Executive Summary

This project is titled as “Accounts Receivable management for IT Company”. It was a growth
project. In the beginning I started studying about the company’s financial position and
analyze the same with respect to the growth of company.

Later on I decided to learn about Accounts Receivable procedure for Syntel. As Accounts
Receivable is also an important function of finance department.

It is a process which includes some category, including Organization’s Staff, Banks and
Customers of the company. In today’s world where slowdown is speared, demand for speed,
cost cutting measure has become so important that an advance technology can be a good
move.

It also shows the company’s total revenue including all Earned Revenue, Deferred Revenue
and also Accrued revenue. If anybody wants to measure any company’s strength then the first
step is to find out the company’s Revenue and the way how the revenue is being calculated.

1
 Objective:

In an IT company Accounts Receivable is the main department in finance & if one makes the
deep study in it, and then this will be a good value addition to one’s knowledge. Now days
due to global slowdown it is necessary to stop on heavy investment & focus to strengthen
“Receivables Management” to improve the financial position.

Main Objectives:

 To understand the various accounting processes involved in Accounts Receivable

Management in an IT company.

 To find which are the factor that determines the growth of an IT company?

 To consider IT & finance relationship.

 To understand the new technology & its contribution to company’s growth.

Sub Objectives:

 To explain & find need of SOW & MSA agreement.

 To measure role of finance in IT company.

 To see how a company get an advantage of SEZ area.

Industry profile

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An Overview:

Information Technology is one of the most important industries in the Indian economy. The
IT industry of India has registered huge growth in recent years. India's IT industry grew from
150 million US Dollars in 1990-1991 to a whopping 50 billion UD Dollars in 2006-2007. In
the last ten years the Information Technology industry in India has grown at an average
annual rate of 30%.

The liberalization of the Indian economy in the early nineties has played a major role in the
growth of the IT industry of India. Deregulation policies adopted by the Government of India
led to substantial domestic investment and inflow of foreign capital to this industry. In 1970,
high import duties had forced IBM to leave India.

However, after the early nineties, many multinational IT companies, including IBM, have set
up their operations in India. During the ten year period between1992-2002, the Indian
software industry grew at double the rate as the US software industry.

The IT industry of India got a major boost since the liberalization of the Indian economy.
India's software exports have grown at an annual average rate of more than 50% since 1991.
The structure of the IT industry is quite different from other industries in the Indian economy.
The IT industry of India is hugely dependant on skilled manpower. Primarily a knowledge
based industry, the IT industry of India has reordered significant success due to the huge
availability of skilled personnel in India.

Some of the main reasons for significant growth of the IT industry in India:

I. Abundant availability of skilled manpower.

II. Reduced telecommunication and internet costs.
III. Reduced import duties on software and hardware products.
IV. Cost advantages.

Some of the major companies in the IT industry of India are:

 Tata Consultancy Services (TCS)

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  Infosys
 Wipro
 IBM
 HP
 HCL
 Cognizant Technology Solutions (CTS)
 Patni
 Mahindra Satyam

Structure of India’s IT Industry

India's IT industry caters to both domestic and export markets. Exports contribute around
75% of the total revenue of the IT industry in India. The IT industry can be broadly divided
into four segments –

 IT services.
 Software’s (includes both engineering And Research and Development).
 IT-Enabled Services-ITES-BPO.
 Hardware

IT services:

IT services constitute a major part of the IT industry of India. IT services include client,
server and web based services. Opportunities in the IT services sector exist in the areas of
consulting services, management services, internet services and application maintenance. The
major users of IT services are -

 Government.
 Commercial Banks.
 Banking And Financial services institutions.
 Retail, Distribution and manufacturing.

IT Enabled Services (ITES):

The services which make extensive use of information and telecommunication technologies
are categorized as IT enabled services. The IT enabled services is the most important

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contributor to the growth of the IT industry of India. Some of the important services covered
by the ITES sector in India are -

 Customer-interaction services including call-centers.

 Back-office services.
 Revenue accounting.
 Data entry and data conversion.
 HR services.
 Transcription and translation services.
 Content development and animation.
 Remote education.
 Data search.
 GIS.
 Market research.
 Network consultancy.

