order-to-cash, fixed assets and
inventories as well as cross-process processes.
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Process Area: Master Data
Missing VAT IDs in customer master data

Objective: Compliance and correctness
Risk: Incorrect VAT posting.
Description: Marked document where the respective customer is located in a European

country other than the own company and a VAT code has not been maintained. Natural
persons being customers are out of scope.
Critical customer due to potential export restrictions

Risk: There is the risk that non-compliant deliveries to critical customers were
conducted.
Description: Marked document due to a flag in the customer master data related to
biochemical, nuclear, national security or missile technology issues (Fields CCC01,
CCC02, CCC03, CCC04, MILVE in table KNA1).
Customers without credit limit

Objective: Saving opportunities
Risk: There is the risk that outgoing invoices are not being paid because credit limits are
not used.
Description: The document has been marked because it is an outgoing invoice (debit
item with customer reference (BSEG-KOART=D)) and for the customer a) there is no
direct debiting authorization and b) a credit limit has not been defined and c) the
customer has never paid something in the financial year considered or has been dunned
or paid later than the twice the defined payment term.
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Adhoc address changes in customer master data

Risk: There is the risk that customers with frequent address changes are fraudulent or
they are not willing to pay.
Description: The document has been marked because it references a customer where
the address (street is analyzed, Table KNA1) has been changed at least two times
within a period of 180 days and the processing date of the document is within the
change dates of the customer address changes. Changes are only taken into
consideration if the new and old value of the street are different according to the
SOUNDEX algorithm.
Rare combinations of country and VAT Key in customer

master data
Risk: Incorrect VAT posting.
Description: The indicator calculates how often a VAT code appears in the postings.
This frequency is calculated per country of the customer and per document type, as well
as the property, whether it is an intercompany customer or not. If the frequency of the
VAT code in a group (customer country + document type + intercompany yes/no) is low
(less than 1% of the cases), the use of this VAT code is considered to be rare and
documents with these rare VAT codes are marked.
Missing customer
Risk: There is the risk of insufficient traceability of business transactions due to missing
customer master data.
Description: Marked document referencing a customer (Table BSEG, Field KUNNR) that
does not exist in the customer master data (Table KNA1 or KNB1).
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Order-to-cash
Process Area: Payments
Postings to bank and revenues

Risk: There is the risk that fraudulent incoming payments cannot be allocated.
Description: Marked payment because there are also items posted to a revenue account
in the document.
Indications for duplicate paid credit notes

Risk: There is the risk that duplicate credit notes have been paid or cleared.
Description: Marked document because the document contains a credit note item that
has been paid or cleared and there are other paid or cleared credit note items (with
regards to the same customer) with the same amount which have also been paid or
cleared.
Customer changed between invoice and payment

Risk: Customer could have been changed after the invoice had been issued.
Description: Marked FI document where the referenced customer changed between

invoice to payment.
Customer paid after term of payment

Risk: There is the risk that customers pay late, and high receivables lead to a lack of
liquidity or loss of interest.
Description: Marked document because customer paid at least 3 days or more after
term of payment. The indicator only operates if a payment term with more than 0 days
payment period has been defined in the document (Table BSEG, Field ZBD3T>0),
otherwise the document is ignored.
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Late customer payment

Risk: There is the risk that customers pay late, and high receivables lead to a lack of
liquidity or loss of interest.
Description: Marked document because customer paid later than 1,5 times of average
payment time in days (days between baseline date and clearing of the invoice). The
indicator is only relevant if no useful payment terms have been maintained in the
invoice. Payment terms are not useful if the due date period has been set to 0 days
(Table BSEG, data field ZBD3T, ZBD2T, ZBD1T=0). Intercompany invoices are not taken
into consideration.
Reversed incoming payments

Risk: There is a risk that an incoming payment was correctly allocated.
Description: Marked reversed incoming payment.
Process Area: Sales Document
Sales doc payment terms changed after sales doc creation

Risk: There is the risk of fraudulent changes of payment terms.
Description: Marked sales doc due to changes in payment terms after sales doc.
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Process Area: Process Plausibility
Customer credit limit changed during sequence

Risk: Customer gets goods and services although near credit limit.
Description: Marked document due to changes of the credit limit of a customer used in a
sequence.
Customers used in foreclosure proceedings

