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I would like to express my profound gratitude to MR. A.D. JOSHI & Mr.S.S.MUTALIK (external Guide, Finance manager Tata Motors ltd.), under whose guidance, I gained deeper insights into the subject matter. His constant support provided the right direction to my analysis and helped me understand the subject. I feel immense pleasure to express my sincere gratitude to MR.R.V.PETHE (Assistant General Manager, Finance), MR. PANCHBHAI (Manager HR) for giving me an opportunity to work with Tata Motors as a project trainee. Special thanks goes to my internal guide, MR.HEMANT SONAWANE for helping me to complete the report as well as the challenging research that lies behind it and thanks to our PRINCIPAL DR.J.K.DATTAGUPTA Without their encouragement and constant guidance I could not have finished this report. I would like to deeply thank the various people, during the two months in which this Endeavour lasted, provided us with useful and helpful assistance. Without their care and consideration, this project report would likely not have matured.

Sr. No. 1. 2. PAGE NO.

Content Executive Summary Title, Objective and Scope of the Project Company Profile a. History


b. Vision &mission c. Milestones d. Product

Theoretical Background A. An overview of Account Payable System a. Introduction b. Meaning and Definition 4. c. Role of Account Payable d. Objective B. Vendor Master Process C. Account payable material (schedules)

5. 6. 7. 8. 9. 10.

Research Methodology Schedule analysis & interpretation Findings & suggestion Limitations & conclusion Annexure Bibliography




SWOT profile

Transferability of work. Good brand image. Well established marketing & service network. Adequate human resource. Good infrastructure.

OPPORTUNITY WEAKNESS Huge Domestic market potential. Export opportunity to provide larger market share reach. Tax concession from Government. Car penetration in India. Growing consumer culture.


Lack of flexibility. Connection between different locations.

Any Major Slowdown in the Economy. (Recession) could impact TMLs Revenue & profitability. Substitute products. High interest rates. Credit unavailability. Fuel prices. Input cost.


Introduction of shared services: Department of shared services is newly formed department in TATA Motors Limited. It is a branch of Finance Department. In 1980s shared services has started life in US. It is process of high value, low cost transactions for finance functions. Shared services has to provide the services like account payable (Material), account payable (services), employee payroll & pension funds, fixed asset, employee travel expenses, General Ledger & close the books etc. A shared service was a multi-step process. The first step of shared service was to have finance & accounting (F & A) function, which has segregated into business planning & financial accounting department. The process of migration to shared service was also debated & judicious mix of Standardize, Re-engineer & Consolidate. As implementation of shared service would involve significant process changes, deployment of new technology & migration of work to a central location, the senior leadership very Cleary recognized the importance of change management & communication. Objective of shared service: The main objective of shared service is to provide centralized processing of accounting for its different units. The major work is to consolidate & process the inputs provided by different department of different units. Objectives: 1. To provide a standard route of maintenance of accounts for all units. 2. To avoid wastage of time & money by reduction in duplication of work. 3. To provide standard & quick consolidated accounts. 4. To use uniform principles of accounting for different units.

5. There will be no duplication of services in business units, once the service is designed as a shared service. 6. Service will be changed at a rate to cover fully loaded costs. 7. The shared service organization will report annually to the corporate executive committee on costs & satisfaction level.

Vision & Mission Statement of the Shared Services Centre:TML has formulated their Vision & Mission statement which is communicated to all Employees of the Shared Services Center. Vision statement:TMLs Vision is To be a World Class Shared Services Mission statement:Tata Motors Mission is to provide:a.Total customer satisfaction:To be highly customer focused, practice high Ethical Standards, and be Transparent in all Dealings with our customer. b. Best in class processes:Deploy efficient process which are well controlled as well which have appropriate performance measures b.Services at lowest cost:Attain a high level of automation in transaction processing, encourage creativity in work & innovative thinking to get break through improvements. In order to ensure that they implemented the best practices right from inception, the senior leadership of the Shared Services Center got themselves thoroughly acquainted with the concepts & practices related to Shared Services.

Benefits of the Shared Services Center:-

Shared Services Center has following benefits. a. Higher Transaction Processing Accuracy & Efficiency (Quality). b. Standardization of processes. c. Data Integrity. d. Better synergy.


SCOPE: finance TRANSACTION & ADMINISTATIVE: Accounts payable, payroll, fixed asset, G/L & close of the books. PROFFESION & TECHNICAL: Finance analysis, business case support, and capital planning.


System and Applications Product (SAP) is the German software, which is the founded in 1972.It, is the third largest software company in the world. Today, company has nearly 1000 partners. SAP employees more than 22,000 people in more than 50 countries. It sells two products called R/2 & R/3. The company has supplied only the R/3 software which is used for all financial, HR & plant maintenance transactions. Real time means that you will have immediate information. SAP is also known as the ERP software. ERP stands for Enterprise Resource Planning. In ERP solution there is only one database that is used by all departments such as sales, production, finance & accounting, maintenance & engineering, purchasing etc. ERP has module like Production, finance & accounting, sales & distribution modules etc. Each module consist of the best business practice that can be implemented for that industry. Ex: - Manufacturing Company.

