Po Process

1. INTRODUCTION

1. Introduction to study

The aim of the study is to provide stakeholders an understanding of the end-to-end

global business process for accounts payable process. The term ‗end-to-end‘ refers to

the concept of demonstrating the integration of all activities performed within a given

financial process. The term ‗global‘ refers to the idea of promoting a single standard

method of operation used by all operating units and location across Tata Consultancy

Services. While it is acknowledged that strictly adhering to all activities within the

global process may be challenging for some Tata Consultancy Service operating units

or affiliates due to various business, legal, regulatory or other constraints. This

document is meant to provide a comprehensive view of the various problems that arise

in the Accounts Payable process. Due to the problems caused the payments gets

delayed and hence delay in the full and final settlement to the vendors. This report

focuses on identifying the aspects of Finance operations that best lend themselves to

outstand the performance, automation, or both as well as quantifying the potential

benefits that may be achieved in doing so. The study identifies emerging best practices

to benchmark

1.2 STATEMENT OF PROBLEM

Increasing no of errors in the Accounts Payable process of TCS which is

increasing the process time and making the process cumbersome.

1.3 Objectives of the Study

Understand the Accounting and bookkeeping as they affect the Accounts

Payable and where the Accounts Payable fits into big financial picture of TCS.

Recommend good internal controls for Accounts Payable policies and

procedure.

Avoid Common Mistakes and delays in Accounts Payable Process and suggest

improvements in AP Process Productivity.

At the very lowest level, Accounts Payable‘s chief responsibility is to pay a

company‘s bills, On the face of it. This might seem simple, but it is not, really. Those

who say, ―What‘s the Big deal—you get a bill and then you pay it,‖ so no

understanding of the corporate accounts payable world. Yes, accounts payable pays

the bills—but no, the staffs do not just get a bill and pay it. It only does so when

proper controls are in place and when the payment is approved.

1.4 Limitations of study

In the study we meet all the persons and under stood the process depending on

their work flow and their activities.

We analysed the problems and errors stated by the employees of TCS but we

did not worked and got the errors

The information given by the persons whom we meet may not be in detail or

complete.

I did not meet all the departmental heads mainly admin because of their busy

scheduled and some important works.

1.5 RESEARCH METHODOLOGY

While making this report on organization study, I use both primary and

secondary data which are as follows.

1.5.1 Primary Data:

(i) Through the organizational authorities, executives.

(ii) And also from the employees.

1.5.1.1 Personal interviews with organization authorities and executives:

There were interview sessions with each of the functional heads and there was

a questionnaire that was followed as also questions which were asked depending upon

the situations

1.5.1.2 Observations done with the employees:

There was a keen sense of observation followed during the study period to follow

the entire AP process functions very well. We sat at the work places with the

employees and their some staff members which help me in understanding the AP

process and the errors in the better way.

1.5.2 Secondary Data:

(i) Through Journals, Company newsletters.

(ii) And also from the Internet.

1.5.2.1 with the help of Journal and Company Brochure:-

On the first day when I went to the company office, there one madam gives me the

company brochure and some journal and the newspapers which contain the news

related latest trends in ITES industry for getting some knowledge regarding the

company and industry, later I came to know many things such as competitors, major

players in the industry, their products and many more.

1.5.2.2 By using Internet:-

I used internet for the information related to industry, pest analysis, and porter‘s 5

force analysis and for some more which takes lots of time but understand the meaning

and got help to make analysis effective.

2. Industry Profile

2. Industry Profile

World-wide technology and related services spend is estimated to have crossed

USD 1.6 trillion in 2008, a growth rate of 4.6% over 2007. Due to the slowdown,

considerable reductions were experienced in IT service spends across geographies.

According to technology analyst firm Gartner, the Americas experienced a 6.6%

growth in 2008 in comparison to 7.1% growth in 2007. Europe experienced a growth

rate of 11.5% in 2008 in

Comparison to 14.3% in 2007 and UK experienced 12% growth in 2008 in

comparison to 15% growth in 2007, with most of the growth being experienced in the

first two quarters of 2008. The economic downturn contributed to reductions in

spending in the last quarter of 2008 and the first quarter of 2009. Companies reduced

IT spending either by delaying the decisions or by putting some discretionary

spending on new IT projects on hold. This in turn, led to both pricing and volume

pressures for IT service providers. Some of the drivers of IT spending were focused

around the following:

Increase in operational efficiency through improvements in business processes,

infrastructure consolidation, reengineering, virtualization, workload

management, cut down on cycle time, increase speed to market.

Increased regulation leading to more enterprise regulation, security and

reporting

New focus areas including green IT and mobility/ ubiquity initiatives.

2.1 Industry performance and projections

Globally technology spending continues to grow even during tough economic

times and this is expected to further increase once the global economy starts its

recovery process. Information Technology (IT) has become an integral part of

business operations across industries and is seen by organizations as a primary driver

of productivity improvement and business transformation that lead to sustained

competitive advantages in the market place.

The IT services segment grew by 9.0% in 2008 to USD 820 billion and is expected to

grow at a Compounded Annual Growth Rate (CAGR) of 7.1% till 2012, according to

a Gartner Dataquest estimate. The Business Process Outsourcing sector grew by

11.9% worldwide last year as per NASSCOM strategic review 2009. The export

revenue generated from ITES is about US$ 47.5 billion and has a projection of more

than US$ 86 billion by 2012. (CAGR – 20.7%)

India holds a dominant share of the global offshore IT-ITES sector (65% of the

global market in offshore IT and 46% of the ITES market). Yet, at US$ 31.3 billion in

FY07, Indian IT-ITES exports accounted for less than 3% of the global spend on IT-

ITES. This clearly indicates significant headroom for growth. If India maintains its

current share of the global offshore IT-ITES market, IT-ITES exports from India will

exceed US$ 60 billion by FY10 and US$ 86 billion by FY12.

Fig 2.1 Figure showing the estimated trend of CAGR

Further, growing at current trends, Indian IT-ITES exports are projected to

reach nearly US$ 330 billion by FY20 (nearly 14% of the projected worldwide spend).

Software and services exports (including BPO) are expected to account for over 99

per cent of total exports, employing over 1.76 million employees. But the Indian IT

companies will have to move up in the value chain and concentrate more on high

value added services.

2.2 Why Outsourcing?

―Outsourcing system allows companies to contract for services that are not within the

scope of their expertise, so that they can focus their time, money and energy on their

core competencies instead of wasting valuable resources trying to gain Understanding

of areas that are somebody else's expertise".

2.3 Challenges

While the industry has significant headroom for growth, competition is

increasing, with a number of countries creating enabling business environments aimed

at replicating India‘s success in the IT-BPO industry. Hence, concentrated efforts are

required by all stakeholders to address the current challenges, to ensure that India

realizes its potential, and maintains its leadership position.

2.4 External Analysis

Current position of IT/ITES sector in India

Fig 2.2 Figure showing the competencies and service offering

2.5 External Environment - PEST Analysis

Political

Indian political structure is very positive and stable.

U.S Government has declared that US Companies that outsource IT locations

work to other locations other than U.S will not get tax benefit negative.

Government owned companies and PSUs have decided to give more IT

projects to Indian IT companies positive.

