1.

INTRODUCTION

Page 1
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.

Page 2
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

Page 3
 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.

Page 4
2. Industry Profile

Page 5
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, re- engineering, 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.

Page 6
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.

Page 7
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

Page 8
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.

Page 9
2.6 SWOT Analysis - IT & ITES Industry
Strengths
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
Opportunities
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
Weakness
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.
Threats
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.
Page 10
2.7 Porter’s Five Forces Model (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
1. Bargaining Power of
Customers: Large
Rivalry among firms is Number of IT
high: Companies Vying for
IT projects results in
1. Commoditized offerings high competition for
2. Low-cost, ‗little projects
differentiation‘
2. Huge Decline in IT
positioning
Expenditure: Indian IT
3. High Industry Growth
Sector is dependent on
4. Strong Competitors
US and BFSI in
5. Few Number of Large
particular for majority
companies
of its revenues and
within the recent
financial crisis, the new
spending has been
reduced tremendously

Barriers to Entry:

1. Low Capital Requirements,

2. Large Value Chain,
3. MNCs are Ramping up capacity
4. Employee strength

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

Page 11
3 Company Profile

Page 12
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.

Page 13
 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.

Page 14
4 Literature Review

Page 15
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.

Page 16
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.

Page 17
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.

Page 18
5. Accounts Payable process.

Page 19
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

Page 20
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.

Page 21
 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.

Page 22
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.

Page 23
 5.4.5 PNC PROCESS OVERVIEW

Approve the Requirements

GM ADMIN of Activity

Receive PNC, RFQ

copy, Get MAC
Job Ensure output
Suggest Approval
meet his
Specification in Requirements
ACTIVITY Requirement selecting
vendors
OWNER
Raise RFS in GPS once
everything in place
IF VENDOR IS AN
OEM

AD

OEM Letter of Conformity

As sole Representative

Sending RFQs, Check for

conformity of vendors
Ensure confirmation, Request a
revised quote from vendor, if
vendor agrees for price and terms

Ensure quotes are signed Organize PNC; inform the

PURCHASE by all members in PNC members and vendor well in
OFFICER advance about the meeting Store all PNCs in a server,
and advice activity
(SECRETARY
owners for item/service
PNC) Prepare comparison sheet, and
circulate to committee
members, well in advance

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

Page 24
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

Page 25
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
MAC Management Approval Committee
RTGS Real Time Gross Settlement
Table 5.2 List of Abbreviations and Acronyms

Page 26
5.5.3 Purchase Order Process Overview

MISSING DOCS

REQUIRED
INFORMATION

SEEK FOR
RECTIFICATION

Fig 5.2 Figure showing the overview of a PO Process

Page 27
 5.6 Integrated Process of PNC and PO

PRICE NEGOTIATION COMMITTEE PURCHASE ORDER

Approve ADMIN RECEIVES RECEIVES

Requirements
UNAPPROVED CONFIRMATION DOCUMENTS
of Activity OF SHIPMENT FROM VENDORS

Receive PNC, RFQ

Job copy, Get MAC
Specification Approval RECEIVES GOODS
Requirement AT LOCATION
M
Ensure output REQUIRED
to meet his INFORMATION
requirements A
raise RFS in GPS
C
Sending RFQs, Check for
conformity of vendors
RECTIFICATION
DRAFTS PO
IN PO
Ensure quotes are signed
by all members in PNC UNAPPROVED

PNC COPY, APPROVAL MAIL,

AGREEMENT COPY, PAN
NEFT DETAILS

DELIVERY CHELAN,
INVOICE COPY, TAX
INVOICE

SEEK
CLARIFICATIONS

QUERIES TRANSFER OF PAYMENTS

??? VIA NEFT/RTGS

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

Page 28
6. Query Analysis

Page 29
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

Page 30
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

Frequency of queries for April 2009

Non presentment of
supporting documents

Charging of Service Tax

222 Need of authorised

6 3 signature
14
Errors due to entry
9
63 Non conformance with
the present day Service
Tax
Reference to Closed POs

Failure of non unique

invoice numbers

Debit note missing

Fig 6.1 Shows Ratio of Frequency of Queries for April 2009

Page 31
6.2 Frequency of Queries for May 2009
Queries Frequency %
Non presentment of supporting documents 2 2
Charging of Service Tax 52 39
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