SAP is the newest software program to enter the worldwide market. It is used in 7500 companies around 90 countries, because SAP has incorporated all the functions of a business into one system. It is also referred to as an Integrated Software System. Each department in a business needs to share their information with different department in that same business. SAP solves this datasharing problem by incorporating all of these different functions into one system, therefore, making information from one department available to another department immediately. This data sharing in an organization makes the business run smoother & become more universal.



Fixed Asset is an asset with a useful life of more than one year that is held for investment or used for producing income & it is not consumed or sold in the ordinary course of business. Fixed Asset is also called as Capital Asset. Fixed Asset in shared services are includes basically, Land & Building, Plant & Machinery, Railway-siding, Water system, Furniture & Fittings, Technical know-how, Vehicles & Transport, Etc.

A firm sells goods for cash & credit. Credit is used as a marketing tool by a number of companies. When the firm extends credit to its customer, debtor (Accounts Receivables) is credited in the firms accounts. Debtors are convertible into cash over a short period & therefore are included in current assets. The liquidity position of the firm depends on the quality of debtors to a great extent.

ACCOUNTS PAYABLE (MATERIALS) Account payable (Material) process is very important in shared services. The person who has to pay the sum of amount to vendors in specific period as well as specific account, then it is called as account payable. This amount may be paid on Inventory, Raw Material for manufacturing any products. Etc.

ACCOUNTS PAYABLE (SERVICES) Generally, person has to use the services with the help of Electricity bill, Water bill and Telephone bill. Etc. this services is nothing but Invisible services It is one type of Invoices which is Included Goods Inwards Note (GIN). In case of any company or organization there are services like Purchasing of software, Gardening, Training, Transportation, Maintenance, Capital payment, Certify bill, Chassis transportation, Travel management. Etc. All these services are account payable (services) in the shared services. Certification of all the services is must in shared services. Certifications of all the services are manual. In shared services, payment for over 200 different types of services availed by various department or locations. Finance department processed these based on receipt of paper Invoices from the services provider & certification by the agency availing the services.

In Employee payroll system, basically included salaries paid to employee. The payroll of all employees in TATA Motors irrespective of where they are located is processed centrally from the shared services. In this system company has know about the personnel information of employee. Basically, personal information of employees is as follows, Name of employee, address of employee, Area of employee, Sub-area of employee, Personnel no of employee, ID number of employee, Employee status.etc.

The General Ledger is the core of a companys financial records. These constitute the central Books of a system, & every transaction flows through the General Ledger. These records remain as a permanent track of the history of all financial transaction.


Introduction of Accounts Payable system: Account is formal record that represents, in words, money or other unit of measurement, certain resources, claims to such resources, transactions or other events that result in changes to those resources and claims & Payable means amount owed to a creditor for delivered goods or completed services. Hence accounts payable means nothing but an expense that has been incurred but not yet paid. Accounts payable is a file or account that contains money that a person or company owes to suppliers, but has not paid yet (a form of debt). When you receive an invoice you add it to the file, and then you remove it when you pay. Thus, accounts payable is a form of credit that suppliers offer to their purchasers by allowing them to pay for a product or service after it has already been received. The accounts payable processes have a significant impact on the profits of a business. Companies spend huge amounts of money every year to process invoices, perform purchase order matching, address defects and respond to vendor inquiries. If the accounts payable system is not effective, a company has to bear the additional cost of late payment penalties, missed discounts, duplicate payments and rework. With an increased focus on cost reduction and improved fiscal management, executive management teams are realizing the benefits of an effective accounts payable process.

Meaning and Definitions of Accounts Payable:

According to Financial Dictionary; Money owed to suppliers, An expense that has been incurred but not yet paid.

According to Don Hofstrand, Account payable: An amount owed to a supplier for good or services purchased on credit; payment is due within a short time period, usually 30 days or less; according to Berenson LLP Certified Public Accountants. According to Glossary; account payable means Money which a company owes to vendors for products and services purchased on credit. This item appears on the company's balance sheet as a current liability, since the expectation is that the liability will be fulfilled in less than a year. When accounts payable are paid off, it represents a negative cash flow for the company, examples: Money that you owe to your suppliers and other creditors will be recorded as transactions in the accounts payable ledger. Accounts payable is the obligation that a business owes to its creditors for buying goods or services. That is, it is the unpaid invoices, bills or statements for goods or services rendered by outside contractors, vendors or suppliers. Accounts payable are sometimes referred to as "Payables". Eg: When you pay your monthly utility, phone, cable TV bills, or internet service provider (ISP) bills, you are in a sense paying off your accounts payable obligations.

