Overview
What is SAP FS-CD?. FS-CD stands for Financial Services Collections & Disbursements. It is an application of SAP for Insurance suite. As the name suggests, for any insurance company this application provides capabilities to collect the payments like premium, fees etc. and disburse the amounts like claims, refund etc and all the relevant processes around these types of transactions like invoicing, sending reminders to customers or vendors in case of overdue payments, converting the premium to installments etc.
FS-CD is a settling system and not a calculating system meaning that FS-CD does not calculate any kind of amount like premium, claims etc. but it gets these amounts from source systems and processes them in SAP. So its more like a billing solution from SAP for the Insurance industry.
Like any other application of SAP it also has master data and transaction data and their related database tables but we will discuss them when we go deeper.
How its integrated
Now you have a rough idea on what is SAP FS-CD, let’s look at how it’s integrated. Since FS-CD serves as a billing or settling system, it takes the data or input from different source systems. It can be other SAP like SAP PM (Policy Management) SAP CM (Claims Management) ICM (Incentive & Commission Management) or Non-SAP systems. Below picture shows the integration of FSCD with different systems from where the data comes into FS-CD.
Take for example:
If an insurance company XYZ decides to issue an auto policy to a customer then the policy administration department of the company decides what are the terms and conditions for payment and how much premium, lets say its $100 the customer has to pay and if there are any other charges/fee.
Policy admin system (SAP or Non-SAP) then sends the data about this customer and the premium amount $100 to be paid by the customer to the FS-CD system. The FS-CD system then registers this and creates a posting of $100 (we will discuss posting) when we go deeper.
Now this FS-CD posting of $100 will go through invoicing, dunning, correspondence (we will discuss when we go deeper) and at last this posting should be reported to FI-GL.
After this premium of $100 is posted to SAP FS-CD, and when customer makes the payment or insurance company auto deduct the amount from customer’s bank account then this $100 posting is cleared against the payment that is made. And again this is reported to FI-GL at the end of the day. We will. have a deeper look on the postings when we go to specific chapters on postings.
Difference B/w FS-CD and FI-GL
FS-CD is a subledger and it’s sometimes called a fat subledger and FI-GL a thin ledger. It’s because FI-GL does not need to know every detail about every transaction that comes in from different source systems, but FS-CD needs to know every detail of each posting and stores this information.
For example – If a customer has to pay $100 as a premium and like this there are 2 million customers who are paying premium amounts to the insurance company. Then all those 2 million transactions information is stored in FS-CD but when it sends the information to FI-GL, then amounts are aggregated and posted to FI-GL, it does not store the information like who paid what amount. It just needs to know how much has come and on which GL account. You can always back track the details of each transaction from FI-GL to FS-CD. There is a standard drill down functionality from FI-GL to FS-CD for the transaction details.
For this reason FS-CD holds a lot more information than FI-GL and is called a fat ledger. FS-CD is designed to process this large amount of data in an efficient manner. Almost all the processes in FS-CD have mass-processing capabilities.
FPSL (Financial Products Sub-Ledger) is also a subledger system. Difference between FPSL and FS-CD is explained in a different blog.