A REPORT ON BILLS PAYABLE PROCESS At TVS

LOGISTICS SERVICES

Submitted by

ESSAKKIAPPAN.R

Reg.No.175012101041
 INTRODUCTION

COMPANY PROFILE

We are one of the leading company in Logistics

Fig. Logistics Service

TVS Group is an Indian, diversified industrial conglomerate with its principal

headquarters located in Madurai and presence across the Globe. It is an automotive
conglomerate company, specialized in manufacturing of two-wheeler, three-wheeler,
auto-electrical components, high tensile fasteners, die casting products, dealership
business, brakes, wheels, tyres, axles, seating systems, fuel injection components,
electronic and electrical components and many more. What started as a humble journey
for TVS Group is now a voyage shared by more than 39000 employees across 50 group
companies, and millions of customers worldwide. Uniting these multiple businesses is a
common ethos of quality, customer service.

T V Sundram Iyengar & Sons, established in 1911, is the holding company of

the TVS Group and is the largest automobile corporate dealer in India. The service
focused company provides employment to over 10,000 people with revenue in excess of
INR 8000 Cores. It operates through three divisions, viz., TVS, Sundaram Motors and
Madras Auto Service. Being the trading and distribution arm of the group, the business
activities of TVS & Sons include dealerships for Automobile vehicles, sales and service
of products for special applications like Construction; and Material handling. The company
manages Joint Ventures in Sri Lanka and Bangladesh for automobile distribution,
dealership business through its subsidiary company in South Africa and vehicle servicing
business in Saudi Arabia. The dealership business focuses on sales and distribution of
commercial vehicles, utility and sports utility vehicles, passenger cars representing
various automobile vehicle manufacturers such as Ashok Leyland, General Motors,
Honda, Mahindra & Mahindra, Mahindra Navistar, Mercedes Benz, Renault, Volkswagen
and off highway equipment manufactured by Escorts, JLG, Ingersoll Rand and Pal Finger.
The company has more than 150 outlets and sells over 60,000 vehicles, with a service
reporting that exceeds 600,000 vehicles per annum. TVS & Sons has two subsidiary
companies, viz., TVS Logistics Services Limited – India’s leading third party logistics
service provider and TVS Automobile Solutions Limited – India’s largest aftermarket
service provider for passenger cars.

TVS Logistics Services Ltd (TVS Logistics) one of the top supply chain
management companies in India is a flagship company of the $7 billion TVS Group. It is
among the best 3rd party logistics companies in India and provides integrated supply
chain solutions across the world directly and/or through joint ventures and subsidiaries.

The company established in 2004, has grown exponentially organically and

inorganically to a turnover of more than INR 5600 crores in 2016. Headquartered in India
and with offices also in 12 other nations – USA, UK, Germany, Singapore, Thailand, China
(Including Hong Kong), Spain, Australia, New Zealand, Mexico, Italy and France; TVS
Logistics serves customers in over 50 countries through its 15000 plus skilled work force.

TVS Logistics’ services include contract logistics, warehousing, transportation,

freight forwarding, packaging design and solutions, in-plant and aftermarket solutions,
material handling, material management, free trade warehousing, infrastructure solutions
and technology logistics. As a one stop solution for end to end logistics services and
supply chain management companies in India, TVS Logistics works with multiple
industries including automotive, defense, electronics, discrete component manufacturing,
engineering, FMCG, retail, FMCG, utilities.

TVS Logistics is one of the largest integrated logistics service providers and a top
3PL company in India, operating more than 10 million square feet area of warehousing
space across 29 states. An ISO 9001:2008 Certified company, with a strict focus on
quality and business excellence, its operations are backed by robust technology for
transportation, last mile, warehousing, accounts and billing, manpower management, etc.
TVS Logistics seamlessly connects with customers’ ERP to provide them with real time
visibility and transparency in operations. The company has been repeatedly recognized
among the best 3rd party logistics companies in India by industry and customers through
awards for its operations, technology, end to end services and human resource practices.