Accounts payable is also used to refer to the unit within an organization's accounting department that manages these payments. The accounts payable unit often oversees a variety of tasking which

may include authorizing purchase orders, collecting credit card receipts, organizing account withdrawals, and keeping the general ledger, and auditing expense reports. Other accounting transactions that an organization's accounting department may manage includes accounts receivable, which focuses on the billing of customers, and payroll, which focuses on paying the salaries to the organization's employees. The job of the accounts payable administrator is a serious responsibility. Paying bills on time and according to the specific terms and conditions can affect company credit ratings and ultimately business relationships.

Commonly, a supplier will ship a product, issue an invoice, and collect payment later, which creates a cash conversion cycle, a period of time during which the supplier has already paid for raw materials but hasn't been paid in return by the final customer. Certain companies, most famously Dell [citation needed], have been able to profit handsomely by reversing the conversion cycle: they receive payment before they ship the product. Instead of granting credit to their customers, they receive it from them. The firm may delay payment for materials and production of sold output (sales). This will cause accounts payable (suppliers credit) to increase. Since account payable is included in expenses, they overstate actual cash payments. Thus, increases (or decrease) in accounts payable should be subtracted from (or added to) expenses for computing actual cash payments. The powerful Accounts Payable library of accounting and reporting features facilitates rapid entry of vendor invoices, flexible cash disbursement and full

check reconciliation using Bank Services. Expense administration is

usually closely related to accounts payable. Accounts Payable makes it easier to manage the detailed information which the company requires.

Role of Account Payable System in the organization: The accounts payable system controls the disbursement of funds to outside organizations. As part of this process, it retains subsidiary ledger information for thousands of vendors and thus becomes a vital tool, providing management with an abundance of information relating to vendor activity. Effective and efficient accounts payable processing is important for several reasons: The accounts payable system is one of the main sources of general ledger activity. Because of the disbursement of funds, accounts payable is a likely place for fraud to occur. The relationship between customer & supplier can be greatly influenced by the accounts payable services. The nature of the accounts payable system makes it a prime target for periodic auditing. The primary role of the accounts payable system is to process payments to vendors for both trade and administrative payables. In addition to this, most businesses use the system as a centralized disbursement system for paying other demands, such as customer refunds or employee expense advances.

Objectives of Account Payable System:

The accounts payable processes have a significant impact on the profits of a business. Companies spend huge amounts of money every year to process invoices, perform purchase order matching, address defects and respond to vendor inquiries. If the accounts payable system is not effective, a company has to bear the additional cost of late payment penalties, missed discounts, duplicate payments and rework. With an increased focus on cost reduction and improved fiscal management, executive management teams are realizing the benefits of an effective accounts payable process. The accounts payable system is a totally integrated and consistent sub-system of the general ledger system. Maintain good relationship with supplier: Flexibility is critical to meeting the unique needs of the suppliers, and accounts payable provides the tools to help to build and maintain efficient, personalized supplier partnerships. Whether a supplier prefers electronic funds transfers (ETFs), drafts, or paper checks, Enterprise One supports individual payment terms and ensures the recognition of preferences. You can handle prepayment, specific information, and multicurrency payments requests. And, you and your suppliers save time with self-service functionality for independent supplier review of vouchers and payments within your Accounts Payable system. Establish Prompt, Efficient Invoice Processing: With Accounts Payable, you have the flexibility to meet your unique business requirements whether you process multiple recurring invoices or high-dollar prepayments. The system automatically calculates taxes, discounts, and currency conversions based on your preconfigured specifications. This capability enables you to take full advantage of discounts and pay your suppliers according to their terms, without interrupting the accounts payable process.

Manage Cash Effectively: An effective cash management approach takes maximum advantage of discounts while maintaining your suppliers preferred payment methods. Accounts Payable allows you to consider a virtually unlimited number of variables before submitting payment to a supplier, including date due, discount offered, and amount of cash on hand. Whether you pay vouchers automatically or manually, the result is always controlled, efficient, and accurate. You can organize your vouchers and have Accounts Payable handle the payments or select vouchers for manual, split, or partial payments based on current cash requirements. On a supplier-by-supplier basis, online inquires allow you to review information quickly, such as balances forward and open items, before authorizing payments. Accounts Payable provides timely and accurate information on cash flow, aging information, and discount opportunities. With online access to real-time supplier information, payment history, and vouchers, you are able to improve supplier relationships, negotiate better contracts, and control cash flow
















PAYMENT RUN (Payment made to vendor/bank)




Local cheques Cheque generated on due date which is handed over to bank.

A/C to A/C transfer



P2P materials have been documented as a mega process. The initiation for the mega process happens at the procurement planning and ordering stage through indenting and authorization is done through approval of price and release of Delivery schedule/ purchase order to the vendor. Recording of purchases is documented at the receipt stage, processing is documented at the processing of payables and payment run.