Software products:

Software products are among the most highly exported products from India. The software
industry in India originated in the 1970s and grew at a significant pace in the last ten years.
Between 1996-1997 and 2002-2003, the Indian software industry grew more than five times
from Rs. 2630 Crores to Rs. 13200 Crores. During the same period software and service
exports from India grew by almost twelve times.

Hardware:

The hardware sector of the It industry focuses on the manufacturing and assembling of
computer hardware. The consumption of computer hardware is high in the domestic
market. Due to the increase in the number of IT companies, the sales of desktops,
laptops, servers, routers, etc have been on the rise in recent years.

Size of an IT Industry in India

The size of India's IT industry has grown significantly over the years. This sunshine industry
grew from 150 million US Dollars to 50 billion US Dollars between 1990-1991 and 2006-

5
2007. The growth of the IT industry has been very high in the last few years. The size of the
Information Technology industry of India was 5.7 billion US Dollars in 1999-2000. The
industry experienced exponential growth to reach the 50 billion mark by 2006-2007.

Revenue of the IT industry of India for the year 2008 is 87 billion US Dollars & Exports for
the year 2008, was 50 billion. USA’s Software’s and services are exported to about 95
companies from India. North America accounted for 61% of the software exports from India.
The projection about the size of India’s IT industry presents a very optimistic picture.

The industry is expected to grow to double its current size by the year 2012. India's IT
industry is expected to grow at an annual average rate of 18% in the next five years. The
industry is also expected to cross the 100 billion US Dollar mark by 2011. One of the major
areas of growth for the IT industry of India is by tapping the potential in the domestic market.
The IT industry of India is largely dependent on the export market.

Contribution to Indian Economy

The contribution of India's IT industry to economic progress has been quite significant. The
rapidly expanding socio-economic infrastructure has proved to be of great use in supporting
the growth of Indian IT industry. The flourishing Indian economy has helped the IT sector to
maintain its competitiveness in the global market.

The Total Revenue from this sector was valued at 2.46 trillion Indian rupees in the fiscal year
2007. Out of this figure, the domestic IT market in India accounted for 900 billion rupees. So,
the IT sector in India has played a major role in drawing foreign funds into the domestic
market.

The growth and prosperity of India's IT industry depends on some crucial

factors. These factors are as follows:

 India is a home to a large number of IT professionals, who have the necessary skill

6
 and expertise to meet the demands and expectations of the global IT industry.

 The cost of skilled Indian workforce is reasonably low compared to the developed
nations. This makes the Indian IT services highly cost efficient and this is also the
reason as to why the IT enabled services like business process outsourcing and
knowledge process outsourcing have expanded significantly in the Indian job market.

 India has a huge pool of English-speaking IT professionals. This is why the English-
speaking countries like ‘United States’ and the ‘United Kingdom’ are dependent on
the Indian IT industry for outsourcing their business processes. The emergence of
Indian ‘Information Technology’ sector has brought about sea changes in the Indian
job market. The IT sector of India offers a host of opportunities of employment, with
IT biggies like Infosys, Cognizant, Cap Gemini, etc.

 Wipro, Tata Consultancy Services, Accenture and several other IT firms operating in
some of the major Indian cities, there is no dearth of job opportunities for the Indian
software professionals.

 The IT enabled sector of India absorbs a large number of graduates from general
stream in the BPO and KPO firms. All these have solved the unemployment problem
of India to a great extent. The average purchasing power of the common man of India
has improved substantially.

 All these have improved the gross production of goods and services in the Indian
economy. So in conclusion it can be said that the growth of India's IT industry has
been instrumental in facilitating the economic progress of India.

Challenges before IT industry

At present our IT industry is facing a number of challenges. One of the major challenges for
the ‘Indian IT’ industry is to keep on maintaining its excellent performance standard. The
experts, are however of the opinion that there are certain things that need to be done in order
to make sure that India can maintain its status as one of the leading Information Technology

7
destinations of the world.

The first step that needs to be taken is to create an environment for innovation that could be
carried for a long time. The innovation needs to be done in three areas that are connected to
the Information Technology industry of India such as Business Models, Ecosystems and
Knowledge. The Information Technology sector of India also needs to spread the range of its
activities and also look at the opportunities in other countries.

The improvement however, also needs to be qualitative rather than just being quantitative.
The skill level of the Information Technology professionals is one area that needs
improvement and presents a considerable amount of challenge before the Indian Information
Technology industry.

