How an apparel company automated their factoring in SAP using EDI.
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The selling of a company's receivables to a factor has been common practice for over a hundred years, and is commonplace in many industries such as textiles, apparel, and wholesale/distribution. Unfortunately, so has the manual and paper based nature of this process.
Countless hours are spent going back and forth between customer service, accounts receivable and the factor to run credit checks, communicate receivables and receive payment updates.
CONTAX has been able to help companies eliminate this overhead by utilizing EDI to automate much of the process. From requesting the credit check through to the transfer of receivables, we have made this streamlined and seamless for the users involved.
By making use of the standard SAP functionality for credit checks and credit holds, we can help ensure that product is not shipping to customers that doesn't already have their credit approved by the factor. This can include both customers that are pre-approved, and customers that require approval on each order. The automation of this process ensures that the order is approved and processed in SAP within minutes of it being approved by the factor.
The EDI 850 and 870 are put in place to communicate with the factor at the various phases of the order to cash lifecycle. Utilizing these transactions, SAP is in sync with the factor without a flood of emails and phone calls throughout the day. When an order is created, the 850 is triggered to send to the factor. This contains all of the information they need to evaluate the credit status of the customer. Once a decision is reached on their side, the 870 is sent back. This message, translated to an IDOC in SAP will lift the credit status if successful, and will trigger a notification to the accounts receivable team if it is rejected.
Utilizing EDI takes advantage of your existing SAP investment and help create efficiencies in a day to day task.
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