Risk: If the customer is close to bankruptcy there is a high risk that receivables will not
be paid.
Description: Marked document references a customer that is flagged to be in foreclosure

proceedings (Field KNB1-GMVKZK) or was once flagged as such in the change
documentation.
Transactions with blocked customers

Risk: Customer block is taken out to run a sales order.
Description: Marked document because the customer had more than one change to the
customer block field within the same day. (Table KNA1 or KNB1 Field SPERR) The
changes occurred the same day of the referencing FI document processing date.
Sales doc creation date after FI document creation

Risk: Standard processes and internal controls were circumvented by directly entering
an FI document without adhering to the sales process.
Description: Marked document because an FI document is processed prior to a

referenced sales doc.
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Order-to-cash
FI documents without sales reference contrary to

expectations
Objective: Process standardization
Risk: Standard sales processes and internal controls could be circumvented.
Description: Marked document due to lack of reference to a sales doc although

documents of that document type have SD references in more than 80% cases
(Reference BSEG-VBELN).
Customers with multiple bank account changes

Risk: Multiple bank account changes were performed.
Description: Marked FI document (outgoing payment) because it was processed

between two changes of the bank account of the customer used in the document
(outgoing payment). The two changes of the bank account were made within a time
period of 7 days maximum.
Sales doc changed after creation date of a referencing FI

document
Risk: There is a risk that standard sales processes and internal controls were
circumvented.
Description: Marked change document where the sales doc was adjusted/changed after
the referencing financial document was processed (header or position).
Transfer postings among customers

Risk: There is the risk that postings are swapped among customers.
Description: Marked document because the posting consists of items belonging to

different customers.
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Process Area: Sales Delivery
Sales delivery prior to sales order

Risk: There is the risk that a sales delivery order was subsequently created.
Description: Marked sales delivery because it was created prior to sales order in the
sequence. The date in field VBAK-ERDAT (sales doc) is compared to the date in LIKP-
ERDAT (delivery).
Delivery not invoiced

Risk: There is the risk that deliveries were not invoiced, and goods were not paid for.
Description: Marked delivery because a SD sales invoice related to this delivery could
not be found.
Deliveries of dangerous goods to problematic countries (beta)

Risk: There is the risk that goods are delivered to non-compliant countries.
Description: The delivery document has been marked because the receiving customer is
located in a country having a score less than 35 considering the Corruption Perception
Index. Deliveries in the country of origin of the own company are not analyzed.
Furthermore, the delivered goods need to be hazardous goods. A material is a
hazardous good if the data fields PROFL, DG_PACK_STATUS, STOFF or HAZMAT are
used in the material master data (table MARA).
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Process Area: Sales Document
Intra-community supply of goods or intra-community supply

of services without VAT-ID
Risk: There is the risk that for an intra-community supply of goods or for an intra-
community supply of services a VAT-ID has not been used.
Description: The document has been marked because the referenced customer is
corporate (Datafield KNA1-STKZN) and is registered in another third country (Datafield
KNA1-LAND1) or the supplying country and receiving country within the EU is different
(Datafields BSEG-EGLLD and EGBLD) and a VAT-ID could not be found in the
document (Datafield BSEG-STCEG).
Intra-community supply or service with entered VAT (EU)

Risk: There is the risk that an intra-community supply of goods has not been treated tax
free or for an intra-community supply of services within the EU the reverse charge
approach was not applied.
Description: The document has been marked because the referenced customer is
corporate (Data field KNA1-STKZN) and is registered in another third country (Data
field KNA1-LAND1) or the supplying country and receiving country within the EU is
different (Data fields BSEG-EGLLD and EGBLD) and (manually entered) VAT has been
charged (Data field BSEG-MWSTS).
Customer changed between sales and FI document

Risk: A faked invoice could be associated to an existing sales doc.
Description: Marked FI document where the referenced customer is not the same as the
referenced customer in the associated sales doc.
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Outgoing invoice with VAT in corporate group

Risk: There is the risk that VAT in an outgoing invoice has been charged although the
transaction was not taxable (VAT group).
Description: Marked document due to charged VAT and the customer belongs to the
corporate group (BSEG-VBUND not empty) and both, the customer and the own
company are in the same EU country or the supplying country and receiving country are
the same (Neglect of VAT group).
Accounts receivables items for foreign customers without

clearing in the fiscal year
Risk: There is the risk of fictitious revenues or accounts receivables.
Description: The document has been marked because no clearings were posted for a
receivable in respect of this foreign customer in the whole fiscal year, although an open
customer item exists or existed at year end. Intercompany customers are outside of the
scope.
Missing or inappropriate payment terms in sales invoices