1. Receipt of goods: Objective: : To monitor trucks turnaround time within the premises. : To ensure inbound delivery is performed accurately &completely to populate purchase order (PO) & vender details in SAP, to enable accurate &timely preparation of GIN.

2. Generation of LECI: Objective: : To monitor truck turnaround time within the premises. : Material transporter who arrives at the material gate are provided with a visual basic generated token for orderly entry into TML premises. : When the transporter arrive at the material gate , CRDO/GDC team member verifies the delivery challan /invoice &prepares LECI. Single print out of the LECI is generated &is sent to stores , along with the material &GIN TAG for stores acknowledgement.

3 .GIN preparation: Objective: : Goods Inward Note is prepared by the CRDO/GDC team member to record the receipt of materials. : Financial entry for receipt of materials is recorded in SAP on Preparation of GIN. 1. GIN through inbound delivery route. 2. GIN through PO route. 3. GIN for MASOP/ Repair transactions. 4. GIN in case of import of materials. 4. Unloading Authorization Slip (VAS): Objective: :To ensure accurate &complete recording of receipt of goods in a timely manner through preparation of UAS. :UAS is prepared in case of following circumstances; This SAP system is not available. Imports (where MIRO is not done by Excise cell Finance) PO is locked. PO is not available. No power supply. is later converted to GIN after material are verified

&acknowledge by stores. :Three copies are printed , one copy is retained with CRDO &two copies are sent along with transporter(one affixed by security) for store acknowledgement. 5. Excise Posting: Objective: : To ensure CENVAT is availed accurately and completely for applicable cases.

: Excise Cell-CRDO and Excise cellfinance handle the posting of duties. Domestic, MASOP, Repairs Excise Cell (CRDO/GDC): After preparation of GIN, excise posting is done for availing excise credit in case of excisable goods. Imports Excise Cell (Finance): It performs MIRO posting to avail Countervailing Duty. 6.Invoice Data Entry(MIRA): Objective: : To ensure the invoice is recorded accurately and completely in the system in a timely manner to facilitate payment to vendors. : MIRA is performed to capture Invoice details in SAP to perform three way matching and facilitate invoice verification process. A control report is verified by Officer Shared services to identify duplicate MIRA and the same are deleted.

7 .Material receipts &store acknowledgement: Objective: : To ensure that quantities received are recorded accurately. : The materials cleared through CRDO (Central Receipt Documentation Office) are received at the Stores. The concerned Stores Officer unloads the material and he receives all documents except invoice. : If the physical quantity received at Stores is different from the quantity for which GIN is prepared, the documents back to CRDO for creation of new GIN. : In case of Imported material ,if there damages, the stores officers informs the shared services for filing insurance claim.

8. VQA Inspection:

Objective: : Vender Quality Assurance (VQA) department performs quality assurance activity, to ensure material of good quality are accepted &recorded in timely manner. : To ensure that reject quality materials are not accepted. : To ensure correct updating of stock ledger for rejected material. : To ensure changes made to inspection &are authorized correct. 9. Vender Master Creation: Objective: : To ensure that VM is created with accurate document duly authorized as per authorization matrix for all approved request received in timely manner. : To ensure blacklisted venders are blocked/eligible venders are unblocked at appropriate level. : To ensure all changes carried out are confirm by senior officer to avoid any incorrect updates of venders.

10. Error Clearance MIR6 (manual): Objective: : To ensure that invoices which are not posted through automatic route are cleared and posted accurately through manual error clearance route in the correct accounting period.

11. Debit note: Objective: : To ensure that debit notes are raised accurately and in the relevant period. : Debit notes are categorized into 5 types: 1. Penalty Debit Notes. 2. Line rejection debit notes

3. Debit notes for MASOP items not received within 180 days. 4. Debit notes for Dies sent to Vendors. 5. Debit notes for warranty. 12. BMS interest accounting: Objective: : To ensure that all interest payable to banks are accounted timely and accurately. : In this process the amount of interest debited by bank, in case of Hundi transactions, is reconciled with amount of interest calculated by TML. : Company accepts Hundi from the vendor. On the date of discounting of Hundi, bank debits the interest to the company account. Bank sends the details of Hundi to TML. : On the receipt of the details, Officer-SS checks the Hundi control number & the interest which specified by bank. If there is any major difference, the interest calculation is checked as per rate & number of days. 13. Hundi run: Objective: : : Hundi is generated for all eligible documents for correct amount on right vendors at correct locations having payment terms as AP10 to AP19 & payment method as Y. : The suppliers, who want to enroll under the Hundi payment terms, negotiate with the Purchase agencies. 1.9% discount is availed from such vendors in the basic rates. : The decision for payment through Hundi is taken at the PO stage, and Hundies are generated after Invoice verification is completed. Hundies are generated in the name of the bank as specified in vendor master.