Frequency of queries for May 2009

Non presentment of
supporting documents
2 Charging of Service Tax

22 Attachment approval Mail

1 39 copy
Delay in creating vendor
16 name in ultimatix
11 Error due to entry

Requirement of PAN# and

2 NEFT details
1 222 Non arrival of items

PO# not unique

2
SWON # missing

Inappropriate vendor name

Fig 6.2 Shows Ratio of Frequency of Queries for May 2009

Page 32
6.3 Frequency of Queries for June 2009
Queries Frequency %
Non presentment of supporting
documents 2 9
Charging of Service Tax 3 13
Inappropriate routing of claims 13 57
Debit not required 1 4
Error due to entry 2 9
SWON # missing 1 4
Missing Invoice # 1 4
Total 23 100
Table 6.3 Frequency of Queries for june 2009

Frequency of queries for June 2009

Non presentment of
supporting documents
Charging of Service Tax
4 4 9
4 9 13 Inappropriate routing
of claims
Debit not required
57
Error due to entry

SWON # missing

Missing Invoice #

Fig 6.3 Shows Ratio of Frequency of Queries for June 2009

Page 33
6.4 Frequency of Queries for July 2009
Queries Frequency %
Error due to entry 3 75
PAN# and NEFT details
missing 1 25
Total 4 100
Table 5.4 Frequency of Queries for July 2009

Frequency of queries for July 2009

25
Error due to entry

75 PAN# and NEFT

details missing

Fig 6.4 Shows Ratio of Frequency of Queries for July 2009

6.5 Frequency of Queries for August 2009
Queries Frequency %
Non presentment of supporting
documents 3 17
Signature of the concerned authority 15 83
Total 18 100
Table 6.5 Frequency of Queries for August 2009

Frequency of queries for August 2009

Non presentment of
17 supporting documents
Signature of the
concerned authority

83

Page 34
 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

Error due to entry 3 8
Non presentment of supporting
documents 1 3
NEFT details missing 1 3
Total 39 100
Table 6.6 Frequency of Queries for September 2009

Frequency of queries for September 2009

Signature from Admin

Charging of Sevice tax

3 3
5
8 33 5 Approval from VP

Signature of Vedor

72 Non attachment of
approval mail
Error due to entry

Non presentment of
supporting documents
NEFT details missing

Page 35
 Fig 6.6 Shows Ratio of Frequency of Queries for September
2009

6.7 Frequency of Queries for October 2009

Queries Frequency %
Non attachment of approval mail 2 11
Error due to entry 5 26
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

Frequency of queries for October 2009

Non attachment of
approval mail
11 11

26 Error due to entry

53
Approval Mail for
extended stay by the
associate
Signature missing

Fig 6.7 Shows Ratio of Frequency of Queries for October

2009

Page 36
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
Error due to entry 2 3
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 attachment of approval mail 1 2
Non presentment of supporting documents
(PO) 21 34
Total 61 100
Table 6.8 Frequency of Queries for November 2009

Page 37
 Frequency of queries for November 2009

Charging of Sevice tax

Approval from VP

Credit note required from

vendor

Debit note required from

3 TCS
3
7 5
34 3 Error due to entry
8

5 Improper format for

13 7 invoice
3
2
3 Improper filing of
22
invoices

Improper routing of
invoices

Non attachement of tax

breakup(soft copy)

Non attachment of
WON/SWON (soft copy)

Fig 6.8 Shows Ratio of Frequency of Queries for November 2009

Page 38
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

Error due to entry 21 23
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

Page 39
 Frequency of queries for Dec 2009
Credit note not issued from
vendor
Approval from ISU head

Authorised signature from VP

Charging of appropriate ST
and VAT
Improper address of TCS
facility in invoice
Error due to entry

1
1 11 Non Presentment of
3
12 6 2 6 supporting documents(PO)
2 2 21 Invoice date missing in invoice
3
Mismatch in the items arrived
and items in invoice
23 2 PO against Govt
21

Improper routing of PO

WON/SWON missing

Tax break up not shown

explicitly in invoice
Mismatch in the amount in PO
and invoice
Mismatch between amount in
invoice and PO
Incomplete PAN# and NEFT
details
Non unique Invoice # for the
FY