Risk: There is a risk of receipt of late payment.
Description: Marked document due to missing or inadequate payment terms in a FI

document item related to sales invoices. The three fields (Days from Baseline Date for
Payment) are not maintained in the referenced payment term (BSEG Table, ZBD1T=0,
ZBD2T=0, ZBD3T=0 Fields) although discounts have been defined (BSEG Table,
ZBD1P>0 or ZBD1P>0 Field). Documents without any payment term reference are also
included (BSEG Table, ZTERM Field). Intercompany customers are out of scope.
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Reversed accounts receivables

Risk: There is the risk that accounts receivables are reversed late and potentially posted
again to avoid depreciation.
Description: The document was marked because it contains a debit item related to a
customer (accounts receivables KOART=D) and this document was reversed more than
30 days after its posting date. It is also shown when there were accounts receivables
items of the same customer which were posted within 14 days after the processing
date of the reversal.
Revenue without an outgoing invoice

Risk: There is the risk that revenue has been posted without an outgoing invoice.
Description: The document has been marked because it posted a revenue (credit item in
P/L) and the account of the revenue has in >90 percent of cases a debit item
(KOART=D) in the document belonging to a customer (e.g. an invoice). In this case, the
debit item of a customer does not exist.
SD invoice prior to sales delivery

Risk: There is the risk that a SD invoice was created after the delivery.
Description: Marked SD invoice created prior to sales delivery in the sequence. The date
in field VBRK-ERDAT (SD invoice) is compared to the date in LIKP-ERDAT (delivery).
SD invoice prior to sales order

Risk: There is the risk that an order for a DS invoice was created after the delivery.
Description: Marked SD invoice created prior to sales order in the sequence. The date in
field VBRK-ERDAT (SD invoice) is compared to the date in VBAK-ERDAT (sales doc).
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Sales invoices without payment terms

Risk: Missing payment terms might lead to bad payment behavior.
Description: Marked sales invoice due to lack of payment terms (Table VBRK, Field
ZTERM). Intercompany customers are out of scope.
SD invoice without sales order

Risk: There is the risk that the usual sales process has not been used since a sales order
belonging to the sales invoice could not be found.
Description: Marked SD invoice without any sales order in the sequence.
SD Invoice without FI Invoice

Risk: There is the risk that not all invoices have been recorded in the accounting.
Description: The SD invoice has been marked because no invoice in the accounting
could be found for it. SD invoices with net value 0 (VBRK-NETWR) and SD invoices not
being in the fiscal year are not analyzed.
VAT-ID in customer master data and invoice do not match

Risk: There is a risk of bad quality of master data concerning value added tax (VAT).
This could result in possible errors in tax returns.
Description: The document has been marked because the VAT ID in the document and
the VAT ID in the customer master data do not match. It has been taken into account
that the VAT ID could have been changed in the master data in the past.
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Rare reconciliation account in customer master data

Risk: There is the risk of a misstatement in the balance sheet if customers are assigned
to wrong reconciliation accounts.
Description: The financial document has been marked, because it is a customer invoice
and the properties of the customer do not fit with the structure of the reconciliation
account. It is assumed that reconciliation accounts (accounts receivables) are structured
according to assigned customers: home country, EU foreign country, non-EU foreign
country, private customer or company, intercompany or non-intercompany.
Reconciliation accounts are subject to investigation if they are only almost
homogeneous (but not totally homogeneous) according to at least one of these
properties. Almost homogeneous means that e.g. 99.6% of customers assigned to the
reconciliation account are home country customers. In that case all the other 0.4% of
non-home country customers (alternative: 0.2% of home country customers) on this
reconciliation account are marked as an exception.
Delayed declaration of VAT after delivery (beta)