: Hundies are generated for documents having payment method as Y only. Hundies are generated for the net credit balance in each business area. 14. Hundi distribution: Objectives: : All Hundies generated are distributed to right vendor at right time. : The Hundies are distributed on daily basis. The Hundi distribution is done at the main gate at 3.00 pm on all days except bank holiday. : The Hundies generated and printed are received from HDFC bank, covering all banks. : The Hundies are sorted vendor code wise and then distributed by Supervisor (SS). : Hundies which are not distributed are kept in a file for 89 days and monitored on a daily basis. 15. Payment run (Domestic): Objective: : To ensure accurate and timely payment to appropriate vendors and accurate recording of the same. : In this process, payments are released to vendors towards their supplies of materials, services, taxi refund and free service bills. : Vendor payments processed through normal payment run are either paid through cheque or through account to account transfer. Vendors who have accounts with HDFC Bank, direct credit transfer are paid through this process. 16. Advance /immediate (online) payment: Objective: To ensure timely and accurate release of advance and urgent payments based on appropriate approvals. This process deals with processing and payment of advance/immediate payment/payment against proforma invoice. This

process is performed based on requests from purchase officers. After verifying the details given in their request with the PO, a payment document is generated and an online payment voucher duly signed by an officer and approved by authorized signatory, is sent for payment. Urgent payments are also released through Online Payment Process.

17. payment run for advance /immediate payment: Objective: : To ensure timely and accurate release of advance and urgent payments based on appropriate approvals. Officer-SS receives payment vouchers/email duly authorized as per authorization matrix. Advance includes trade advance which is paid based on request form vendor, recommendation from purchase officer and approval as per the delegated powers. The vendor submits the bank guarantee and the post dated cheque as per the above repayment schedule. 18. Clearing of vendor accounts (Domestic): Objective: To ensure that the contra accounts are completely and accurately cleared in timely manner (Automatic clearing) To ensure that the amounts approved by the management is transferred to the consumption account in the same financial year (Manual clearing) To ensure that the amount is recovered and paid in proper times (Manual clearing) 19. Processing of cheque received from vendor: Objective:

To ensure accurate settlement of accounts against debit note in the correct period. To ensure that the trade advance installment is accurately adjusted against the trade advance in a timely manner. To ensure that close of books (COB) is performed in timely manner.

20. Tax deduction at source (TDS) Deduction and verification: Objective: :To ensure that all the companies deduct the tax at source while making provisions/payments whichever is earlier to the vendors within the due date. It is mandatory for the company to deduct the tax at source while making provisions/payments whichever is earlier to the vendors. TDS is deducted in respect of all transactions relating to services provided by contractors/ Professionals, RENT, MASOP charges/Interest other than securities/ Commission and brokerage. TDS is deducted at the time of Invoice Verification/Advance Payment whichever is earlier. Post verification, Officer, SS forwards the excel sheet to respective locations specifying the amount of TDS to be paid through email. 21. Payment of TDS to government: Objective: To ensure that the amount of TDS within due date. To ensure that the amount of TDS has been credited to respective TDS/GL account for the month should be paid to the central government on ore before 7th of next month.

22. Challan updation and certificate printing:

Objective: : To ensure accurate and complete updation of TDS and bank challan updation and certificate printing. Challan updation: The challan updation program is carried out after the payment of TDS into the central Govt. Bank Challan Updation: This activity is performed to update the external challan number as appearing on counter foil given by bank, date of TDS payment against all cleared documents where challan updation is done. Certificate Printing: After the bank challan updation activity is over, the jobs for certificate printing are carried out. The spools numbers are informed to TTL. 23. Quarterly TDS return Filing: Objective: : To ensure that the annual return is filed within stipulated time. The Quarterly TDS returns are filed as per the format prescribed in Form No.26Q in E form. QTDS is filed for all location i.e. JSR, Lucknow, Mumbai and Pune each having a different TAN number. After the file is validated, a statistical report is generated giving the details like TDS deducted, TDS paid, number of dedicatee records, Gross amount paid, PAN details etc. The amount of tax deducted & paid is checked as per the TDS GL accounts in Trial balance to ensure that all documents are considered with correct amounts for filing the QTDS return. 24. C form generation and printing (Maharashtra &

Uttranchal): Objective: To ensure that C form is obtained on prescribed form by government under sales tax rules. To ensure accurately and timely dispatch of C forms to vendor.


MEANING OF RESEARCH: Research is an Endeavour to discover intellectual & practical answers to problems through the application of scientific methods to the knowable Universe. Research is systematic & redefined technique of thinking, Research starts with the problems, collect data or facts , analyses them critically & reaches decision based on actual decision. Research is advance of knowledge, which is a scientific Endeavour of the human mind.

DEFINITION OF RESEARCH: According to KARL PEARSON, There is no shortcut to the truth, no way to gain knowledge of the Universe except through the gateway of scientific method.