International Logistics and Freight Management

TVS Logistics is strategically located in 10 of the top 12 container ports of the world,
providing international import and export freight forwarding via sea and air, licensed
customs clearance brooking, export documentation and third party logistics services,
especially in Asia markets.

We use cutting edge ERP for Import-Export Shipment Processing, Purchase Order
Management, Customer Relationship Management, Billing and Financial Accounting,
Track & Trace (under Development), Alerts & Notifications, MIS reporting and Analysis
and Electronic Data Interchange.

The key solutions offered are:

 Pre shipment and post shipment services: Air freight, ocean freight, inward,
outbound, handling over dimensional and special equipment
 Customized surface transport: Dedicated trucking facilities, a cell for export
packaging and optimizing container cube optimization, air and ocean
consolidations
 Customs clearances with direct EDI link to sea ports and airports
  VMI Services and JIT deliveries with warehousing at destinations
 Sea, Air Import and Export
 Value added services: Quality inspection at destination, effective container
cube utilization, robust packaging and continuous improvement

In India, TVS Logistics provides customer-centric freight forwarding services and

cargo solutions with specialization in ocean and air transportation globally through its
offices in all major ports and airports in India, and access to the overseas facilities of TVS
Logistics.

Customers can avail benefits of TVS Logistics' annual contracts with shipping lines
and special rates with air carriers, and various certifications and associations with
government and industry bodies including:

 IATA approval to operate as MTO (Multimodal Transport Operator) by the

Director General of Shipping, Government of India, with the authority to issue
its own House Air waybills and Bills of Lading.
 Membership with ACAAI (Air Cargo Agents Associations in India), FFFAI
(Federation of Freight Forwarders Associations in India), MMA (Madras
Management Association), FIATA (International Federation of Freight
Forwarders Associations), CII (Confederation of Indian Industry) and AMTOI
(Association of Multimodal Transport Operators of India).

Packaging Solutions

Through its packaging facilities in India, Germany and the US, TVS Logistics
delivers smart packaging solutions enabling fast, safe and secure movement of inventory
from point of origin to the point of use for customers from automotive, healthcare and
hardware industry verticals. For efficient asset tracking and shrinkage management, we
use technology like Bar code /QR Code / RFID / RTLS and GPS on our packaging assets.

Packaging Solutions Include:

 Packaging design
  Software driven packaging density optimization
 Packaging prototyping
 Visualization of logistics process
 Manufacturing of packaging
 Contract Packaging - Right fit packing design, special pallet design & packing
resources augmentation
 Container and Pallet Pooling- Foldable Eco metal /Mesh /Plastic containers,
Bins & optional PP/HDPE/XLPE inserts
 Customers’ Packaging Asset Management - Skillets, frames, pallets, trolleys &
activities of track, retrieve & manage reverse logistics, repairs & cleaning
Benefits offered to our Customers:
 Design, Estimation, Execution and Technology Competency
 Lower Total Cost of Ownership
 Total Quality Management
 Greener Supply Chain
VISION

We aim to be a leading Indian MNC and a partner of choice for us customers, in

providing customized, integrated supply chain solutions across the globe.
MISSION

To deliver unique, value added supply chain solutions and a committed, partnership-
like approach with customers.

FINANCE DEPARTMENT

TVS GROUP has a combined turnover of more than US$ billion. The TVS GROUP
employs a total of around 25000. Charting a steady growth path of expansion and
diversification, it currently comprises of 30 companies. These operate in diverse field that
range from two wheeler and automotive dealership, finance and electronics. Uniting these
multiple business is a common ethos of quality, customer service and social
responsibility. In TVS the finance department is centralized. One executive controls the
day to day financial activates of the organization
INTRODUCTION ABOUT ACCOUNTS PAYABLES

An Accounts payable is a document which shows the amount owed

for goods or services received on credit. Accounts payable can also be called as Bills
Payable. Examples of an accounts payable include a monthly telephone bill, electricity
bill, a bill for repairs or maintenance, the bill for merchandise purchased by a retailer on
credit, etc. The provider of the goods or services is referred to as the supplier or vendor.
Hence, the accounts payable is also known as an unpaid vendor invoice. When a
company orders and receives goods (or services) in advance of paying for them, we say
that the company is purchasing the goods on account or on credit. The supplier (or
vendor) of the goods on credit is also referred to as a creditor. If the company receiving
the goods does not sign a promissory note, the vendor's bill or invoice will be recorded
by the company in its liability account Accounts Payable (or Trade Payables).The
accounts payable figure on the financial statements of any company represents the
company’s unpaid bills. It is the money owed by the company to its suppliers and other
creditors. Accountants break the money owed by the company into two groups namely

 Current liabilities
 Long-term liabilities.

