Photo of Kevin Grant, Serrala and Salvatore LoBosco, Merck Business Services/Business Technology.

Merck has successfully automated its credit management processes by implementing a SAP-embedded solution delivered by Serrala. The positive effects for the daily work of Merck’s credit managers are remarkable; processing time for customer credit checks are reduced from six weeks to just one to three days.

Proactive customer risk prevention by digitising the credit to cash process

The challenge

Merck aspired to ensure and control the assigned credit limit for each customer to prevent a deficit in payments. The entire process had to be automated to eliminate manual activities and interruptions. Merck had built and set up a global credit limit guideline, that needed to be underpinned by a fully automatic process to control, check and proceed with the assignment of credit limits to each customer.

The solution

In their search for a credit management tool, Merck compared the functionalities of the Serrala solution with those of other vendors on the market. Based on its individual business needs, Merck selected the Serrala Credit Management solution which was the best fit for its requirements.

The credit management add-on solution for SAP by Serrala (now available as the next generation software FS² Credit), as implemented by Merck, covers all important credit management processes: credit assessment, risk classification, check/control of credit assessment and calculation and fixing of the credit limit.

“The system allows greater flexibility, enabling the credit managers to adjust credit limits in reaction to changes in the customers’ payment behaviour without any IT support. As a result of having this new system in place, Merck has next to no deficits in payments any more due to customer insolvency,” concludes Salvatore LoBosco, Team Lead of ERP Finance CoE, Merck.

Best practice and innovation

Reducing risks: KYC and efficiently managing customer credit

When companies issue an invoice they automatically extend credit to their customers. Depending on a customer’s creditworthiness, the payment terms often vary. Existing processes typically involve manual tasks. By deploying this solution Merck has automated the processes and benefits from features including the following:

• Merck’s Virtual Credit File

  To manage all their customer data, Merck uses the virtual credit file, a key feature of the solution. It serves as the central cockpit for credit managers. Each customer has a designated credit file and each of them has their accounting as well as a sales clerk.

• Integrating credit rating reports into the process

  Assessing a customer’s creditworthiness is a key task for credit managers. To determine credit scores for each customer, Merck uses connectors by Serrala for integrating business information from credit rating agencies directly into SAP. Together with the internal data, such as payment history, the credit reports are processed into a scorecard.

• Credit limit application

  In case Merck wants to increase for a specified period the credit limit for a customer on behalf of its sales team, an application from sales can be processed. The credit manager will check the credit limit application and determine whether the request can be granted.

• Credit limit check

  This is automatically initiated when the customer reaches 125% of its credit limit. This control function reduces the risk of overspending. Additionally, it is possible to increase the credit limit.

• Credit limit calculation

  This runs daily for each customer and credit control area. It automatically calculates the limit based on different internally set criteria. If a customer has undergone a credit limit check or has a fixed credit limit application limit, the limit will not be overwritten until the validity date – only the score and risk category is updated.

• Robotic process automation

  In addition to supporting all credit management activities with predefined best-practice processes, the credit management solution offers robotic workflows for automation. Merck has implemented workflows that automatically create a credit file for each customer, conduct a credit limit check in case the customer has used more than 125% of its credit limit and triggers a credit limit check in case the customer is having negative criteria.

Key benefits

• Implemented in seven months.
• Reliable and efficient.
• Seamless integration with SAP.

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