According to P.V.YOUNG, A method of studying , analyzing & conceptualizing social life in order to extend , modify ,correct or verify knowledge , whether that knowledge aids in construction of theory or in the practice of an art. METHODS & SOURCE OF DATA COLLECTION: The two main sources of data collection in research are, 1. Primary data 2. Secondary data

A) PRIMARY DATA: Primary data is the information collected during the course of an experiment during experimental research. A data can be collected through actual working. Its called as primary data. There are several methods of collecting primary data like ,observation method, interview method , questionnaires etc. For this, prior study was important & for this I had to go through the various processes and Account Payable System of the company to get an idea about the process is done actually. The collection of primary data requires

considerable time. In this research the Primary data were obtained by actual working with those managers who are involved in this process. OBSERVATION: OXFORD DICTIONARY DEFINES, Accurate watching & noting of phenomena as they occur in nature with regard to cause & effect or mutual relations. The observation method is the most commonly used method especially in studies relating to behavioral sciences. In a way we all observe things around us, but this sort of observation is not scientific observation. Observation becomes a scientific tool & the method of data collection for the researcher, when it serves a formulated research purpose, is systematically planned & recorded & is subjected to check & controls on validity & reliability. Under the observation method, the information is sought by way of investigators own direct observation with / without asking the respondent. Observation helped me to get a jest of the process. It just gave me an idea that the transactions are processed in Procurement to Payment Material process and transactions are verified and control with different types of controls in system. Observation by asking questions to the manager. That gave me an idea how actual control is done in SAP. B) SECONDARY DATA: Secondary data means data i.e. already available in various reports , diaries, letters , books etc. Secondary data is that, which has been used previously for any research & is now in use for the second time. For this project, sources for secondary data included Procurement to payment Material Process, vender accounts and Financial of the Company.

CHAPTER: 06 Schedule Analysis & Interpretation

Analysis & interpretation of Schedule March 2008 & 2009 are based on the following four criterions: Creditors ageing. Abnormal items Variance in amount of vendors Business area

a) CREDITORS AGEING: Creditors ageing is a criteria based on which the outstanding creditors can be judged. One can also check out for the reasons of the vendors still being not paid. This option allows one to analyse the outstanding amounts one owes to his/her creditors in periods such as current, 30, 60 and 90 days, or more. This analysis is essential for cash flow control. One may also wish to use this facility to schedule the payments to creditors, to optimise ones cash flow management. The policy that TML is credit period of 30 days, for direct payment vendors. b) ABNORMAL ITEMS: Generally the abnormal items which appear in the GL accounts of the creditors are some critical items i.e. if certain GL accounts are having the entries of all debit balances and if there is an entry which is of a credit nature then such credit entry is said to be the ABNORMAL ITEM. For eg. Debit balance in creditors schedule & credit balance in debtors schedule. c) VARIANCE IN AMOUNT OF VENDORS FOR TWO FINANCIAL YEARS: In this type of analysis GL accounts are analyzed based on the overall increase/ decrease in the total balance of the account for two consecutive financial years i.e. 2008 & 2009.

d) BUSINESS AREA: TML carries out its business processes through various locations & all the accounting transactions are centralized at the Pune plant in its Shared Services Department. The major business areas are as follows: Location Code P010 L010 J010 M010 U010 MSPA CO10 Name of the Location Pune Lucknow Jamshedpur Mumbai Uttaranchal Spare parts Car plant

Variances at location are analyzed for particular business area.

ACCOUNT NO: 118100 DESCRIPTION: Advance to Suppliers For all business areas.

EXPLAINATION: The account shows the advances given to vendors for which goods or services are yet to be received. Journal entries are, Advance A/C..Dr. To bank A/C Inventory A/C.Dr. To GR/IR A/C GR/IR A/C..Dr. To vender A/C Vendor A/C..Dr. To advance A/C On comparing the two different periods, it is observed that there is a substantial decrease in the year March 2009 as compared to March 2008 by Rs. 16 lakhs. Company has to pay the advances to vendors in some cases such as; The terms finalized with vendor are advance against purchase order and the same are reflected in the purchase order as advance payment. Generally these payment terms are offered to the vendors having supplies of monopoly items i.e advance for Steel, Petrol, Cement, Oil and Gas of these specific item groups Few government organizations are also there in the list of advance vendors. o GAS Authority of India Limited.

o HPCL (Hindustan Petroleum Corporation Limited) o IOCL (Indian Oil Company Limited) o MMTC (Minerals & Metals Corporation) etc.

ANALYSIS: The reasons for advance payments are Defecting position of vendor. Monopoly of the vendor in Market. Capital Procurement. One time order for specific customized design. Advance for Steel, Petrol, Cement, Oil and Gas of these specific item groups.