They consider accounts payable a current liability. Current liabilities are those obligations
that must be paid in less than one year. Other current liabilities might include taxes and
salaries. These are separated from items such as long-term debt repayments that have
longer due dates. The term accounts payable can also refer to the person or staff that
processes vendor invoices and pays the company's bills. That's why a supplier who hasn't
received payment from a customer will phone and ask to speak with "accounts payable.
“The accounts payable process involves reviewing an enormous amount of detail to
ensure that only legitimate and accurate amounts are entered in the accounting system.
Much of the information that needs to be reviewed will be found in the following
documents:

 Purchase orders issued by the company.

  Receiving reports issued by the company.
 Invoices from the company's vendors.
 Contracts and other agreements.

The accuracy and completeness of a company's financial statements are dependent on

the accounts payable process. A well-run accounts payable process will include:

 The timely processing of accurate and legitimate vendor invoices,

 Accurate recording in the appropriate general ledger accounts, and
 The accrual of obligations and expenses that have not yet been completely
processed.
 The efficiency and effectiveness of the accounts payable process will also affect
the company's cash position, credit rating, and relationships with its suppliers.

DEFINITIONS FOR ACCOUNTS PAYABLE

Accounts payable (AP) is an accounting entry that represents a company's

obligation to pay off a short-term debt to its creditors or suppliers. It appears on the
balance sheet under the current liabilities. Another common usage of AP refers to a
business department or division that is responsible for making payments owed by the
company to suppliers and other creditors. In general, having a lower accounts payable
balance is better. This means that the organization is paying bills on time, and aren’t
risking getting into any trouble with their vendors and suppliers.

Accounts payable is the amount owed for the purchase of goods or services at
a specific date. It is the money that a company owes to vendors for products and services
purchased on credit extended in the normal course of business.

As a general practice suppliers offer to their customers credit, which is a payment

arrangement to pay for a product or service after it has already been received.

Accounts Payable is presented as Current Liabilities under the Liability section of the
Balance Sheet. It represents a negative cash flow for the company. Accounts payable are
often referred to as "payables".
Accounts Payable is considered as Current Liability, meaning that it is a short term credit
extended to the business expected to be fulfilled in less than a year.

ESSENTIALS OF ACCOUNTS PAYABLE

 Current expenses are expenses that have been incurred (and thus are considered
a liability) and will be paid within the current period.
 Accrued expenses are expenses that a company has incurred but has not been
billed for yet. Many companies accrue accounts payable expenses at the end of
each month and virtually all accrue them at the end of the fiscal year for financial
statement purposes. It is not uncommon to hear accounts payable associates
talking about doing accruals at month end. Using accruals allows the company’s
executives and bankers and— in the case of public companies, its investors—to
have a realistic picture of the company’s financial position and obligations. These
numbers can be especially meaningful in the case of those companies that employ
payment timing or stretching practices.

WAREHOUSING SERVICES

TVS LOGISTICS has ware houses all over India. The main purpose of having
warehouses is provide services without any delay. TVS Logistics doesn’t has its own
warehouses all over India and it’s difficulties to have own warehouses all over India
because of maintenance cost the cost involved in maintaining a warehouse is very
high.so TVS Logistics taken warehouses for rent . A monthly rent is paid to all
warehouses in India. TVS Logistics had made an agreement with all the customers.
Some of the customers are

 Ford
 Ashok Leyland
 Mahindra
 Renault
According to the agreement TVS Logistics will get finished goods and raw materials from
these companies and stores in their warehouses. When the Ford Company demands a
particular amount of goods to deliver to Ford customers TVS Logistics will do that in
charge of the Ford Company for this warehouse TVS Logistics will be paid by its
customers. Moreover maintenance not only includes maintenance charges it includes
hiring of new workers and other office expenses. In order to maintain all this expense TVS
Logistics has outsourced the employees and maintenance expenses.