The Indian IT industry also needs to co-ordinate with the academic circles as well as other
industries in India for better performance and improved productivity. The experts are of the
opinion that the ‘Business Process Outsourcing (BPO)’ service providers in India need to
change their operations to a way that is more oriented to the ‘Knowledge Process
Outsourcing (KPO)’.

Another important problem is that the Indian IT industry is concerned about is the human
resources aspect. The problems with outsourcing in country like the ‘United States of
America’ are posing problems for the Indian Information Technology industry as well. In the
recent times a bill has been passed in the state of New Jersey that allows the citizens or legal
non-Americans only to be given contracts.

This legislation has also affected some other states like Missouri, Connecticut, Wisconsin and
Maryland. These states are also supposed to be considering these laws and their
implementation.

This is supposed to have an adverse effect on the outsourcing that is the source upon which
the Information Technology industry of India thrives. The Information Technology
professionals who aim at working in the country are also likely to be hindered by the
legislation as a significant amount of these professionals have been going to work in the USA
for a long time.

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 Future of IT industry in India

The current scenario in the IT industry of India and the tremendous growth registered in
recent years has generated much optimism about the future of the Indian Information
Technology industry. Analysts are upbeat about the huge potential of growth in the
Information Technology industry in India.

The major areas of benefit that the future growth in the IT industry can
generate for the Indian economy are –

 Exports:

The IT industry accounts for a major share in the exports from India. This is expected
to grow further in coming years. The Information Technology industry is one of the
major sources of foreign currency for India.

 Employment:

The biggest benefit of the IT industry is that it generates huge employment. For a
developing country like India, with a huge population, the high rate of employment in
the IT sector is a big advantage. The IT industry is expected to generate employment
of 2.2 million by the end of 2010.

 Foreign Direct Investment (FDI):

High inflow of FDI in the IT sector is expected to continue in coming years. The
inflow of huge volumes of FDI in the IT industry of India has not only boosted the
industry but also an entire Indian economy.

Company Profile

 An Overview

Type: Public (Listed on NASDAQ)

Code: SYNT

9
Foundation: Troy, Michigan 1980

Founder(s): Bharat Desai, Neerja Sethi

Top Executives: Bharat Desai- Chairman, Prashant Ranade- CEO and President

Headquarter: Troy, Michigan, USA

Industry: Information Technology

Revenue: $419 million (2009), $130.6 million (2Q 2010)

Employees: 14,900+ (as of June 30, 2010)

Products: Application outsourcing

KPO

E-business

Team Sourcing

Industry Served: Banking and Financial Services

Manufacturing, Logistics

Diversified Business Unit

Quality certificate: ISO 27001, SEI CMMi Level 5, ISO 9001:2000, Project
Management Institute (PMI)

EPS: $2.86 diluted (FY 2009), $0.68 diluted (2Q 2010)

IPO Date: August 1997 with 3.45 million shares

PE: 14.37

10
 Debt Ratio: 0

Transfer Agent: Computershare Investor Services, LLC Chicago,

Independent Auditor:Crowe Horwath LLC Oak Brook, IL

Reporting Period: Calendar Year (January 1 - December 31)

Website: https//www.syntelinc.com

HISTORY

Syntel came into existence in 1980. After success with a leading Indian technology services
firm, Bharat Desai had the urge to launch his own company. Armed with an M.B.A. from The
University of Michigan as well as $2,000 in savings, Desai launched Syntel in 1980. The
business model was simple in those days. I.e. Work with local corporations to place well-
trained programmers at the customer's location for project work. But the world along with the
approach to delivering technology services had changed quite dramatically later on.

11
In 1992, when most of the IT services firms were focusing on delivering on-site services,
Syntel was busy with launching its first Global Development Centre in Mumbai, India.

Working closely with its customers, American International Group (AIG), Syntel became the
first U.S.-based IT services company to launch a global delivery concept. By leveraging the
outstanding pool of technology talent, a 12-hour time zone variance, and economies of scale,
Syntel became the first firm to run an around-the-clock IT project approach.

A series of large-scale applications outsourcing contracts began to build Syntel's growth

momentum. In 1994, the company surpassed the $50 million revenue mark and exceeded
1,000 employees. In 1997, Syntel exceeded the $100 million revenue point and earned the
highest "Preferred" performance rating from DaimlerChrysler.