ACCOUNT NO: 161000 DESCRIPTION: AP Foreign Payments For all business areas. EXPLIANATION: The account shows the amounts payable to foreign vendors. ANALYSIS: The payment for this account are overdue since 2007 and the document types are AB (accounting document) and RE (Invoice Gross) There is a substantial decrease from April 2008 to March 2009 by 10 Cr. OBSERVATION: The account shows the creditors but actually (in practical terms) they are not creditors. Payment has been already done and the debtors in respect of payment are appearing in different G/L accounts i.e. goods in transit (Account code 793105) Net amount appearing in this G/L account is towards retention money payable to foreign vendors. Since these amounts are in foreign currency the entry is passed for revaluation as on 31st March every year. There are few old items which are occurring in this account but corresponding debit is also there in G/L account i.e. 79310.

REASONS: Permanent entry for netting of advances and liability is pending.

ACCOUNT NO: 192100 DESCRIPTION: Freight clearing (MM) For all business areas. EXPLIANATION: The account shows the liability towards freight payable where invoice verification is awaited. ANALYSIS: There is an increase in the month of March 2009 of . 8 Crores (approx) as compared to balance outstanding in month of March 2008. Following are the major vendors contributing towards the increase in balance. Most of the vendors are foreign vendors.

NUMBERS 1. 2. 3. 4. 5. 6. 7. 8.


ACCOUNT NO: 124020 DESCREPTION: Prepaid Expenses Discounting charges. EXPLIANATION: The account shows prepaid interest towards 89 days hundies discounted with various banks and discount on sale of vehicles. Being interest is charged with front end method the portion of interest for period after the closing date is shown on prepaid interest and same is reflected in this A/C. Journal entries are, Interest A/C...Dr To bank A/C. Prepaid Expenses A/CDr To Interest A/C Interest rates other than HDFC: NAME OF THE BANKS State Bank Of India (SBI) United Bank Of India (UBI) Kotak Mahindra HDFC Bank From this table we come INTEREST RATES 12.75% 11.75% 11.25% 10.75% to know that ,

High interest rates charged by SBI i.e.(12.75%) while low interest rates charged by HDFC i.e.(10.75%)

ANALYSIS: Prepaid expenses are increased in the month of March 2009 as compare to March 2008. Some specific reasons of this increase are: Increase in number of venders under BMS scheme. Interest on payments to SSI venders through SIDBI. Pre liquidation of hundies in FY 07-08

ACCOUNT NO: 160090 DESCRPTION: AP BMS For all business areas. EXPLIANATION: The account shows the amounts payable to BMS vendors where invoices are verified and are credited to the vendor account for which the hundies are not yet generated. The account also includes the amounts credited to vendor account towards price increase but claim from vendor is awaited. Journal entries for such type of transactions are: Inventory a/c Dr To GR/IR (Creditors) a/c. GR/IR a/c Dr To vendor a/c Vendor A/CDr. To Acceptance A/C ANALYSIS: There is increase in the schedule of March 2009 as compared to March 2008. In March 2009 there is increase of Rs.6cr. (approx.) as compared to March 2008. Some specific reasons of this increase are, The liability in this account are mainly for liability towards retrospective increase in the rates of the purchase order. This account reflects that the liability towards BMS vendors is maximum in Jamshedpur as compared to other business areas. (closing )

ACCOUNT NO: 191120 DESCREPTION: GR/IR (Imports) For all business areas. EXPLAINATION: The account shows the liability towards goods received but invoice verification of foreign vendor is awaited. The journal entry is: Inventory a/c .Dr To GR/IR a/c. GR/IR a/c...Dr To Vendor a/c. OBSERVATION: The account shows the creditors but actually (in practical terms) they are not creditors. Payment has been already done and the debtors in respect of payment are appearing in different G/L accounts i.e. goods in transit (Account code 793105) Net amount appearing in this G/L account is towards retention money payable to foreign vendors. Since these amounts are in foreign currency the entry is passed for revaluation as on 31st March every year. There are few old items which are occurring in this account but corresponding debit is also there in G/L account i.e. 793105

ANALYSIS: This is a substantial decrease in the year 2009 as compared to March 2008 by Rs. 87 Cr. The reason is: The substantial decrease is for Jamshedpur location. This is the result of rigorous follow ups done by import groups for completion of Invoice verification process.