TRANSPORTATION SERVICE

When a company is ordering some goods to deliver in a particular location TVS Logistics
uses its own transport for transporting the goods. TVS Logistics has its transport on
contract basics. TVS Logistics has more transport service acquired on a contract basics.
For this transportation each month the vendor will sent invoice for the transportation for
which TVS logistics wants to pay.

CHECKING OF PROVISION

PROVISONS

TVS Logistics has warehouses all over the India and its transporting
cargos of various customers with its own transportation. Provision is about monthly
expenses that TVS Logistics had incurred it will be sent to all branches from the head
office. Provision include all expenses such as office expenses, expenses that came
by purchasing office maintaining materials and for many branches in the northern part
of India TVS Logistics has gone outsourcing to handle manpower in warehouse and
transportation. When the end of the month a vendor will send his invoice to the TVS
Logistics here employees want to check the invoice amount and the provision amount
if both are found to be correct they call that is called as exact provision or if provision
is more than the invoice amount means the invoice will be sent for payment or if the
invoice amount is more than the provision it will sent to head office for checking again.
The contents of a provision statement are

 Cost Center.
 Project.
  Month.
 Nature of the work.
 Vendor Name.
 Amount.

COST CENTER

It is code and it can be also code as cc code. This code is prepared by combination of
including the name of the project and the place where the transportation or other works
are done.it is prepared taking two letters from project name and the city name where the
service is done

E.g. NCRSDLAP11 .Here NCR represents the type of project and AP represents ANDRA
PRADESH

PROJECT

It is about the type of project which for the work is done and it includes exact place where
the work is carried out. E.g. NCR_ Vishakapatnam here NCR is name of the project and
Vishakapatnam is the place where the work is done.

MONTH

It tells us about for the expenses for month. E.g. if in month column if it is
represented in December means that particular expenses are made on the month of
December. In a vendor invoice there will be date for the service month as well as the date
when the invoice is sent but we should take the date of service month only.

VENDOR NAME

It says about the name of different vendors that TVS Logistics used for
transportation

AMOUNT

It contains the expenses occurred with each vendor based on this amount employees will
calculate the provision
  If the vendor invoice amount is less than the provision amount then the invoice
will be sent to payment.
 If the vendor invoice amount is same as that of the provision amount then the
invoice will be sent to payment.
 If the vendor invoice amount is more than the provision amount then it will not
be sent to payment it will sent to head office for further operations.

ACCOUNTS PAYABLE PROCESS

The accounts payable process or function is immensely important since it

involves nearly all of a company's payments outside of payroll. The accounts payable
process might be carried out by an accounts payable department in a large corporation,
by a small staff in a medium-sized company, or by a bookkeeper or perhaps the owner in
a small business. Regardless of the company's size, the mission of accounts payable is
to pay only the company's bills and invoices that are legitimate and accurate. This means
that before a vendor's invoice is entered into the accounting records and scheduled for
payment, the invoice must reflect:

 What the company had ordered

 What the company has received
 The proper unit costs, calculations, totals, terms, etc.
 To safeguard a company's cash and other assets, the accounts payable process
should have internal controls.

A few reasons for internal controls are to:

 Prevent paying a fraudulent invoice

 Prevent paying an inaccurate invoice
 Prevent paying a vendor invoice twice
 Be certain that all vendor invoices are accounted for
 Periodically companies should seek professional assistance to improve its internal
controls.

The accounts payable process must also be efficient and accurate in order for the
company's financial statements to be accurate and complete. Because of double-entry
accounting an omission of a vendor invoice will actually cause two accounts to report
incorrect amounts. For example, if a repair expense is not recorded in a timely manner:

 The liability will be omitted from the balance sheet, and

 The repair expense will be omitted from the income statement.

