Cash Application Process at JSW

This PPT will describe in detail the Cash Application Process in the Account Receivables Department of JSW
JSW is a conglomerate with operations in areas like mining, manufacturing etc.

1. Presentation by : Arjun Mehra Summer internship project A PROJECT ON DELAY IN CASH APPLICATION PROCESS

2. A  multi-billion-dollar  conglomerate, the JSW Group is a part of the O.P. Jindal Group with strong footprints across core economic sectors, namely, Steel, Energy, Infrastructure, Cement, Ventures and Sports. The JSW Group  is amongst the leading conglomerates in India, with presence across the vital sectors of the Indian economy. JSW decided to create shared services for all of its group companies and that is precisely what JSW GBS is currently. About the company

3. It applies incoming payments to the correct customer accounts and receivable invoices. First step is to determine where to apply the payments. D one by matching the payment to the associated invoices. The payment then can be applied to reduce accounts receivables. There are two ways that cash application is done - manually or automated . Cash Application process

4. The cash application specialist will look at the customer name or invoice number on the payment, find the associated remittance and post it to the outstanding accounts receivable invoice in their company’s ERP. An automated cash application process is able to match payment and remittance at a must faster speed. Continued…

5. The JSW- Global Business Solutions uses SAP as an accounting software. Funds are primarily transferred via RTGS, NEFT, DD, Cheques, BOE etc. JSW primarily uses- Conventional banking system of accounting Cash Management Services (CMS) as their main sources for receiving and recording funds transactions . Invoices are cleared in SAP either on Ad-hoc basis or Bill to Bill basis. JSW and Cash application process

6. JSW- GBS uses CMS accounting system for its CEMENT business which involves BDS (batch data calculator) for recording the receipts. Manual entry in done in case of INFRA, ENERGY, STEEL, COATED STEEL which involves less number of transactions in SAP. Various T-codes are used for recording and knocking off the transactions. Primarily used for AR department are F-28, F-29, F-32 & for BDC- ZFI_BDC_F29. The process involved in JSW for Cash Application is- Download Bank Statements from various bank accounts. Match payments & remittance details. Knock off invoices JSW and Cash application process

7. The main T-codes used by Accounts Receivables department are – F -28 - When funds received are directly against said invoices F-29 – Clearing of invoices against advances received F-32 – For knocking off the payments when received through BDS FB70 - Enter Customer Invoice    FB75 - Enter Customer Credit Memo   FBL5N - Customer line item display is used to show open and cleared line item transactions in individual customer accounts    FB08 - Reverse GL Document ZFI_BDC_F29 – BDC (Batch data communication) report FD10N- GL account balance summary display of debit and credit postings by period that allows you to drilldown to the line items level Customer Aging Report T-codes and their functions

8. F-28 - Manual Payment

9. f-29 - Customer Down Payment Type of transaction- CT (RTGS/NEFT), CQ ( Cheque ) Currency (INR) Customer account number Details of the transaction i.e. RTGS/NEFT/CHQ no.

10. F-32 - Manual Clearing Customer code Clearing date (at the end of the month) Standard window for clearing

11. F-32 - Manual Clearing Partial Clearing, (Done on FIFO basis) Amount Outstanding

12. Fb-70 Enter Customer Invoice SCREEN 1 SCREEN 2

13. FB-75 Post Credit Memo SCREEN 1 SCREEN 2

14. FBL5N Line Item Display Screen 1 Screen 2

15. FB08 - Reverse GL Document Reference number Present Financial year Company code

16. ZFI_BDC_F29 – BDC report File Destination Run time methods

17. FD10N- Customer Balance display Screen 1 Screen 2

18. Customer Aging report Screen 1

19. Customer Aging report Screen 2

20. In theory, the cash application function comprises a very simple process: apply customer payments to open receivables. The quicker this cash is applied, the better visibility A/R managers have into a customer’s past-due status. Efficient cash application processes are key to reducing the time to resolution and increasing recovery rates. Typically, the two main challenges are: customer payment practices and internal application processes . Customer Payment Practices  – B2B customers can accidently complicate and slow down the cash application process when they submit partial payments, combine invoices and do not include any reference numbers or P.O. numbers . Eg - In case of cheques, only cheque number is displayed and not the details of the customer in a bank statement. However, this could be changed at a special request by the company’s AR specialist. challenges in cash application

21. Internal Application Processes  – Inconsistent application processes, manual processes and a lack of visibility cause customer service/collection problems and use up valuable resources (time, money, labour costs) that could better used elsewhere . Customers with multiple A/R account numbers where certain disputes/claims need to be set up based on customer specific reference numbers or coding. This introduces customer specific complexity that is difficult to properly code into the auto cash programs . challenges in cash application

22. Cash Application is an important and often overlooked part of Receivable Management. Timeliness and accuracy are two key metrics. If payments are not posted accurately and timely, inefficiencies are created in the downstream processes that creates a negative impact on a company’s day’s sales outstanding (DSO) which is a key financial ratio. This process represents a great opportunity to improve efficiencies through automation . Customers with multiple AR accounts- JSW’s customers usually have one AR account but in case a customer has multiple businesses, different customer codes and AR accounts are maintained by company although customer being the same. Reduction and improvement in Cash application

23. Automation - Basic Requirement Automation is critical to ensure payments are applied in a timely manner. Payments need to be received electronically to enable the auto cash application process . Some benefits on automatically applying cash: The use of automating cash application software to process customer payments enables the cash application team to perform higher value-added functions. One benefit is that much of the drudgery (dull work) of cash application can be eliminated using auto cash. Automating cash both simplifies and dramatically accelerates the cash posting process, making possible better credit decisions based on more current information. Reduction and improvement in Cash application

24. Another benefit of automating cash application is that this automation process should result in cost savings including the possibility of headcount reductions in cash application. Automating cash enables cash application personnel to focus on higher value activities such as addressing disputes and deductions more quickly. continued

25. automation in jsw Applying automation is a lengthy process which involves setting up of a separate CMS account and asking all of your customers to pay in a new format with detailed information. The new bank statement downloaded by the account specialist can be uploaded directly to SAP with the BDC format reducing the time load of the company . This gives specialist time for clearing the entries which otherwise takes time when entries are done manually.