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Total Environment Building Systems PrivateLimited

 Automatic Payment Process 

Created by: Rajendra M.Prasad Date of creation: 23rd February, 2009

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1.1.1.1. Automatic Outgoing Payments

Questions: 

Q: 1) How do you post payments? Which G/L accounts are used? Which additionalaccount assignments (for example, cost centers) do you need for bank postings,bank charges accounts, cash discount accounts, and exchange rate differences?

 A: a) By Using T.code F-53 we do the posting of payments,b) GL accounts are used as follows.GL account  Bank account  Remarks 125000 Axis Bank All kinds of Vendor payments124100 Citi Bank EMI payments for which PDC’s or standing

instructions issued124500 HDFC Bank Salary payments

c) As of now we are not using any additional account, however we will notdiscount if any valuable additional accounts that can be used.

d) For Bank charges, presently we are entering manually by referring to bankstatement

e) Presently not having any cash discount accounts. If it is not a roundabout wecan contemplate introduction of accounting for cash discount facility.

f) Exchange rate differences do arise, as there are overseas payments dealingwith other currencies.

Q: 2) Do you wish to clear vendor invoices at the time of payment {or at the time thebank statement is posted (Phase II)}?

 A: We wish to clear vendor invoices at the time of payments. We are not clear whatdo you mean by clearing at the time of posting bank statements. Please elucidate.

Q.3 – Q-3 is Missing, we assume it is not relevant to us.

Q: 4) How often do you make automatic payments?

 A: Presently there is no automated payments system. Manual analysis of pendingpayments is being analysed on day-to-day basis.

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Q: 5) From which bank account(s) do you make payments? List the bank accountsby payment method, by foreign currency, or any other criteria relevant for bankselection.

 A: Bank Name Bank account  Foreign Currency Payment Method  Axis Bank 300010200000675 INR Cheque/Manager’s

cheque/ Demand Draft/Real Time Gross Transfer (RTGS)/Wire transfer for foreignremittances

HDFC Bank 0077232000002656 INR Cheque/Manager’scheque/ Demand Draft/Real Time Gross Transfer (RTGS)/Wire transfer for foreignremittances

Citi Bank 0900781008 INR Cheque/Manager’scheque/ Demand Draft/Real Time Gross Transfer (RTGS)/Wire transfer for foreignremittances

Q: 6) Whether All House bank master data is available or not?

 A: All the House bank has been created. (In production). It is to be noted that wedon’t operate presently , Incoming account, outgoing account and Main account.Directly transactions are effected in Main account.

Q: 7) How do you handle bank charges?

 A: As specified in reply (d) to Q.1,bank charges are handled manually at the time ofreconciling the bank statement with the books of accounts..

Q: 8) How do you handle Cash Discount?

 A: As specified in reply (e) to Q.1, Presently not having any cash discountaccounts. If it is not a roundabout we can contemplate introduction of accounting forcash discount facility

Q: 9) What information do you include in payment advice?

 A: Vendor name, vendor address, particulars of payments made, vendor invoicenos, tax or other deductions made, advance adjustments if any etc.,Suggest us anexhaustive standard format containing the information amongst other things mentionedherein. We would like to introduce annexure where the payment advice is not suffices theinformation that we want to furnish.

Q: 10) How do you process your payment differences?

 A: By accounting debit note or credit notes or reversals as the case may be,presently payment differences are being adjusted manually by passing necessary Journals.

Q: 11) how many vendor masters do you have?

 A: Roughly 2300 Vendors

Q: 12) Which are the payment methods do you have? Like Cash, Cheque DD, EFT,

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RTGS etc:

 A: We use following payment method.Cheque/Manager’s cheque/ Demand Draft/Real Time Gross Transfer (RTGS)/Wiretransfer for foreign remittances

Q: 13) Do you have any pre printed cheque format, and advice format?

 A: Not readily, however we can arrange the same from the respective banks , asthere will be a standardized format for each of the banks..

Q: 14) If You Have ECS Facility with you banks, what is the Process, which are allthe banks?

 A: Generally we have given ECS facility for our EMI payments of vehicle loans andother secured loans wherein at periodical agreed intervals, debits will come to ouraccount automatically from our banker’s end. 

Q: 15) Kindly explain the authorization matrix (if any) when making Payment

 A: All payments are being authorized presently by Chairman and MD , planned tointroduce the authorization matrix once robust and well guarded APP and cheque printingfacility is contemplated

Q: 16) Kindly explain the cheque approval process before printing cheques

 A: Once the bills are processed by relevant delegated authorities, payment is beingauthorized by Senior Manager- Accounts upon which manual cheque is prepared and send itfor approval and signature as mentioned in serial no . 15 above.

Q: 17) Is any workflow exist in the present system for authorization / approval? If Yes,please elaborate the same

 A: Refer to the S.no.16, as of now there is no formal documented work-flow thatexists. NO SOP’s documented, with the help of you we can certainly do this and legalise thesame.

Q: 18) On what basis you decide the house bank while payment? Any fixed priority isthere, if multiple bank exists?

 A: Normally we are using selective bank-Axis, Marthahalli, as we are having cash-credit arrangements, for salaries we are also using HDFC bank Account (ITPL Branch)besides Axis, as mentioned earlier.

1.1.2. Vendor Payments

Questions: 

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 Q: 1) How do you handle payables to vendors that are also customers?

 A: We don’t have vendors who are also as customer as of now , but it is not ruledout for future. Presently we have vendors and customers in inter-companies.

Q: 2) How do you handle credit memos?

 A: Presently by passing manual interventions through JV’s-FB 65 & F-41

Q: 3) How do you handle cash discounts?

 A: Presently not having any cash discount accounts. If it is not a roundabout we cancontemplate introduction of accounting for cash discount facility.

Q: 4) Are you using Payment terms ? If so please list all Payment Terms which arein use

 A: No Payment terms being used , picked up for payment on need basis.

Q: 5) Whether all Payment Terms are configured as per credit policy with vendors?Do you foresee any new payment term configuration?

 A: As specified in previous question the question of configuration presently does notarisen. However, we should plan when we move APP

1.1.2.1. Others

Questions: 

Q: 1) How do you release invoices that have been blocked for payment?

 A: Presently we have not foreseen this. Want to get more elucidation.

Q: 2) Explain VOID Cheque process which are currently in place?

 A: Through manual intervention, reversal or cancellation entries are being made.

Q: 3) Do you need cheque reprint functionality? A: On regular basis no. In case of emergencies sufficient in-built measures andproper escalation of authorities are to be put in place for re-printing. Similar like

Form-16 issued for Income-tax purposes.

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Consultant  – Rajendra M Prasad Business Process Owner