If the vendor invoice for a repair is recorded twice, there will be two problems as well:

 The liabilities will be overstated, and

 Repairs expense will be overstated.

In other words, without the accounts payable process being up-to-date and well run, the
company's management and other users of the financial statements will be receiving
inaccurate feedback on the company's performance and financial position. A poorly run
accounts payable process can also mean missing a discount for paying some bills early.
If vendor invoices are not paid when they become due, supplier relationships could be
strained. This may lead to some vendors demanding cash on delivery. If that were to
occur it could have extreme consequences for a cash-strapped company.

STEPS IN PAYABLE PROCESS

The purpose of accounts payable is to provide checks and balances for all outgoing
payments to vendors for their goods or services. The aim of this process is to make certain
that only bills which are legitimate are paid, and sufficient security is built into the process.
The following are the steps involved in the payable process.

PURCHASE ORDER

A purchase order, or PO, is an official document issued by a buyer committing to pay the
seller for the sale of specific products or services to be delivered in the future. The
purchase order or PO is prepared by a company to communicate and document precisely
what the company is ordering from a vendor. The advantage to the buyer is the ability to
place an order without immediate payment. From the seller’s perspective, a PO is a way
to offer buyers credit without risk, since the buyer is obligated to pay once the products
or services have been delivered. Each PO has a unique number associated with it that
helps both buyer and seller track delivery and payment. The paper version of a purchase
order is a multi-copy form with copies distributed to several people. The people or
departments receiving a copy of the PO include:

 the person requesting that a PO be issued for the goods or services

 the accounts payable department
 the receiving department
 the vendor
 the person preparing the purchase order

What is on a Purchase Order?

Among other things, a PO specifies:

 Quantity purchased
 Product or service being purchased
 Specific brand names, SKUs, or model numbers
 Price per unit
 Delivery date
 Delivery location
 Billing address
 Payment terms, such as on delivery or in 30 days

The purchase order will indicate a PO number, date prepared, company name, vendor
name, name and phone number of a contact person, a description of the items being
purchased, the quantity, unit prices, shipping method, date needed, and other pertinent
information.

How is a Purchase Order Used?

 A Purchase Order simplifies the purchase process, which typically looks like this:
 Buyer decides to purchase a product or service for their business.
 The company issues a Purchase order to the seller, often electronically using a
purchase order template.
 The seller receives the Purchase order and confirms the company can fill the order.
  If not, the seller tells the buyer the order cannot be completed and the Purchase
order is cancelled.
 If the order can be filled, the seller begins preparing the order by pulling the
inventory together or scheduling necessary personnel.
 The order is shipped, or service provided, with the Purchase order number on the
packing list so the buyer knows which order has arrived.
 The seller invoices for the order, using the Purchase order number so that it can
easily be matched with the delivery information.
 The buyer pays the invoice according to the terms laid out in the Purchase order.

RECEIVING REPORT

A receiving report is a company's documentation of the goods it has received.

The receiving report may be a paper form or it may be a computer entry. The quantity
and description of the goods shown on the receiving report should be compared to the
information on the company's purchase order. After the receiving report and purchase
order information are reconciled, they need to be compared to the vendor invoice. Hence,
the receiving report is the second of the three documents in the three-way match. A
receiving report has the following details

 Date and time of delivery.

 Name of the shipping company.
 Name of each item received.
 Quantity of each item delivered.
 The purchase order number.
 Condition of the goods on arrival.

VENDOR INVOICE

The supplier or vendor will send an invoice to the company that had received the goods
and/or services on credit. When the invoice or bill is received, the customer will refer to it
as a vendor invoice. Each vendor invoice is routed to accounts payable for processing.
After the invoice is verified and approved, the amount will be credited to the company's
Accounts Payable account and will also be debited to another account (often as an
expense or asset).A common technique for verifying a vendor invoice is the three-way
match.

Three-way match

The accounts payable process often uses a technique known as the three-way match to
assure that only valid and accurate vendor invoices are recorded and paid. The three-
way match involves the following

Document What it shows

 Company Purchase Order
 Company Receiving Report
 Vendor Invoice
 What the company has ordered at what
cost.
 What the company received.
 What the vendor had billed the
company.