In 1997, Syntel launched its Initial Public Offering (IPO) with the sale of 3.45 million shares
trading on NASDAQ under the symbol SYNT. All Syntel employees at that time became the
shareholders and the company began its life in the public eye. After having more than 65
meetings with potential investors over a three-week period, Syntel's CEO and CFO took a
well-deserved breather. In 1998, Syntel surpassed the 2,000 worldwide employee mark.

History On and After 2000

 2000: Syntel begins exploring BPO service offerings by migrating its own HR,
Finance and Helpdesk operations from US to India.

 2001: Syntel’s Global Development Centers (GDC) assessed at SEI CMM Level 5,
making Syntel one of the only 15 U.S. companies to achieve this standard; Syntel
opens healthcare-focused Global Development Center in Nashville, TN and a regional

12
 office in Munich, Germany.

 2002: Syntel opens Global Development Centers in Phoenix, AZ and Pune, India.

 2003: Syntel’s Global Development Centers in Mumbai and Chennai achieved an ISO
9001:2000 certification.

 2004: Syntel opened dedicated BPO center in Mumbai; Syntel’s Global Development
Centers achieved BS 7799 security certification.

 2005: Syntel’s Global Development Centers achieved SEI CMMi Level 5; Syntel
opened the first phase of its Pune Technology Campus. Syntel acquired a 27-acre

(110,000 m2) parcel of land in Chennai for a second technology campus.

 2008: Syntel breaks ground on its Chennai technology campus and records more than
$400 million in revenues for the first time.

Financial Highlights
(in thousands, except share data)

Particulars For year ending 2009 2008 2007

31st December.
Total Revenue $ 419,006 $ 410,426 $ 337,673
Gross Profit $ 203,852 $ 178,697 $ 132,251
Income from Operation $125,389 $ 98,350 $ 63,338
Net Income $118,495 $ 86,681 $ 62,860

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 Quality Control:

“QUALITY DRIVES CUSTOMER SATISFACTION”

Syntel is very quality conscious company. Inherent in this commitment they pledge to pursue
zero-defect software. Wide Quality System integrates multiple quality standards like Six
Sigma, ISO, and SEI Healthcare CMMi in delivering
enhanced productivity and ACS State Healthcare LLC continual, ongoing
improvement. Baxter Healthcare Corporation
CORDIS CORPORATION
Coventry Healthcare
Quality tool: Healthcare Management
Systems
 QTrack is the Humana Inc umbrella module of this
suite and manages Magellan Health Services, Inc. software development and
The TriZetto Group, Inc.
maintenance project workflow and
process automation. Customers can access the data to generate reports and obtain
project status.

 The CITADEL module is specific to application maintenance and is used internally

by Syntel Project Managers for trend and productivity analysis. Drill down data
enables Syntel to identify reengineering opportunities and process
improvements.

 Over the past year, various process improvement initiatives have delivered 10%
improvement in productivity, 12% improvement in timeliness and 25%
reduction in defects has taken place.

14
Banking and Financial Diversified Business Unit
American Express Incentive Services American Greetings
Comerica Bank Ashley Furniture Industries, Inc.
JP Morgan Chase (Europe) Golfsmith International
Moody's Guitar Center
Pioneer Investment Management USA Inc International Paper
PNC Bank, National Association Jeppesen Sanderson Inc
Portfolio Recovery Associates MeadWestvaco
Princeton Financial Systems In Musician’s Friend
RBC Dexia Investor Services Oriental Trading Company
Smart Stream Technologies Ltd Sterling Testing System
State Street IMS IT TDS Telecom
Thomas Cook
Insurance Automotive and Manufacturing
American Safety Insurance Daimler Trucks North America LLC
California Casualty Group GATES, USA
Cincinnati Insurance Company T-Systems
Pine Bridge Investments Services Limited
The Dominion of Canada General
Insurance
The Manufacturers Life Insurance
Company

Consumers:

Let’s see the customers of Syntel in their various Field

Development Centers:
13 centers worldwide (10 centers in India, 3 in US). 12,000+ capacities in India 4,000

15
seats added in 2007.