Terrorist attacks, War negative

Economic

Global IT Demand (Negative)

Domestic IT spending Demand (Negative)

Currency Fluctuation Negative

Attrition: Due to Recession, The lay-offs and job cuts have resulted in low

attrition rate mildly positive.

Economic attractiveness due to cost advantage and other factors positive.

Social

Number of technical institutes and universities over the country offer IT

education. Highly Positive

Working age population: positive

Technological

Telephony Highly Positive

India has the world‘s lowest call rates

Expected to have subscriber base about 500 million by 2010

ARPU for GSM is $6.6 per month

New IT Technologies

Technologies like SOA, Web 3.0, Cloud Computing, high definition

content, Grid Computing in low cost technologies is presenting new

opportunities and challenges for Indian IT Industry.

2.6 SWOT Analysis - IT & ITES Industry

Strengths Weakness

Cost advantage – most financially

attractive country in a study by A T

Kearney on global IT destinations

Breadth of service offering – end to end

solutions including high end services like

IT consultancy and KPO

Ease of Scalability – more than half of

India‘s population is less than 25 years

old. English speaking IT – ITES

professionals growing at a good pace

Quality and Maturity of process –

many players have quality standards such

as CMM to differentiate from other low

cost advantage countries

Excessive dependence on USA for

revenues – US Companies are cutting

down IT budget hence revenues to be hit

hard of Indian IT firms Excessive

dependence on BFSI sector for

revenues – Banking sector is facing a

crisis globally and is going to spend less

on IT High rates of attrition – Although

slowdown in global economy has lowered

attrition rate but the industry still faces

high attrition rates as compared to other

sectors Decreasing competitive

advantage – rising salary expenses is

taking away the cost advantage enjoyed

by India.

Opportunities Threats

Greater scope for product innovation

Increased focus on high end work like

consulting and KPO Domestic demand

for IT services is to grow at 20%

Greater scope to service domains other

than BFSI such as Transportation,

Infrastructure, etc. Satyam fiasco – Likely

to have positive impact on business

considering corporate governance,

possibility of shifting of business, getting

higher incremental business from

overlapped clients, and winning new

business from new clients

Global economic slowdown may

continue for several years – hence low IT

spending globally US Govt. against

outsourcing

Shrinking margins due to rising wage

inflation

Rupee-dollar movement affects revenue

and hence margins

Increased competition from foreign

firms like Accenture, IBM etc.

Increased competition from low-wage

countries like China, Indonesia etc.

2.7 Porter’s Five Forces Model (Indian IT Industry)

Fig 2.3 Figure showing Michael porter’s five forces on Indian IT Industry

1. Threat of Substitutes: Other Offshore

locations such as Eastern Europe, The

Philippines and China are emerging and

are posing threat to Indian IT Industry

because of their cost Advantage

however this should have impact only in

medium to long term

2. Price quoted for the projects is the

major differentiator, The Quality of

products being the same

1. Bargaining Power

of Supplier: Due to

slowdown, Job cuts

and layoffs and

bleak IT outlook

2. Demand and Supply

of IT Professionals

is no longer that

favourable to IT

employees

Rivalry among firms is

high:

1. Commoditized offerings

2. Low-cost, ‗little

differentiation‘

positioning

3. High Industry Growth

4. Strong Competitors

5. Few Number of Large

companies

Barriers to Entry:

1. Low Capital Requirements,

2. Large Value Chain,

3. MNCs are Ramping up capacity

4. Employee strength

1. Bargaining Power of

Customers: Large

Number of IT

Companies Vying for

IT projects results in

high competition for

projects

2. Huge Decline in IT

Expenditure: Indian IT

Sector is dependent on

US and BFSI in

particular for majority

of its revenues and

within the recent

financial crisis, the new

spending has been

reduced tremendously

3 Company Profile

3. Company Profile

A small and innocuous beginning marked the birth of Tata Consultancy Services.

In 1968, Tata Sons established TCS as a division to service their electronic data

processing (EDP) requirements and provide management consulting services

However, over the next few years, the bright young engineers at TCS, including a

slim, bespectacled 23 year old electronics graduate, working under the steely gaze of a

visionary, MIT trained electrical engineer –Mr FC Kohli - realised that they were

staring at a potential new business opportunity and started offering data processing

services to clients outside the group.

Taking over as CEO in 1996, Ramadorai made organizational changes

beginning with more empowered management style. Having grown from the ranks

and served TCS in different departments, his understanding of the organisation was

deep and his vision was to take TCS into the global top ten leagues of IT services

companies.

Under his leadership, the enablers for TCS‘ accelerated growth were put in

place. It was restructured into a domain led organisation, capabilities were evolved to

deliver end-to-end solutions and organisation-wide uniform quality processes were

introduced and reinforced.

TCS became the world‘s first organisation to achieve an Integrated Enterprise-

wide Maturity Level 5 on both Capability Maturity model and People Capability

Maturity model; these are frameworks conceptualised by the Software Engineering

Institute at Carnegie Mellon University, to benchmark and appraise the software

process and people management process of an organisation. As the offshore model of

software development gained currency among global corporations, Ramadorai played

an active role in establishing Offshore Development Centres (ODCs) in India to

provide high-end quality solutions to major corporations such as HP and GE. Under

his leadership, Technology Excellence Centres were set up in India with a view to

remain abreast with changing technologies at all times. Internal operational efficiency

was given a boost by an Enterprise-wide digitisation initiative.

TCS to build India‘s financial and capital market infrastructure including the

state-of-the-art National Stock Exchange which is among the biggest exchanges in

terms of volumes as well as the National Securities Depository which made the Indian

stock markets paper less. New horizons emerged for the business including the Y2K

problem before the end of the millennium, E-business services, and BPO services and

Engineering services. TCS‘ global growth saw an expansion in its customer list, its

global network and presence, increased interaction with professional groups and

earned a greater voice share with the Indian Government on policy matters.

In 2003, TCS became India‘s first billion dollar IT Services Company and soon

after the following year, went public through an IPO which was at that time the largest

ever initial public offering.

Under the leadership of R N Tata, TCS and Tata Group Chairman, the

Company went ahead with its IPO in 2004. This set the stage for the next phase of

growth for a Company that had crossed the billion dollar mark in revenues in 2003

and was looking to double its revenues every 18-24 months. Post-listing, India‘s

largest IT Company was firmly in the spotlight, not only as the jewel in the Tata

Group‘s crown but also because of its growing global presence. Investments in new

regions like Latin America, China and Eastern Europe was creating an emerging

global giant in the industry, headquartered in India.

Together with other organic growth initiatives like the expansion into Brazil,

Mexico, China and Hungary as well as by setting up strategic units to pursue new

opportunities in the financial services products space or new services like Remote

Infrastructure Management and Platform-based BPO, TCS set the stage for

positioning its brand and its offerings in a unique manner to global customers.

The culmination of all these led to the Company‘s offerings of Global

Network Delivery Model (GNDM ) across India, China, Europe, US and Latin

America as well as its integrated full services offerings, all backed by the promise of

certainty of experience for customers. In 2007, this value articulation of ―Experience

certainty‖ was formally introduced, accepted and validated by global customers.

The philosophies of leadership, delivery excellence and the promise of

―Experience certainty‖ are pillars on which the success of TCS is cemented.