Only when the details in the three documents are in agreement will a vendor's invoice be
entered into the Accounts Payable account and scheduled for payment. Good internal
control of a company's resources is enhanced when the company assigns a separate
employee with a specific, limited responsibility. The following chart illustrates the concept
of the separation (or segregation) of duties involving accounts payable When the duties
are separated, it will require more than one dishonest person to steal from the company.
Hence, small companies without sufficient staff to separate employees' responsibilities
will have a greater risk of theft. The three-way match involves comparing the following
information:

 The description, quantity, cost and terms on the company's purchase order.
 The description and quantity of goods shown on the receiving report.
 The description, quantity, cost, terms, and math on the vendor invoice.

After determining that the information reconciles, the vendor invoice can be entered into
the liability account Accounts Payable. The information entered into the accounting
software will include invoice reference information (vendor name or code, invoice number
and date, etc.), the amount to be credited to Accounts Payable, the amount(s) and
account(s) to be debited and the date that the payment is to be made. The payment date
is based on the terms shown on the invoice and the company's policy for making
payments. Lastly, the documents should be stamped or perforated to indicate they have
been entered into the accounting system thus avoiding a duplicate payment.

VOUCHERS

Some companies use a voucher in order to document or "vouch for" the

completeness of the approval process. You can visualize a voucher as a cover sheet for
attaching the supporting documents (purchase order, receiving report, vendor's invoice,
etc.) and for noting the approvals, account numbers, and other information for each
vendor invoice or bill. When the vendor invoice is paid, the voucher and its attachments
(including a copy of the check that was issued) will be stored in a paid voucher/invoice
file. If paper documents are involved, an office machine could perforate the word "PAID"
through the voucher and its attachments. This is done to assure that a duplicate payment
will not occur. The unpaid invoices and vouchers will be held in an open file. Vendor
invoices without purchase orders or receiving report. Not all vendor invoices will have
purchase orders or receiving reports. Hence, the three-way match is not always possible.
For example, a company does not issue a purchase order to its electric utility for a pre-
established amount of electricity for the following month. The same is true for the
telephone, natural gas, sewer and water, freight-in, and so on. There are also payments
that are required every month in order to fulfill lease agreements or other contracts.
Examples include the monthly rent for a storage facility, office rent, automobile payments,
equipment leases, maintenance agreements, etc. Even though these obligations will not
have purchase orders, the responsibility is unchanged: pay only the amounts that are
legitimate and accurate.

STATEMENTS FROM VENDORS

Vendors often send statements to their customers to indicate the amounts (listed
by invoice number) that remain unpaid. When a vendor statement is received the details
on the statement should be compared to the company's records. The fact that a company
can be receiving both invoices and statements from a vendor means there is the potential
of a duplicate payment. In order to avoid making a duplicate payment, companies often
establish the following rule:

Pay only from vendor invoices; never pay from vendor statements.

RELEASE AND MAKE PAYMENTS

Once the matching is done and if the accounts payable department is satisfied with the
accuracy and validity of purchase that refer to the payment terms. Companies may have
negotiated different payment terms with different suppliers. Payment is released based
on the agreed payment terms and the amount is issued to the supplier.

BANK RECONCILATION

The reason for reconciliation is suppose if we have a large number of transaction

with same vendor so there is chance of mismatch of amount so we can go for
reconciliation Generally the payment is made through the bank there is a slight delay
between when the payment is released and when it reaches to the account of the supplier
the bank entry is registered as original entry in the payments register to reconcile.

CONCLUSION

There are many responsibilities involved in running a business successfully,

but maintaining strong control over accounts payable is among the most critical. If
organization leaders do not have proper oversight of these processes, it’s possible for
errors to negatively affect the bottom line and even a company’s reputation. According
to Inc. Magazine, there are a few primary reasons that supporting cash flow and
cultivating positive business relationships are among the most important functions of
accounts payable. If best practices are not being adhered to, it’s possible for problems
such as late or duplicate payments to occur, and these errors can severely damage a
firm’s reputation.