Mumbai

Chennai

Pune

Syntel operates from 27 offices worldwide, strategically placed across the US, Europe and
Asia, which enables Syntel to provide best practice IT solutions; staff mobility; responsive
turnaround; and cost-effective delivery and technical expertise.

AWARDS

Quality & Technical Certification:

 ISO 27001:2005

16
  India Development Centers operating at SEI CMMI Level 5

 ISO 9001:2000 Certification for India Development Centers

 Project Management Institute (PMI) Registered Education Provider

 Microsoft Certified Gold Partner

Consumer recognition & other awards

 Fortune 50 General Merchandise Retailer: #1 Offshore Vendor Partner

 DaimlerChrysler: Highest "Preferred" Award

 Harvard Business School "Entrepreneur of the Year"

 Students in Free Enterprise (SIFE) " Champion of SIFE"

Media & analyst recognition & ranking

 Crain's Detroit Business "Largest Publicly Held Companies (Ranked by 2007
revenue)" (2008 [#34])
 The 2008 Aberdeen Report: State of the Market, "Top 100 Most Influential
Technology Vendors for 2008" (#90)

 International Association of Outsourcing Professionals "The Global Outsourcing 100"

(2008, 2007)

 Global Services "Global Services 100" (2008, 2007)

 Oakland Business Review, "One of the Largest Public Companies Based In Oakland
County", 2007

 Forbes "200 Best Small Companies in America," 2008, 2007,2004-2001,1998[#90])

 Software Magazine, "Software 500" 2007 (#118)

 Dataquest India Top 50 IT Companies, 2006-2007 (2007 [#35], 2006 [#33])

 The Black Book of Outsourcing's "50 Best Managed Global Outsourcing Vendors",
2007 (#25)

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 Accounts Receivable Management

Money owed by customers (individuals or corporations) to another entity in exchange for

goods or services that have been delivered or used, but not yet paid for is known as Accounts
Receivable. These Receivables usually come in the form of operating lines of credit and are
usually due within a relatively short time period, ranging from a few days to a year. On a
public Ltd. company's Balance Sheet, Accounts Receivable is often recorded as an asset
because this represents a legal obligation for the customer to remit cash for its short-term
debts. If a company has receivables, this means it has made a sale but has yet to collect the
money from the purchaser. Most companies operate by allowing some portion of their sales
to be on credit. This type of sales is usually made to a frequent or special customer(s) who are
invoiced periodically, and allows them to avoid the hassle of physically making payment as
each transaction occurs.

Accounts Receivable is not limited to businesses only. - Individuals do have them as well.
People get receivables from their employers in the form of a monthly or bi-weekly paycheck.
They legally owe this money for services (work) already provided. When a company owes
debts to its suppliers or other parties, these are known as accounts payable.

By maintaining Accounts Receivable, firms are indirectly extending interest-free loans to

their clients. A high ratio implies that either a company operates on a cash basis or that its
extension of credit and collection of Accounts Receivable is efficient.

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 Accounts Receivable Procedure

1. Receivable files have to be updated soon after the close of billing for a month or
on receipt of a remittance. They are maintained month wise. Always the latest months file
should be considered as the final one. As a practice the last preceding month file is copied
in a new folder, which is named with the relevant month & then the updated.

2. The file is maintained customer wise consisting of various details viz. Invoice
Month, Foreign Inward Remittance Certificate No.(FIRC),FIRC Date, Realized Date,
Remitted Amount, Softex Bank, Softex No., Date, Rate Applicable., Invoice No., Invoice
Date, Invoice Amount USD/Euro, FIRC Adjustment Amount in USD. The fresh invoices
raised are to be incorporated in an order as Chennai, Pune & then Mumbai invoices.

3. The debit notes raised for a month towards buffer & expense recovery are also be
incorporated in the same sequence as followed for invoices i.e., Chennai, Pune & then
Mumbai Debit Notes.

4. The closing balances after every updating to the file must to be cross-verified with
the INR figures per books.

5. Generally, after closing the billing for a month, outstanding statements for all the
customers are prepared in a standard format stating the correct outstanding amount as on
that date. Outstanding statements may also be prepared as and when necessary.

6. As per the rules laid down by Reserve Bank of India (RBI), proceeds from exports
must be realized within 180 days from the date of raising the invoices. Hence, customers
are followed up for payments once every month. If the receivables have exceeded 5
months, then every week reminders are sent or phone calls are made.