4 Literature Review

4 Literature Review

Review accounts payable to operate faster, more efficiently

By Martin C. Daks

Dt: oct 5 2009

Njbiz

A business with a poorly organized accounts payable system was routinely

taking a month or more to approve and pay invoices, said Torpey White, director of

business at Amper, Politziner & Mattia. The delay increased the company‘s risk of

running up late payment and interest charges, and disqualified it from early-pay

discounts. ―When we reviewed the company‘s operations, it turned out that the AP

system had tracking procedures built into it that would let the firm process the

payables a lot faster,‖ White said. ―A challenging economy like this provides a great

incentive for companies to review their operations and modify them if needed.‖ White

and other experts also talked about coping with issues like rising health care costs and

declining sales at a New Jersey Chamber event, titled Practical Advice for Positioning

Your Business for the Economic Recovery, last month. ―Inventory can gobble up

capital, so you should be aware of what you‘ve got on hand, and what‘s moving,‖ he

said. ―You should also know what‘s obsolete and should be disposed of, even at fire-

sale prices, just to get it off your shelves.‖

HAVE YOU CONSIDERED THESE ENTICING OPTIONS FOR AUTOMATING

ACCOUNTS PAYABLE? WHICH ONE IS RIGHT FOR YOUR ENTERPRISE?

BY IASONLAMON

NOVEMBER.DECEMBER.09

Mww.tnlonomicsniag.com

Now more than ever companies are striving to cut product; costs, improve cash

flow, and streamline operations. To accomplish this, company‘s arc illustrating back-

office processes that require costly manual steps that impede overall process

efficiencies. Of particular importance are business processes tied to initial processes,

such as the accounts payable (AP) process, where the benefits of automation can

immediately impact the bottom tine. Most companies have begun automating such

processes by implementing an L-enterprise resource planning (ERP) system. Even

though these systems provide functionality that helps companies realize efficiency

increases, the presence of manual, paper-based tasks still impedes overall

optimization. By incorporating content management technology into the process, your

organization could realize increased efficiencies, streamlined operations, and r educed

costs overall.

25 Proven Strategies to Improve Your Accounts Payable Productivity

By David L. Foster

ISSUE 05-06

WWW.IOMA.COM

JUNE 2005

Accounts payable professionals find great ways to handle even the most

tedious day-to-day processes! As part of MAP‘s recent Operations Survey, we asked

for a description of the most innovative changes readers had made. As usual, accounts

payable professionals at all levels were generous in sharing their success strategies.

STREAMLINING AP IN A SAP WORLD

By Janice Prescott

May 2006

WWW.IOMA.COM

This editor recently participated in a one-hour Webcast, Streamlining Accounts

Payable in the SAP-Enabled Enterprise, sponsored by Mobius Management Systems

Inc., a provider of integrated solutions for content management. The Webcast included

a report on the current state of AP automation, and it examined how some

organizations are saving money and reducing processing costs while others continue

to struggle with lost data, missed discount payment terms, and strained supplier

relationships. It also has some valuable insights from panelists at Brose and Tarrant

County, Texas, who offered first-hand accounts of the challenges they have faced and

overcome and the resulting benefits of their automated AP deployments in the SAP

environments. You can listen to and view the archived Webcast at www.mobius.com.

How to Get the Most From Your AP Benchmarking Initiatives

By Mary S. Schaeffer

ISSUE 04-06

A/P Training & Certification—www.ioma.com

JUNE 2004

Any decent benchmarking initiative can take a lot of work. But, is it worth all the time

and aggravation? Is there a payback? Definitely, say Debbie Vander Bogart, the senior

director of AP at the Gap Inc., and Felecia Jalensky, Snap-On Tools‘ manager of

accounting services. Speaking at an IOMA audio conference, they not only explained

how their companies had benefited from benchmarking initiatives, but also shared

their secrets for making their programs so successful.

http://www.mobius.com/

The Future Is Now: What Is Happening in America’s AP Depts.?

By David Solomon

June 2004

Institute of management and Administration

We know from anecdotal evidence that AP departments are changing rapidly. We‘ve

heard a number of prognosticators talk about moving AP from a transactional group to

analytical function. Most forward-thinking AP professionals want to be part of that

transformation. But to prepare for the future, they need to know exactly what the AP

department will evolve into. To get their fingers on the pulse of this movement,

RECAP Inc. polls its clients (mostly arger companies) to determine what companies

are doing in AP. Since larger companies tend to lead the way when it comes to

process improvements, it is instructive to see what they are doing. What follows is a

recap (no pun intended) of the key results.

5. Accounts Payable process.

5. Accounts Payable process.

Accounts Payables is nothing but a Liability which has to be paid by the

company for the goods that they have purchased or services that they have availed

from a Vendor. The Firm is Accountable or responsible to pay for the goods

purchased or services that they have availed.

Accounts payable best practices in controlling accounts payable with the

intention of contributing positively to cash flow and bearing jointly beneficial

relationships with suppliers. The hope between a company and its suppliers seems to

be shaken by accounts payable actions there by upsetting supplier relations. On the

other hand, paying your bills on time improves your relationship with the supplier. An

improved relationship with suppliers is essential to a company since they supply

priceless trade credit, and also offer ideas for new methods and products, which are

considered as important role in customer service.

5.1 Metrics in AP Process

Cost/invoice and cost/line

Percent of invoices electronic

Percent of aged items: 30, 60, and 90 days

Percent of discounts captured

Number and cost of manual payments

Number and cost of exception handling

Inquiries by phone, e-mail and IVR, or IWR

Error/recovery rates (percent and cost)

Total cost stretched without hurting vendor relationships

Average days invoices received but not yet processed at month-end close date

Received, but not invoiced, inventories

Debit balances

Number of purged vendors

Track process of all entities being processed

5.2 Best Practices Execution:

The execution of best practices in account payable enables a company to control

its accounts payable activities with the following advantages. The advantages include

the,

Recompense of bill on a fixed schedule of the company's choosing,

Guarantee the correctness and genuineness of statements that the company

pays,

Enables to carry the process involving less paperwork and at minimum

expense. Today‘s modern accounts payable operations have stipulated and

simplified their procedures.

5.2.1 Electronic Document Capture:

Invoices not only enter an organization in the form of paper delivered by mail

or courier; many are sent as attachments within an email or simply faxed.

Companies receiving invoices via email may open the attachment, print the

invoice, and scan the paper. This leads to the creation of more paper and adds

another step in the process. On the other hand, faxes are simply scanned upon

receipt. However, faxed invoices suffer from image degradation, which often

makes it difficult for data entry operators to see pertinent data on the invoice.

Capture software featuring the ability to import electronic documents can

help streamline the process. For invoices sent as an attachment in an email, the

software can be configured to monitor an email inbox, When an email containing

an attachment reaches the inbox, the capture software is able to import the

attachment, convert it to an image format (if necessary), and route it for indexing.

Similarly, with a fax, the capture software can be configured to monitor a fax

directory or network fax appliance. When a fax is received, the capture software is

able to convert the fax from its native format to an image and route it for indexing.

5.2.2 Distributed Document Capture:

Distributed document capture software is typically a Web-based capture system

consisting of two components – a client and a server. Remote workers use the client to

scan or scan and index invoices. The images and data are then sent back to the central

location for indexing or immediate archiving. Extending capture capabilities to any

location where invoices may enter the workplace can eliminate the shipping of

invoices via mail to processing centres, helps secure invoice information as soon as it

enters the workplace, and most importantly, reduces overall invoice cycle time.