Fig 6.9 Shows Ratio of Frequency of Queries for December 2009

Page 40
6.10 Frequency of Queries for January 2010
Query Frequency %
Non presentment of documents 4 10
Charging of Service Tax 2 5
Need of authorised signature /approval 9 22
Errors due to entry 4 10
Failure of non unique invoice numbers 2 5
Debit note missing 2 5
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

Frequency of Qureies for Jan 2010 Non presentment of

documents
17 2 10 Charging of Service Tax
5

22 Need of authorised signature

/approval
24
Errors due to entry
5 10
5
Failure of non unique invoice
numbers
Debit note missing

Fig 6.10 Shows Ratio of Frequency of Queries for Jan 2010

Page 41
6.11 Frequency of Queries for February 2010
Queries Frequency %
Non presentment of supporting documents 8 1
Charging of Service Tax /VAT 12 2
Need of authorised signature /approval 482 73
Errors due to entry 49 7
Non conformance with the present day Service 1 0
Tax
Reference to Closed Pos 8 1
Failure of non unique invoice numbers 1 0

Duplicate invoices 12 2
Bills held for clarification/approval 20 3

SWON # Missing/Incorrect 24 4
Missing invoices 2 0
Debit note missing 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

Page 42
 FREQUENCY OF QUERIES FOR FEB 2010
Non presentment of supporting
documents
Charging of Service Tax /vat

Need of authorised signature

/approval
0 Errors due to entry
2 0
0 0 0 1 Non conformance with the
3 present day Service Tax
1 4 3 2 2
0 Reference to Closed POs
7
Failure of non unique invoice
numbers
duplicate invoices

73 bills held for

clarification/approval
SWON # MISSING/INCORRECT

Missing invoices

Debit note missing

neft data required

po needed to be raised

items not recived

errors in misc service

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

Page 43
6.12 Frequency of Queries for March 2010
Queries Frequency %
Charging of Service Tax /vat 1 5
Need of authorised signature /approval 4 20
Errors due to entry 3 15
SWON # Missing/Incorrect 1 5
Correction in Invoices 2 10
Debit note missing 1 5
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

Frequency Of Qureies for March 2010

Charging of Service Tax /vat

Need of authorised signature

1 1 /approval
1
4 Errors due to entry

6 SWON # MISSING/INCORRECT

3
correction in invoices
1 1
2
Debit note missing

Billing Address Mismatched

pan no required

Fig 6.12 Shows Ratio of Frequency of Queries for March 2010

Page 44
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

Page 45
 Consolidate Frequency of Queries for
FY 2009-2010 Non presentment of documents

Charging of Service Tax

Need of authorised signature /

approval
Errors due to entry

10 16 Mismatch in the items arrived

18
41 3 47 74
and items in invoice
63
13 121 errors related to pos
54
2
82 Debit note missing

errors with missing / wrong

vendor details
590
Non arrival of items

SWON # missing

Inappropriate routing

errors in invoice

Amount mismatch between PO

and Invoice
errors in misc service

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

Page 46
7. Findings and recommendations

Page 47
7 Finding and recommendations of most common Queries in FY 09-10:
7.1Non 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:
This Query is concerned with all Admin, Finance and Purchase
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:
This Query is concerned with all Admin, Finance and Purchase
Department. It is an error predominantly due to non proper tracking of
CST rate which is influenced by Union Budget every Fiscal Year

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7.2.4 Non charging of Taxes:
This Query is concerned with all Admin, Finance and Purchase
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:

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

Page 49
  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
7.3Need 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.

7.4Errors 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.

7.5Queries 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.

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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

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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.
7.8SWON # 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.

7.9Inappropriate 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.

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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.
Page 53
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.

Page 54
 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

Page 55
 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.

Page 56
 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

Page 57
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.

Page 58
 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.

Page 59
 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.

Page 60
8. Provision

Page 61
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.

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 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

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9. Summary of suggestions

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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.

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10. Conclusion

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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.

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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

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Appendix
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
GPS Global Procurement System
ESS Employee Self Service
RFS Request for Service
MSR Miscellaneous Service Request
MAC Management Approval Committee
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

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