Risk: There is the risk that VAT is declared too late in the VAT sales tax pre-registration.
Description: The outgoing Invoice (SAP SD) was marked because the entry date (table
VBRK, data field ERDAT) is at least 90 days after the entry date of the corresponding
delivery (table LIKP, data field ERDAT) and the invoice contains VAT (table VBRP, data
field MWSBP). This is critical because (at least in Germany) the VAT arises with delivery
and thus possibly was declared too late.
Suspicion of missing provision for specific doubtful debts

(beta)
Risk: There is a risk that receivables will be overstated and that the net income for the
year will be overvalued.
Description: Receivables are flagged for which a provision for specific doubtful debts
was expected, but no provision was found. Intercompany receivables are not
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considered. First, a cutoff-date is determined, to which the status of the receivables is

considered. As cutoff-date, the latest posting date is determined, which can be found in
the raw data set. Only receivables are examined if there are more than 180 days
between the posting date of the receivable and the cutoff date and the claim was not
yet cleared on the cutoff date. For these receivables, it is examined whether there were
provisions for the affected customer at the time of the cutoff date. A provision for
specific doubtful debts is a debit item (BSEG-KOART = 'D') in credit (BSEG-SHKZG =
'H'), which is equipped with special G / L indicator 'E' (BSEG-UMSKZ = 'E' means
'provision for specific doubtful debts'). The indicator is subject to the following
limitations:
1. If the indicator does not strike, then the converse conclusion that the company
has done everything right about provision for specific doubtful debts is
inadmissible.
2. If the company does not calculate provisions for specific doubtful debts per
customer separately using the special G/L indicator 'E', the indicator will show hit
in case of doubt.
3. The indicator only pays attention to the existence of provisions for specific
doubtful debts per customer. The amount of a provision for specific doubtful
debts is not valued.
Service or supply to customers in third countries (no-EU-

member countries) with VAT (beta)
Risk: There is a risk that sales tax will be charged, although this is not necessary.
Description: The outgoing invoice was marked because the (business) customer is
based in a third country (non-EU-member country) and VAT has been invoiced. As a
rule, such services or deliveries are mostly VAT free. But there are exceptions. Check for
such exceptions.
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All order-to-cash indicators at a glance

From missing VAT IDs within the EU to cancelled

Do you have any questions? Feel free to send me an email:

Process Area: Master Data ............................................................................................................. 6

Process Area: Payments................................................................................................................... 8

Process Area: Sales Document................................................................................................... 9

Process Area: Process Plausibility .......................................................................................... 10

Transfer postings among customers ............................................................................................................................ 11

Process Area: Sales Delivery ...................................................................................................... 12

Process Area: Sales Document................................................................................................. 13

What are indicators?

How do indicators work?

What is the connection between indicators and the internal

If an indicator hits at a document, it is an indication of a mistake in the process or

What are the results based on?

How is the relationship between indicators and processes?

Are indicators synonymous with findings?

What are the indicators?

Process Area: Master Data

Missing VAT IDs in customer master data

Risk: Incorrect VAT posting.

Description: Marked document where the respective customer is located in a European

Critical customer due to potential export restrictions

Customers without credit limit

Adhoc address changes in customer master data

Rare combinations of country and VAT Key in customer

Risk: Incorrect VAT posting.

Process Area: Payments

Postings to bank and revenues

Indications for duplicate paid credit notes

Customer changed between invoice and payment

Description: Marked FI document where the referenced customer changed between

Customer paid after term of payment

Late customer payment

Reversed incoming payments

Risk: There is a risk that an incoming payment was correctly allocated.

Description: Marked reversed incoming payment.

Process Area: Sales Document

Sales doc payment terms changed after sales doc creation

Risk: There is the risk of fraudulent changes of payment terms.

Process Area: Process Plausibility

Customer credit limit changed during sequence

Customers used in foreclosure proceedings

Description: Marked document references a customer that is flagged to be in foreclosure

Transactions with blocked customers

Risk: Customer block is taken out to run a sales order.

Sales doc creation date after FI document creation

Description: Marked document because an FI document is processed prior to a

FI documents without sales reference contrary to

Risk: Standard sales processes and internal controls could be circumvented.

Description: Marked document due to lack of reference to a sales doc although

Customers with multiple bank account changes

Risk: Multiple bank account changes were performed.

Description: Marked FI document (outgoing payment) because it was processed

Sales doc changed after creation date of a referencing FI

Transfer postings among customers

Description: Marked document because the posting consists of items belonging to

Process Area: Sales Delivery