5.3 Accounts Payable Process in TCS

AP Process is very important mainly for a Big Organization like TCS. The

trend is for AP departments to play a key role in spend management. TCS follows the

best in class practices:

PNC(Price Negotiation Committee)

Centralize category management and supplier negotiations—with

executive support;

GPS(Global Procurement System)

Establish a single category purchasing policy across the company, and

let everyone know it will be enforced; Communicate the policy clearly,

consistently, and ubiquitously to employees;

ESS(Employee Self Service)

Facilitate employee adherence to policies and procedures through easy-

to-use access tools; and be open to changing policy and supplier mix based on

performance, Business needs, and Employee feedback.

List of Abbreviations and Acronyms

RFQ Request For Quote

CFT Cross Functional Team

SME Subject Matter Expert

HR Human Resource

MAC Management Approval Committee

SOP Standard Operating Process

SWON Standard Work Order Number

Table 5.1 List of Abbreviations and Acronyms

5.4 PRICE NEGOTIATION COMMITTEE

5.4.1 Purpose:

This SOP aims at standardizing the negotiation process of PNC so that correct

procedure is followed, better results of negotiations are achieved and accurate

documentation is done. It also enlists the areas of responsibility of all stake holders.

5.4.2 Scope:

Applies to purchase of all items–materials and services—that require placement of

Purchase Order.

5.4.3 Composition of PNC:

The PNC committee will comprise the following:-

GM/AGM in chair.

Activity Owner / AM concerned

Representative – Finance Department

Representative – HR Department

Any Qualified Personnel – SME in case the item(s) is technical in nature.

Purchase Officer (Secretary)

The PNC will meet on two days in a week.

5.4.5 PNC PROCESS OVERVIEW

GM ADMIN

ACTIVITY

OWNER

OEM

PURCHASE

OFFICER

(SECRETARY

PNC)

Fig 5.1 This Flowchart explains the flow of activities from different departments.

IF VENDOR IS AN

OEM

AD

Approve the Requirements

of Activity

Job

Specification

Requirement

Suggest

in

selecting

vendors

Ensure output

meet his

Requirements

Receive PNC, RFQ

copy, Get MAC

Approval

Raise RFS in GPS once

everything in place

Letter of Conformity

As sole Representative

Sending RFQs, Check for

conformity of vendors

Ensure quotes are signed

by all members in PNC

Prepare comparison sheet, and

circulate to committee

members, well in advance

Organize PNC; inform the

members and vendor well in

advance about the meeting

Ensure confirmation, Request a

revised quote from vendor, if

vendor agrees for price and terms

Store all PNCs in a server,

and advice activity

owners for item/service

5.5 PURCHASE ORDER

A written sales contract between buyer and seller detailing the exact

merchandise or services to be rendered from a single vendor. It will specify payment

terms, delivery dates, item identification, quantities, shipping terms and all other

obligations and conditions. Purchase orders are generally system generated, numbered

documents generated by the retailer's financial management system which shows that

purchase details have been recorded and payment will be made.

Purchase order is further divided into two types

Global Procurement system (GPS)

Employee Self Service (ESS)

5.5.1 Global Procurement System:

It is mainly used to procure general items and capital specific items and materials

purchase.

In this process the user or finance person in the campus raises the request it

goes to a series of hierarchy which consists of team head, vice president, and soon

passes to 12 level authentications depending up cost and requirement at any level it

may be rejected. Once if all the authentications are done, It comes to Admin

Department where the Purchase Officer raises the purchase order and sends to the

vendors, and the vendor supplies the goods and sends the receipts with the delivery

Chelan to the admin department where they approve it and send to finance department

for payments, They will check for the accuracy of the bills and sends to Mumbai head

office for payment, where they will pay the amount to vendors by NEFT if any

problem rises in the entire process it will send back to admin department for

rectification or clarification.

Main documents required to process this are

Standard Work Order number (SWON)

PNC number / Management Approval Committee (MAC) number

Agreement Copy

5.5.2 Employee Self service (ESS):

It is mainly used to procure project specific items or items which are personally

required for a specific branch

In this process the user or the team head or finance person in the office places

the order under ESS it can be directly send to vendor once it is approved by team

head, Vice President and send to finance department for approval once if all the bills

are clear they are send to Mumbai head office for payment

Main documents required to process this are

1. Standard work order number (SWON)

2. Management approval committee (MAC) number

3. Tax Invoice Copy

List of Abbreviations and Acronyms:

GPS Global Procurement System

ESS Employee Self Service

RFS Request for Service

MSR Miscellaneous Service Request


RTGS Real Time Gross Settlement

Table 5.2 List of Abbreviations and Acronyms

5.5.3 Purchase Order Process Overview

Fig 5.2 Figure showing the overview of a PO Process

MISSING DOCS

REQUIRED

INFORMATION

SEEK FOR

RECTIFICATION

5.6 Integrated Process of PNC and PO

PRICE NEGOTIATION COMMITTEE

PURCHASE ORDER

Fig 5.3 Figure showing the AP Process with the integration of PNC and PO

Approve

Requirements

of Activity

Job

Specification

Requirement

Receive PNC, RFQ

copy, Get MAC

Approval

Ensure output

to meet his

requirements

raise RFS in GPS

Sending RFQs, Check for

conformity of vendors

Ensure quotes are signed

by all members in PNC

ADMIN RECEIVES

CONFIRMATION

OF SHIPMENT

RECEIVES

DOCUMENTS

FROM VENDORS

RECEIVES GOODS

AT LOCATION

DRAFTS PO RECTIFICATION

IN PO

M

A

C

PNC COPY, APPROVAL MAIL,

AGREEMENT COPY, PAN

NEFT DETAILS

DELIVERY CHELAN,

INVOICE COPY, TAX

INVOICE

QUERIES

??? TRANSFER OF PAYMENTS

VIA NEFT/RTGS

SEEK

CLARIFICATIONS

UNAPPROVED

REQUIRED

INFORMATION

UNAPPROVED

6. Query Analysis

6. Query Analysis in Purchase Orders:

The main objective of Query Analysis is to have an exclusive look at

How AP Departments are doing an Extreme Makeover

Implement a scorecard to track resolution of purchasing exceptions.

Reveals AP‘s Experiences with Invoice Imaging

How to Induce Faster and Better Expense Reports From Travelling Employees

Basic Accounting and Journal Entry Preparation Every AP Staffer Should

Know.

