Value Realization
The app comes with a possibility to track the realizable value with the app.
For the Value Tracking, only credit memos are included for which the status has been set to In Progress or Resolved. Untouched Credit Memos or “rejected” credit memos are still shown in the “Cleared Credit Memos” tab but not included in the value realization calculation.
Note
For proper Value Realization, ensure that the credit memo status is updated.
For the value calculation, the set thresholds (see runtime variables) are essential and should be only adjusted by selected users. Please keep in mind that the realized value is not logged but variable updates also change realized value in the past.
Generally, the value realization is grouped into four sections:
Usual Processing Time: This is regular business and when a credit memo is cleared within this time frame, no value is related to Celonis. The usual processing time can be set in the Settings View (usual_processing_time) and is by default three months.
Free-Cash-Flow: After this usual processing time, it is assumed that this invoice has been overlooked in usual processing. Hence, the Free-Cash-Flow gains compared to the maximum Free-Cash-Flow Threshold is calculated the following:
SUM(CM Value * ([FCF Threshold] - [CM Aging]) / [FCF Threshold]))
The Free-Cash-Flow Threshold can be set in the Settings View (free_cash_flow_aging_threshold) but should be usually around 12 months.
Knowledge Model KPI: KPI_CreditMemo_CALC_RealizedFreeCashFlowAfterUsualProcessingThresholdBeforeFreeCashFlowThreshold
Low Risk P&L Write-off Value: After the Free-Cash-Flow Threshold (typically 12 months), the likelihood that the credit memo is forgotten and has to be written off increases continuously. Hence, the saved (=realized) value is increasing linearly each month:
SUM(CM Value * ([CM Aging]-[FCF Threshold]) / ( [P&L Threshold]-[FCF Threshold]))
The Open Credit Memo Write-off Threshold can be set in the Settings View (credit_memo_aging_threshold) and should be usually around 18 or 24 months.
Knowledge Model KPI: KPI_CreditMemo_CALC_RealizedPLAfterFreeCashFlowThresholdBeforeHighRiskThreshold
High Risk P&L Write-off Value: Once the credit memo has reached this threshold, Celonis claims to have the whole value to be realized.
Knowledge Model KPI KPI_CreditMemo_CALC_RealizedPLAfterHighRiskThreshold
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