7. Remittances from Syntel are (in a sequence) first received in our bank a/c
maintained in USA with “Bank 1”. Thereafter from that money, remittances with
considerable amount are transferred to India in EEFC bank a/c. maintained with Credit
Agricola Indosuez Bank (CAIB). This practice is undertaken for complying with RBI

19
 guidelines, which states that at least 70% of the entire export proceeds must come to India
in the form of foreign currency. Whereas remittances from all other customers are directly
received in India in our EEFC a/c with CAIB.

8. Against every receipt of a remittance in foreign currency, a certificate named

FIRC (Foreign Inward Remittance Certificate) is issued. This gives certain details namely,
Name of Remitter, Amount Remitted, Currency Type, Conversion amount to INR, Rate
Applied, etc., These details need to be mentioned in the receivable files which is use for
carrying out other statutory formalities. FIRC’s are issued for only those remittances,
which received in India.

9. Remittances received are normally allocated on FIFO method (First in First Out).
However as per guidelines of RBI, for remittances received in foreign bank a/c. (herein
Bank 1), only onsite invoices raised from Mumbai can be settled and hence, the FIFO
method may not be consistently followed.
“For remittances received in India as per the allocations done (i.e., FIFO method),
following treatment should be taken up”
a. 100% of the foreign currency can be retained in EEFC a/c, only for those
invoices settled against the said remittance, which are raised from Mumbai.

b. 70% of the foreign currency can be retained in EEFC a/c. only for those
invoices settled against the said remittance, which are raised from Chennai & Pune.
Balance 30% must be converted to INR.

c. NIL of the foreign currency can be retained, i.e., 100% conversion to INR
for all Debit Notes allocated to the said remittances.
Thus, a proper figure of the foreign currency retainable and those to be converted are
arrived.

10. The aforesaid allocations are done in the receivable file itself (i.e., updated one
latest) and a letter in standard format advising the bank about the aforesaid conversion is
prepared. After the signatures are obtained on it, the same is communicated via phone &
fax and the exchange for conversion to INR is negotiated.

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11. Once the negotiation is through, entries are booked in accounts as per the
sequence in which the remittances were received.

12. Again, the closing balance in receivable file and that in books are cross verified
for correctness.

Let me explain some points with the help of Process name, Owner and Type.

Process Capture Contract Information

Process owner Delivery Director/ Project Manager
Billing Supervisor (GFT)
Process Importance Moderate
Process Type Internal

 Creation of Project Identification Code (‘Project id’):

 Upon creating a ‘deal’ in Customer Relationship Management (CRM) module of

PeopleSoft, the Sales personnel mentions the industry vertical and location to which the
project belongs, based on which, the Delivery Director is selected who would be
responsible for making the proposal and creating project id and organize resource
allocation, if the deal is won.

 Upon receipt of Letter Of Intent (‘LOI’) or Statement of Work (‘SOW’) from the client,
the lead owner (Sales personnel) updates the probability of winning the deal to 80% in
CRM module of PeopleSoft.

 Upon such action, through a real time interface between PeopleSoft CRM and Finance,
the deal appears in the Projects module on PeopleSoft as pending for creation of project
id. The respective Delivery Director or his secondary logs on to the Project module and
create a project id.

 The Delivery Team and India Finance share a common folder on the server where all
SOW/New contracts are saved for reference. In case the project id has not been created or
any of these contracts, the same is highlighted by Finance to Delivery Directors / BUHs.

 Filling Contract Information:

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 At the time of creation of project id, the Delivery Director/ Project Manager are also
required to fill up the following information in E-projects module of PeopleSoft based on
the LOI/ SOW/ Signed contract:

 Project General information

 Project Location and Project Skill
 Project Administration Team Information

 Approval of Project Id

 Once the project id is created and the required information is filled in, the same is
submitted on PeopleSoft for approval from Global Finance Team (GFT).

 An auto e-mail alert is generated and sent to Billing and Legal team for action at the
respective ends.

 Billing Supervisor (GFT) verifies that the information entered by Delivery department
is in accordance with LOI/ SOW/ signed contract.

 Once the project is approved, resource allocation can be done and cost can be
captured against the same. Billing shall be permitted only on entering the SOW/CR
details and verification by finance.