ACCOUNT NO: 117200 DECREPTION: Claims Recoverable For all business areas. EXPLAINATION: The account shows the amounts recoverable from vendors (Dr. balances in vendor accounts ), insurance company for claims loged for shortages/ damages in imported consignments,(fire claim etc.). Banks refund of discounting charges on BMS(Bill Marketing Scheme) i.e. hundies. It also includes the rent receivable and royalty receivable. Receivable on account of incentives from the State Government. In the month of March 2009 receivable amount as compare to March 2008 is much more. Thus, there is an increase in the amount of Rs. 1865527047.79 ANALYSIS: Specific reason for this increase in March 2009, the March 2008 is Incentive recoverable from State Government. Some other common reasons of Claims Receivable: 1. Vendors: The Account shows the amounts recoverable from Vendors on account of debit notes for, Retrospective price changes, improper quantity received, rejections, penalty etc. 2. Insurance Company: On Insurance companies Claims lodged for shortages, damages in imported consignments, fire claims, natural calamities etc. 3. Bank: This includes recovery of discounting charges on BMS transactions (Hundies). 4. Credit Balances: Write off for old recoverable. 5. Receivables from State/Central Government 6. Others: This includes miscellaneous receivables like rent receivables, royalty Receivables.

ACCOUNT NO: 160000

DESCREPTION: Sundry Creditors For all business areas. EXPLIANATION : The account shows the amounts payable to vendors where invoices are verified and the amounts are credited to vendor accounts for which the payment is not yet due. This account also includes the amounts credited to vendor accounts towards price increase but the claim from the vendor is awaited. Vendor supplies the goods, as per purchase order terms agreed by both the parties and payments are released as per terms mentioned in the Purchase Order. So when the goods are supplied, the invoice is verified and amount is credited to the Vendor a/c. But the amount is actually payable at the end of the credit and till that time liability is reflected in this account. The journal entries are: Inventory a/c .Dr To GR/IR a/c GR/IR a/c...Dr To Vendor a/c. Vendor a/c.Dr To Bank a/c. ANALYSIS: In March 2009, the sundry creditors outstanding in the books of accounts are more as compared to March 2008. Following is the reason: Increase in provision for Price Increase, transfer to claims recoverable etc. REASONS: Because of current funds position of the company, payments were not getting released speedily as compared to March 2008.

ACCOUNT NO: 191140 DESCREPTION: GR/IR Manual Posting For all business Areas. EXPLIANATION: The account includes 1. Entry passed for set off in respect of imports GR/IR and GIT(being no manual intervention allowed in GR/IR account 191120). 2. Reversal of VAT on GRs pertaining to last year and booked in current year. 3. VAT on open GRs 4. Amounts manually credited to liability account where invoice is raised by vendor for lower value then the amount payable as per purchase order. 5. Value of consignments received on unloading authorization slips. 6. Set off entry for advances and GR/IR accounts. 7. Entry for material landed at port. 8. Write back of provision. 9. Material price increase where purchase orders are not amended. 10. Material lying with 3rd party logistics providers. ANALYSIS: There is a decrease in the balance in 2009 as compared to 2008 and the decrease amounts to Rs. 10 Cr. (approx) In 2009 there are some extra documents like LA, AA, AB, DZ, DA, KR but the document JA has been paid off which was in existence in March 2008. Abnormal items are as follows:


The comparison between the year march 2008 & march 2009 for schedules.

The analysis is done on the basis of business area wise & it shows with the help of pie chart.





1. All the transactions are been updated in the SAP system. 2. Most of the P2P process is done through automatic process & in
case of any error clearance the process is done through manually.

3. Generally financial schedules are generated on monthly basis

for critical accounts.

4. Increase in number of vehicles & its varieties which lead to

increase in requirement of parts which results in increase in vendors.

5. The rate of interest of HDFC bank is lowest. 6. Accounts payable (materials) is implemented with the help of
supplier relationship management.

7. Accounts payable (services) is depending upon certification of

the services.

1. Whenever the interest rates charged by the banks on hundies decreases, it is feasible for the company to increase the credit period on hundi payment from 89 days to 100 days. 2. There should be an inbuilt system so that the abnormal items & critical items are highlighted on a regular basis so that such amount can be recovered from the creditors. 3.Interest rates charged by HDFC is lower than other banks , so it is beneficial to the company to do most of its credit transaction related to discounting of bill (hundi) through HDFC bank. 4. All the vendors should enroll their names under Bills Marketing Scheme (BMS) because already the vendors who have enrolled their name under BMS gets immediate payments, due to which vendors supply their goods on time.



While working in TATA MOTORS as a trainee I have faced some snags, which were later resolved with the passage of time. These problems were encountered especially in the initial stage. Some of the problems have been highlighted in the following points:

1) Major limitation faced while completing the project was lack of

knowledge in SAP (System Application Program).

2) Data was not easily available as the data was confidential. 3) It takes lot of time to understand abbreviations which used in Procurement to payment process (P2P).


1) Overall conclusions of project report are all the services in shared services are good maintained in SAP system. These services means Account Payable (Vendor), Account Payable (Services), Employee Payroll System, Fixed Asset, General-Ledger & Close the Books. 2) It has helped in understanding of business functions & operations. 3) Knowledge gained can be in future used. 4) It has given the confidence to exhibit the ability of analyzing & critically evaluating financial & quantitative information in future.








Intra net Www. Books referred Financial Management-I.M.Pandey.