Best Practices in AP Customer Relations Initiatives

6.1 Query Analysis Month-on-Month Report

Queries Frequency %

Non presentment of supporting documents 2 3

Charging of Service Tax 41 63

Need of authorised signature 6 9

Errors due to entry 9 14

Non conformance with the present day Service

Tax 1 2

Reference to Closed Pos 1 2

Failure of non unique invoice numbers 1 2

Debit note missing 4 6

Total 65 100

Table 6.1 Frequency of Queries for April 2009

Fig 6.1 Shows Ratio of Frequency of Queries for April 2009

3

63

9

14

2 2 2

6

Frequency of queries for April 2009

Non presentment ofsupporting documents

Charging of Service Tax

Need of authorisedsignature

Errors due to entry

Non conformance withthe present day ServiceTaxReference to Closed POs

Failure of non uniqueinvoice numbers

Debit note missing

6.2 Frequency of Queries for May 2009

Queries Frequency %



Attachment approval Mail copy 14 11

Delay in creating vendor name in ultimatix 2 2

Error due to entry 2 2

Requirement of PAN# and NEFT details 3 2

Non arrival of items 2 2

PO# not unique 1 1

SWON # missing 3 2

Inappropriate vendor name 21 16

Credit note required 1 1

Invoice Number not unique 29 22

Total 132 100

Table 6.2 Frequency of Queries for may 2009

Fig 6.2 Shows Ratio of Frequency of Queries for May 2009

2

39

11

2 2 2

2

1 2

16

1 22

Frequency of queries for May 2009 Non presentment ofsupporting documentsCharging of Service Tax

Attachment approval MailcopyDelay in creating vendorname in ultimatixError due to entry

Requirement of PAN# andNEFT detailsNon arrival of items

PO# not unique

SWON # missing

Inappropriate vendor name

6.3 Frequency of Queries for June 2009

Queries Frequency %

Non presentment of supporting

documents 2 9


Inappropriate routing of claims 13 57

Debit not required 1 4


SWON # missing 1 4

Missing Invoice # 1 4

Total 23 100

Table 6.3 Frequency of Queries for june 2009

Fig 6.3 Shows Ratio of Frequency of Queries for June 2009

9 13

57

4 9 4 4

Frequency of queries for June 2009



Inappropriate routingof claims

Debit not required

Error due to entry

SWON # missing

Missing Invoice #

6.4 Frequency of Queries for July 2009

Queries Frequency %


PAN# and NEFT details

missing 1 25

Total 4 100

Table 5.4 Frequency of Queries for July 2009

Fig 6.4 Shows Ratio of Frequency of Queries for July 2009

6.5 Frequency of Queries for August 2009

Queries Frequency %


documents 3 17

Signature of the concerned authority 15 83

Total 18 100

Table 6.5 Frequency of Queries for August 2009

75

25

Frequency of queries for July 2009

Error due to entry

PAN# and NEFTdetails missing

17

83

Frequency of queries for August 2009


Signature of theconcerned authority

Fig 6.5 Shows Ratio of Frequency of Queries for August 2009

6.6 Frequency of Queries for September 2009

Queries Frequency %

Signature from Admin 1 3

Charging of Service tax 1 3

Approval from VP 2 5

Signature of Vendor 2 5

Non attachment of approval mail 28 72



documents 1 3

NEFT details missing 1 3

Total 39 100

Table 6.6 Frequency of Queries for September 2009

3

3

5 5

72

8

3

3

Frequency of queries for September 2009

Signature from Admin

Charging of Sevice tax

Approval from VP

Signature of Vedor

Non attachment ofapproval mail

Error due to entry


NEFT details missing

Fig 6.6 Shows Ratio of Frequency of Queries for September

2009

6.7 Frequency of Queries for October 2009

Queries Frequency %



Approval Mail for extended stay by the

associate 10 53

Vendor Signature Missing 2 11

Total 19 100

Table 6.7 Frequency of Queries for October 2009

Fig 6.7 Shows Ratio of Frequency of Queries for October

2009

11

26

53

11

Frequency of queries for October 2009

Non attachment ofapproval mail

Error due to entry

Approval Mail forextended stay by theassociate

Signature missing

6.8 Frequency of Queries for November 2009

Queries Frequency %

Charging of Service tax 4 7

Approval from VP 2 3

Credit note required from vendor 2 3

Debit note required from TCS 3 5


Improper format for invoice 5 8

Improper filing of invoices 2 3

Improper routing of invoices 3 5

Non attachment of tax breakup(soft copy) 1 2

Non attachment of WON/SWON (soft copy) 1 2

SWON # missing 4 7

Amount mismatch between PO and Invoice 8 13

Non unique invoice # for FY 2 3


Non presentment of supporting documents

(PO) 21 34

Total 61 100

Table 6.8 Frequency of Queries for November 2009

Fig 6.8 Shows Ratio of Frequency of Queries for November 2009

7

3 3

5 3

8

3

5

2 2

7 13

3 2

34

Frequency of queries for November 2009

Charging of Sevice tax

Approval from VP

Credit note required fromvendor

Debit note required fromTCS

Error due to entry

Improper format forinvoice

Improper filing ofinvoices

Improper routing ofinvoices

Non attachement of taxbreakup(soft copy)

Non attachment ofWON/SWON (soft copy)

6.9 Frequency of Queries for December 2009

Queries Frequency %

Credit note not issued from vendor 1 1

Approval from ISU head 5 6

Authorised signature from VP 19 21

Charging of appropriate ST and VAT 2 2

Improper address of TCS facility in invoice 19 21


Non Presentment of supporting documents(PO) 3 3

Invoice date missing in invoice 2 2

Mismatch in the items arrived and items in

invoice 2 2

PO against Govt 1 1

Improper routing of PO 2 2

WON/SWON missing 3 3

Tax break up not shown explicitly in invoice 1 1

Mismatch in the amount in PO and invoice 1 1

Mismatch between amount in invoice and PO 1 1

Incomplete PAN# and NEFT details 5 6

Non unique Invoice # for the FY 2 2

Total 90 100

Table 6.9 Frequency of Queries for December 2009

Fig 6.9 Shows Ratio of Frequency of Queries for December 2009

1

6

21

2 21

23

3

2 2 1 2

3 1 1 1

6 2

Frequency of queries for Dec 2009 Credit note not issued fromvendor

Approval from ISU head

Authorised signature from VP

Charging of appropriate STand VAT

Improper address of TCSfacility in invoice

Error due to entry

Non Presentment ofsupporting documents(PO)