 Once the project is approved, an auto generated mail is triggered to the Sr. Manager -
AR (India Finance) for his approval incase project is of Syntel Limited.

 Creation of Statement Of Work[SOW]:

 After GFT approves the project, Project Admin Team needs to add the SOW /
Contract details in the system for Fixed Price as well as T & M Projects.

 An auto email is generated and sent to the Sr. Manager – AR -for action.

22
  Depending on the project owning entity, the same is approved by the Sr. Manager -
AR for billing purposes.

 In the event of non-availability of signed contract/SOW, the SOW information shall

not get approved by finance and no invoicing shall be permissible.

 Capture Change Order Information

A change order may result in either of the following:

 Addition or extension of amount/ time etc. in Fixed Price (FP) Contract or Time &
Material (T&M) Contract:

 In such case sales personnel will have to create a new deal in CRM Module, and
same process shall be followed till the deal qualifies and updated in CRM
Module.

 After that the authorized person of Project Admin Team shall add the SOW /
Contract details in the PeopleSoft for FP Project or T&M Projects as the case
may be.

Or
 Reduction in amount or time Fixed Price(FP) contract or deletion of employee in
Time & Material (T&M) Contract:

 If there is FP contract then in such case the SOW / signed contract shall be first
approved by the Sr. Manager- AR and after that the Project Admin Team shall
send a request to the GFT Billing Team to approve the change.

 But if there is T&M contract then in such case the new billing schedule shall be
approved through separate TM approval link in PeopleSoft.

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 Determine appropriate accounting treatment:

At the time of creation of project Id, Project Manager identifies the nature of contract as
to whether the contract is fixed price contract (development or support/ maintenance) or
time and material (‘T&M’) contract. Upon receipt of signed contract, the Billing
supervisor verifies the same and discrepancies are communicated to the project manager,
who in turn rectifies billing information entered at the time of creation of project id.

The Company has laid down accounting treatment for each type of Contract:

 T&M – as billed else accrued.

 Fixed Price – Maintenance – Straight line or monthly billing.
 Fixed Price – Development – Percentage of completion (based on efforts).
 Billable expenses – as billed else accrued.
In addition to the above, in the case of Master Service Agreement (MSA), the billing team
summarizes other special covenants in Excel worksheets. Such covenants include:
 Incentives, Rebates
 Warrants
Each of these clauses is reviewed and appropriate accounting treatment for the same is
decided for each contract.

Process Capture billing information

Process Owner Project Manager
Senior Manager - AR
Process High
Importance
Event type Boundary

 Process description:
Billing information in respect of Fixed Price contracts and Time and Material contracts is
maintained on PeopleSoft. Once the project id is approved by Global Finance (Billing
team), the Project Manager enters the billing information in ‘SOW/PO Information’
Screen of PeopleSoft.

24
 Fixed price contracts:
In respect of Fixed Price contract, the Project Admin Team fills in the SOW/CR/PO
details. Details like phasing duration, invoicing due date, billable amount, billing contact,
address etc., can be recorded here. Once all the information is recorded it can be
submitted for approval to Senior Manager – AR (India Finance) along with an attachment
for SOW/CR/PO details which is mandatory.

On Submission of the SOW/CR/PO details for approval, an auto mail is triggered to the
Senior Manager – AR (India Finance) for approving the details filled by the Project
Admin Team. This auto-mail gets triggered on daily basis till the time he approves the
SOW/CR/PO details.

Senior Manager – AR (India Finance) can either approve or deny the SOW/CR/PO
details. On denying the SOW, it will again move to the Project Admin Team to correct the
details. For Managed Time and Material Projects, total billing is restricted to the
maximum of consolidated Total Contract Value (TCV) of all the SOW’s in the project.

Any modification can be done only by entering additional billing lines with positive/
negative amounts through the way of CRs. Negative billing lines are treated at par with
the positive lines and accordingly the process for accounting of such reversal entries is
identical to raising an invoice. In case the concerned Project Admin Team enters any
billing line for a past date, the same gets included in the list of invoices to be generated
within next five days and auto generated mails will get triggered to Project Admin Team
and India Finance Billing team. In such a case, the invoice date and the date of
accounting is the current date.