Invoice date missing in invoice

Mismatch in the items arrivedand items in invoice

PO against Govt

Improper routing of PO

WON/SWON missing

Tax break up not shownexplicitly in invoice

Mismatch in the amount in POand invoice

Mismatch between amount ininvoice and PO

Incomplete PAN# and NEFTdetails

Non unique Invoice # for theFY

6.10 Frequency of Queries for January 2010

Query Frequency %

Non presentment of documents 4 10


Need of authorised signature /approval 9 22




SWON # Missing/Incorrect 10 24

Bills held for clarification 7 17

PAN Number required 1 2

Total 41 100

Table 6.10 Frequency of Queries for Jan 20010

Fig 6.10 Shows Ratio of Frequency of Queries for Jan 2010

10 5

22

10 5 5

24

17 2

Non presentment ofdocuments


Need of authorised signature/approval

Errors due to entry

Failure of non unique invoicenumbers

Debit note missing

Frequency of Qureies for Jan 2010

6.11 Frequency of Queries for February 2010

Queries Frequency %


Charging of Service Tax /VAT 12 2



Non conformance with the present day Service

Tax

1 0

Reference to Closed Pos 8 1


Duplicate invoices 12 2

Bills held for clarification/approval 20 3


Missing invoices 2 0


NEFT data required 2 0

PO needed to be raised 18 3

Items not received 1 0

Errors in MISC. Service 15 2

Total 657 100

Table 6.11 Frequency of Queries for Feb. 2010

Fig 6.11 Shows Ratio of Frequency of Queries for Feb. 2010

1

2

73

7

0 1

0

2

3 4

0

0 0

3

0

2

Non presentment of supportingdocumentsCharging of Service Tax /vat

Need of authorised signature/approvalErrors due to entry

Non conformance with thepresent day Service TaxReference to Closed POs

Failure of non unique invoicenumbersduplicate invoices

bills held forclarification/approvalSWON # MISSING/INCORRECT

Missing invoices

Debit note missing

neft data required

po needed to be raised

items not recived

errors in misc service

FREQUENCY OF QUERIES FOR FEB 2010

6.12 Frequency of Queries for March 2010

Queries Frequency %

Charging of Service Tax /vat 1 5




Correction in Invoices 2 10


Billing Address Mismatched 6 30

PAN No required 1 5

Errors in MISC. Service 1 5

Total 20 100

Table 6.12 Frequency of Queries for march 2010

Fig 6.12 Shows Ratio of Frequency of Queries for March 2010

1

4

3

1 2

1

6

1 1

Frequency Of Qureies for March 2010

Charging of Service Tax /vat

Need of authorised signature/approval

Errors due to entry

SWON # MISSING/INCORRECT

correction in invoices

Debit note missing

Billing Address Mismatched

pan no required

6.13 Consolidated Frequency of Queries for FY2009-2010

Queries Frequency %

Non presentment of documents 74 6.53

Charging of Service Tax 121 10.67

Need of Authorised Signature / Approval 590 52.03

Errors due to entry 82 7.23

Mismatch in the items arrived and items in

invoice 2 0.18

Errors related to pos 54 4.76

Debit note missing 13 1.15

Errors with missing / wrong vendor details 41 3.62

Non arrival of items 3 0.26

SWON # missing/Incorrect 47 4.14

Inappropriate routing 18 1.59

Errors in invoice 63 6.56

Amount mismatch between PO and Invoice 10 0.88

Errors in MISC. service 16 1.41

TOTAL 1134 100

Table 6.13 Consolidated Frequencies of Queries for FY2009-2010

Fig 6.13 Shows Ratio of Frequency of Queries for the year 2009-10

74 121

590

82 2

54

13

41 3 47 18

63

10 16

Consolidate Frequency of Queries for FY 2009-2010 Non presentment of documents


Need of authorised signature /approval

Errors due to entry

Mismatch in the items arrivedand items in invoice

errors related to pos

Debit note missing

errors with missing / wrongvendor details

Non arrival of items

SWON # missing

Inappropriate routing

errors in invoice

Amount mismatch between POand Invoice

errors in misc service

7. Findings and recommendations

7 Finding and recommendations of most common Queries in FY 09-10:

7.1 Non Presentment of Documents:

This is a Query Concerned with Finance Department related to Purchase Order.

The main problem occurs due to improper scanning/attachment of the documents

to the mail. The most frequently occurred queries in this category are:

Missing of PNC Letter

Agreement Copy

Tax Invoice Copy

Suggestion:

These Types of Errors are very few; these can be handled easily by

careful observation and monitoring.

Provide Forgotten Attachment Detector (FAD) feature in

workflow mails to alert employees to check for attachments before

mailing the Documents.

7.2 Queries Involved in Taxation

7.2.1 Charging of Service Tax:

This Query is concerned with all Admin, Finance and Purchase

Department. It is a vital error predominantly due to non proper tracking

of service tax rate and Educational CESS.

7.2.2 Charging of Value Added Tax:


Department. It is a vital error predominantly due to non proper tracking

of VAT rate which is influenced by Union Budget every Fiscal Year and

changing of VAT rates between interstate transactions.

7.2.3 Charging of Central Sales Tax:


Department. It is an error predominantly due to non proper tracking of

CST rate which is influenced by Union Budget every Fiscal Year

7.2.4 Non charging of Taxes:


Department. It is an error due to Non-specification of SEZ Area

Delivery Locations in the Purchase Order.

7.2.5 Charging of CST instead of VAT:


Department. The Employees are not aware of the categorization of taxes

on the goods.

7.2.6 Miscalculation in Tax

This Query is raised as the vendors calculate the tax incorrectly in the

invoices.

Suggestions:

Specify SEZ location clearly in the Delivery Address of PO (If Applicable).

So that the vendor and PO officer can easily resolve issues in the tax

holidays.

Closely monitor the Service Tax change and must be carefully updated

regularly with reference to Central Union Budget for every FISCAL YEAR.

Add a feature in GPS and ESS PO Process for categorizing the VAT rates

into 4% and 12.5% depending on the nature of the goods they are placing

orders.

Depending on the nature of the Goods, The PO requisite can

automatically select either GPS/ESS; The PO will automatically allocate the

applicable charges to a particular good. Thus it can prevent the error due to

manual entry to a greater extent.

Department of sales tax comes out with notification at frequent intervals for

both VAT and CST So accordingly the system should frequently updated

with the new notifications.

In case of intra-state transaction. The ERP should detect point of transfer

and delivery of goods. In case of inter-state transaction VAT is charged.

Based on point of sale

7.3 Need of Authorised Signature / Approval:

This is Query concerned with Admin Department due to missing of Signature

from the Concerned Authorized Authority.

Suggestions:

Eliminate invoice approvals for routine and recurring expenses. Use a

Blanket Approval instead of Serial Approval, Where a Blanket Approval

is subjected to Internal Control and Internal Audit.

Reduce the number of individuals who must review invoices for

approval.

7.4 Errors due to entry:

This Query is concerned with Finance Department. This is due to improper

counting of invoices and improper comparison of the scanned with the physical

hard copy of invoices. It is mainly caused due to the human activity but not due

to the error in the process.

Suggestions:

Invoices should be scanned properly and checked with the help of an

IDR (Intelligent Document Recognition) Technology it automatically

reduces the work burden and avoid unnecessary errors in Purchase

Orders.

7.5 Queries related to Purchase Order:

This Query is concerned with Finance, Purchase and Admin Departments. There

are different kinds of queries in processing a PO such as

7.5.1 Reference to Closed Pos

This query is raised due to a PO being pointed to an old PO raised

sometime before Instead of referencing to a new PO.

7.5.2 PO Number not unique

This query is raised due to Usage of same PO Number.

7.5.3 Amount mismatch between PO and Invoice

This query is raised due to lack of verification between PO and Invoice.

7.5.4 PO against Govt

This query is raised because there is no need to raise a PO against

government as all the payments are made by cheques but not by NEFT.

These are useful for internal purposes.

Suggestions:

Ensure that PO is referred appropriately.

To avoid Duplicate PO numbers provide check bits in PO number while

entering in to excel sheet which helps to find error while entering itself.

Use IDR to match PO and Invoice to avoid manual errors and rework.

Make Employees aware of the creation of a PO and when not to create a

PO.

Categorize the goods which require PO in the system as a default.

7.6 Debit note missing

This query is raised due to frequent missing of producing Debit note by the

Purchase Department.

Suggestion:

Proper Attachment of Debit Note with the use of IDR to save time.

7.7 Errors with missing / wrong Vendor details

This query is concerned with Finance Department. The following are the some

common Queries that usually come across in Details of the Vendor

Delay in creating Vendor Name in Ultimatix

Inappropriate Vendor Name

Signature of the Vendor

Requirement of PAN/NEFT Details

Suggestions:

Make sure that the Vendor name is created immediately after the PNC

meeting is completed.

Make Use of Intelligent Document Recognition (IDR) Technology to process

invoices and avoid wrong names in the invoices and POs

Make Vendor to abide by the Policies, Terms and Conditions of TCS that

vendor need to comply. Make a standardized agreement and conformity of

the vendors. This helps in avoiding simple mistakes like missing signature of

vendor, non-unique invoice numbers.

Make sure the vendor attach all the supporting documents including Debit

note, PAN/NEFT details with the help of Forgotten Attachment Detector

(FAD) Technology.

7.8 SWON # Missing/Incorrect

This Query is concerned with all Admin, Finance and Purchase Departments.

This query is raised due to miss out or expiry of the SWON number.

Suggestions:

Make sure that the SWON number is not expired before making a

purchase.

Create a background check process in AP Process in GPS/ESS to ensure

that the SWON is locked and is not expired before the full and final

settlement of the bill to the vendor.

7.9 Inappropriate routing:

This Query is concerned with the Admin Department. The inappropriate

routing involves

7.9.1 Inappropriate routing of claims raised by employees in ESS:

This Query is raised due to wrong routing of claims by employees in

inappropriate channel which causes the delay of payment

7.9.2 Inappropriate routing of Invoices:

This Query is raised due to wrong routing of Invoices.

7.9.3 Inappropriate routing of PO:

This Query is raised due to wrong routing of GPS and ESS.

Suggestions:

Benchmark the AP Process and Make sure the workflow is ideal with

minimum approvals.

Make a clear hierarchical flow for the work flow to various departments

and minimise the delays and Approval times and optimise the AP

Process in making payments to the vendors.

7.10 Queries in Invoices:

These Queries are concerned with all Admin, Purchase and Finance

Departments. The Queries Raised in Invoices is

7.10.1 Invoice Number not unique:

The Query is raised due to improper numbering of invoices by the

vendor. As the vendor prints a book of invoices for a year, next year he

prints another book of invoices with the same invoice numbers. This

creates duplicate invoice numbers.

7.10.2 Missing Invoice Number:

The Query is raised due to improper invoice number which is not

stamped in the invoice.

7.10.3 Improper Filing / Format of Invoices:

This Query is raised due to non-fulfilment of payment requirements.

7.10.4 Date missing in the Invoices:

This Query is raised due to Error made by Vendor in writing date in the

invoices.

7.10.5 Correction in Invoices:

This Query is raised due to any correction to be made in the invoice

w.r.t payment terms, Date, Address etc. fields in the invoice format.

7.10.6 Amount mismatch between PO and Invoice

This Query is concerned with Finance Department. This is raised due to

lack of verification of documents.

Suggestions:

Vendors should maintain a standard trimmed invoice format which must

contain mandatory fields like

Name, Complete Address of Vendor should include Local

Address

Name and location of the delivery location of TCS Branch as

mentioned in PO.

Invoice No (Must Be Unique), Date

Proper Authentication from the vendor

Description of the goods/service with amount clearly specified

individually as mentioned in PO.

Applicable taxes (differentiated) should be calculated accurately

as per PO it should be shown separately on the invoice excluding

bill.

Tax Invoice should be mentioned with required Registration Nos.

or one time Registered Certification copies should be provided to

Finance for TIN No., VAT No., WCT No., ESIC No., CST No.,

Service Tax No., MSMED Registration No., PAN No.

Terms and conditions (if required),

Required Statutory forms should be mentioned.

Make use of IDR and drag the necessary fields of scanned copy of

invoice like Invoice number, Date, Address fields without manual

intervention. IDR is smart enough to identify the invoice based on the

supplier. Based on the supplier‘s invoice format – extract the necessary

data off the invoice.

Appropriate Project Number has been written on the Invoice for correct

accounting of expenses and asset addition against that Project Number.

IDR solves the issues related to missing invoices, improper filing of

invoices, and Date and Delivery Address location of invoices.

IDR helps in auto-check of amounts with reference to POs thus help in

reducing human effort.

7.11 Intelligent Document Recognition (IDR):

Document capture software featuring IDR technology can help to further reduce

document keying from the invoiced images. Capture software with this technology is

able to read and extract data from the invoice without manual intervention. In fact,

some capture systems are smart enough to identify the invoice based on the supplier,

and – based on the supplier‘s invoice format – extract the necessary data off the

invoice (invoice number, vendor number, line item data, amount, etc.) and

immediately populate that data within the ERP system.

The biggest drawback to capture systems with this functionality is price.

Typically, only companies with a high volume of invoices can justify the purchase of

this software. Properly deployed, however, such systems have been able to reduce

data entry costs by more than half.

Fig 7.1 Figure showing a sample Invoice copy of a vendor

The implementation of IDR technology is expensive to smaller enterprises in

which the amount of invoices they handle is less. But IDR is much handy for big

organizations whose invoice base is huge and it proves as a big deal and value for

money.

Fig 7.2 Figure showing the scanned copy of invoice using an IDR

7.12 Forgotten Attachment Detector (FAD):

The Forgotten Attachment Detector (FAD) is a snippet which can be integrated

in a workflow mail, which helps in collect data on its usefulness. Like other

Forgotten Attachment Detectors on the web, when you send an email FAD checks it

for keywords that indicate you‘ve forgotten to attach an attachment. If it detects this,

it notifies you and gives you a chance to correct any mistakes.

FAD can be enhanced to even check for file formats as well. FAD can be used

to check for attachments like an image, a document, or a PDF. In our scenario FAD

can be helpful in detecting the attachments containing following documents

PNC Letter

Agreement Copy

Tax Invoice Copy

FAD can help you avoid the risk of a forgotten email attachment, saving you

time and embarrassment. FAD can be integrated as an add-in to internal e-mails and

workflow mails. It'll recognize when you reference an attachment in the text of your

email but don't attach any files and show you a reminder before it sends your message.

With the integration of these IDR and FAD modules the following queries can

be resolve to a greater extent.

Non presentment of documents

Errors due to entry

Debit note missing

SWON # missing/Incorrect

Amount mismatch between PO and Invoice

Duplicate/Incorrect Invoice and PO numbers

Vendor details

7.13 Business Process Reengineering:

Business Process Reengineering is also known as Business Process Redesign,

Business Transformation, or Business Process Change Management. Business process

reengineering is one approach for redesigning the way work is done to better support

the organization's mission and reduce costs. Reengineering starts with a high-level

assessment of the organization's mission, strategic goals, and customer needs. The

Analysis and Design of Accounting Process workflows and processes within an

organization. A business process is a set of logically related tasks performed to

achieve a defined business outcome Re-engineering is the basis for many recent

developments in management.

Many recent management information systems developments aim to integrate a

wide number of business functions. Enterprise resource planning, supply chain

management, knowledge management systems, groupware and collaborative systems,

Human Resource Management Systems and customer relationship management

systems all owe a debt to re-engineering theory.

The accounts payable (AP) process can be reengineered by streamlining all

procedures to improve efficiency while cutting costs. This reengineering procedure

can be accomplished in two phases. In the first phase, the traditional three-way A P

match is reduced to a two-way match. Then, in the second phase, this two-way match

is reduced further to a one-way match. To ensure that this changeover from three-way

complexity to one-way simplicity is completed as efficiently as possible, certain

measures should be taken to support the changeover. These include the strengthening

of controls on the receiving end, the streamlining of the vendor payments system, the

aligning of pricing to eliminate discrepancies and the development of an expert system

to assist disbursement. Other measures that can facilitate the changeover are

improving recordkeeping at the purchasing end and making price adjustments.

Thus BPR helps in optimizing the Accounts Payable Process by reducing the

processing costs, avoiding improper routing of GPS/ESS, improvising the workflow

of the purchase order, improving the efficiency, setting better Business Rules.

AP Process System Automation

Fig 7.3 The Process flowchart explains in detail about redefining the AP process

with the help of a Uni-Search Store

In processing an invoice and a Purchase order of any organization, the AP

Process involves capture, classify and index the internal and external documents,

which are presently in the form of paper or host reports, mail, fax and email.

By automating the Additional Authorization Rules based routing via single or

multi-tier Authorization(s) either timed automated follow-up reminders for PO

purchases as well as NON PO purchases. Automating the process of match the check

to the voucher packet and archive in unisearch inquiries. AP reports are archived for

network access. The process benefits are,

Lowering Processing Costs – Image-based processes typically cost less than

the same paper-based processes. Electronic solutions provide network access to

documents; eliminating copying, faxing, mailing, filing and storage costs.

Process Automation – Electronic routing, tracking and online approval of

invoices and voucher packets enable Accounts Payable departments to increase

efficiency.

Business Rules – Automated application of business rules allow personnel to

focus on exception processing.

Increase Efficiency - Voucher paperwork is automatically matched and filed

electronically for easy access, eliminating piles of paper on desks and the

manual matching of paper.

Reporting – Gain management control with employee productivity reporting.

8. Provision

8. Provision for Expenses:

The main objective is to ensure that appropriate recognition criteria for

expenses and measurement bases are applied to provisions and that sufficient

information is disclosed in the notes to the financial statements to enable users to

understand their nature, timing and amount.

Accounting Standards specify whether expenditures are treated as assets or as

expenses. These issues are not addressed in AS29. Accordingly, this Standard neither

prohibits nor requires capitalisation of the costs recognised when a provision is made.

8.1 Managing the Risk:

Risk describes variability of outcome. A risk adjustment may increase the

amount at which a liability is measured. Caution is needed in making judgments under

conditions of uncertainty, so that income or assets are not overstated and expenses or

liabilities are not understated. However, uncertainty does not justify the creation of

excessive provisions or a deliberate overstatement of liabilities. Care is needed to

avoid duplicating adjustments for risk and uncertainty with consequent overstatement

of a provision.

Provisioning process for Accounts Payable include

Monthly expense analysis of actual against provision

Monthly historical spend analysis

Month close variance analysis

Filing monthly statutory and regulatory returns

8.2 Consolidated Provisions for the FY 2009-10

After comparing the month on month expenses for this FY. The provisional data

tracks various natures of expenses that are incurred in a month. This data helps the

management to take managerial decisions to reduce the expenses there by the

companies can cut the working capital costs. These expenses are inevitable and it is

very important for finance department to keep track of this kind of expenses right

from a branch level.

The following Pie-chart illustrates 66 different kinds of expenses that can have

provision where the nature of expenses can fluctuate by the usage. So it is very

important for any organization try to minimize the fluctuations expenses against

provision month on month, so that there can be optimal utilization of internal

resources of the organization in their spend management.

Thus provisions do help the organizations in predicting the future requirement

and how to utilize and allocate the resources optimally.

CONSOLIDATED REPORT OF EXPENSES FOR FY APR09-MAR10

Fig8.1 FIGURE SHOWING CONSOLIDATED REPORT OF EXPENSES FOR

FY APR09-MAR10

9. Summary of suggestions

9. Summary of suggestions:

All the suggestions that are briefly discussed in the report. Their summary is

given bellow

Use of an IDR (Intelligent Document Recognition) Technology which

automatically reduces the work burden and avoid unnecessary errors in

Purchase Orders. Process and increases efficiency.

Provide Forgotten Attachment Detector (FAD) feature in workflow mails to

alert employees to check for attachments before mailing the Documents.

Use a Blanket Approval instead of Serial Approval, Where a Blanket Approval

is subjected to Internal Control and Internal Audit.

Standardise ESS process such as GPS which will reduce errors of ambiguity.

To avoid Duplicate PO numbers provide check bits in PO number while

entering in to excel sheet which helps to find error while entering itself.

Make sure that the SWON number is not expired before making a purchase and

Create a background check process in AP Process in GPS/ESS to ensure that

the SWON is locked and is not expired before the full and final settlement of

the bill to the vendor.

Make sure that the Vendor name and other details related to bank and other

details required are created immediately after the PNC meeting is completed.

Make Employees aware of PO process by giving them regular training and

informing them with FAQ‘S regularly.

Categorize the goods which require PO in the system as a default.

Closely monitor the changes around you such as sez areas monitory and fiscal

policy and other changes occurring around and educate the suppliers and staff

about it to reduce errors with wrong taxation.

10. Conclusion

10. Conclusion:

The study of AP process in TCS proved that it is the best practice that most of

the big companies are following in their Spend Management in the world. There is

always a scope for improvement in PNC, PO processes, because due to problems that

the employees are facing in dealing with invoices, Purchase orders. This AP process

helps in establishing a good relationship with their vendors and suppliers. The above

suggestions will help the organization to minimize the delays and errors due to human

intervention in the AP process. Based on Query Recording System maintained by the

employees helped us in understanding the problems in existing AP process better.

Leveraging on the IDR and FAD Technology and latest enhancements that are

happening in MIS and ERP systems. It is beneficial for a big organization like TCS to

make use of technology that surely help in reducing the strain of the employees thus

improving the productivity of AP process.

11. Bibliography:

Accounts Payable Benchmarking Initiatives, by the Institute of Management

&Administration, Inc IOMA Inc.

Managing Accounts Payable, by the Institute of Management &Administration,

Inc IOMA Inc.

AP Process Efficiency, by the JASON LAMON Senior Marketing Manager

Oracle.

ICAI Journals, Delhi

IFRS Journals

Cost and Management Accountant Journals, Kolkata

NASSCOM Reports on Indian IT Sector

TCS Annual Reports

Appendix

List of Abbreviations and Acronyms

RFQ Request For Quote

CFT Cross Functional Team

SME Subject Matter Expert

HR Human Resource


SOP Standard Operating Process

SWON Standard Work Order Number

GPS Global Procurement System

ESS Employee Self Service

RFS Request for Service

MSR Miscellaneous Service Request


RTGS Real Time Gross Settlement

IDR Intelligent Document Recognition

FAD Forgotten Attachment Detector

NEFT National Electronic Fund Transfer

MIS Management Information System

ERP Enterprise Resource Planning

PNC Price Negotiation Committee

TIN Tax Identification Number

PAN Permanent Account Number

VAT Value Added Tax

WCT Work Contract Tax

ESIC Employees‘ State Insurance Corporation

CST Central Sales Tax

Po Process

Documents

Transcript of Po Process