 Time and Material (‘T&M’) contracts

The Project Admin Team fills the SOW/ PO details, along with a SOW/ PO/ CR as
attachment which is mandatory. Employee wise or Role wise details, the details include
role description / employee details, rate, unit of measurement, validity period, maximum
billable amount, maximum quantity etc.

25
 Process Generate billing
Process Owner Assistant Manager – AR
Support Process Finance Executive - AR
Owner
Process Importance High

Once all the information is recorded it can be submitted for approval to Senior Manager –
AR along with an attachment for SOW/CR/PO details which is mandatory. On
Submission of the SOW/CR/PO details for approval, an auto mail is triggered to the
Senior Manager – AR for approving the details filled by the Project Admin Team. This
auto-mail gets triggered on daily basis till the time he approves the SOW/CR/PO details.

Based on the SOW Contact information entered by the project team and the SOW
attached, the Senior Manager – AR will approve the details.

In case of the new billing roles/ employees are entered in the existing SOW then Senior
Manager – AR needs to approve the same for invoicing through separate T&M approval
link in PeopleSoft.

Senior Manager – AR can either approve or deny the SOW/CR/PO details. On denying
the SOW, it will again move to the Project Admin Team to correct the details. Any new
SOW/CR/PO shall be added in through the same process mentioned above.

 Process description

The Company uses billing modules of PeopleSoft for capturing billing information and
generating invoice.

The Company enters into two types of contracts viz.:

 Fixed price contracts.

 Time and Material contracts.

 Fixed price contracts

26
 Five days prior to the date of billing as per the billing schedule, an auto mail is triggered
to the concerned Project Manager to approve the respective billing lines. <deleted
statement on a copy of the same is also sent to finance> This auto-mail gets triggered on
daily basis till the time project manager either approves the billing line or changes the
date of billing to some future date.

 Once the Project Manger approves the billing line, an auto mail is triggered to the India
Finance Billing Team to generate the invoice. <new Para- difference between the above
highlighted point is that the copy in the first case is sent at the first instance, while here
Finance receives it on approval by project>

 On a regular basis, the Finance Executive – AR generates ‘Billing Worksheet’ for Fixed
Price contracts on PeopleSoft. This worksheet summarizes all approved billing lines,
wherein the date of billing is within next five days. Once the billing worksheet is
generated, the Finance Executive - AR submits the same for billing.

 Prior to submission of billing worksheet for billing, Finance Executive - AR has rights to
uncheck any of the approved billing line, in which case, invoice will not be generated in
respect of that billing line. However, such line will continue to appear in all subsequently
generated billing worksheet, till the time invoice is generated in respect of the same.

 Once the billing worksheet is submitted for billing, invoice gets generated in new status
in PeopleSoft in the specified unit for that project. The status of such invoices in the
system is ‘New’ and all its fields are editable at this stage. It is ensured that the
accounting date matches with the invoice date. Date of invoice is the same as mentioned
in the respective billing lines.

 All invoices with ‘Ready’ status are finalized by running the process ‘Generate billing’ in
the PeopleSoft. Upon such action, Accounts Receivable records get updated and the
invoice becomes non-editable.
 Thereafter, the General Ledger (‘GL’) team runs Journal Generator on a regular basis and
the general ledger gets updated.

27
  Once the invoice gets finalized, the respective invoice number gets updated in the SOW
billing lines sent for billing.

 In case the concerned Project Manager changes the date of billing in billing line to a past
date, the same gets included in the list of invoices to be generated within next five days
and auto generated mails will get triggered to Project Manager and India Finance Billing
Team.

 Such invoice gets picked up in the billing worksheet, invoice is raised and Accounts
Receivable balance is updated in the usual manner. The accounting date and invoice date
are left at current date.

 Time and Material (‘T&M’) contracts

The main source of information for T & M billing is employee’s time sheets. Depending
on the terms of the contract agreed with the customer, the time data source could be either
SYNTEL’s time sheets (or) Customer time sheets. Accordingly, there is provision for
generating invoices based on either of the systems.

 Billing based on Syntel Timesheets:

In cases where Syntel timesheet is used , Only hours recorded under ‘Work Hours’ in the
resources timesheets will be considered for billing purpose. In case of Customer
timesheets, the details uploaded as the client approved hours are considered.
Depending on the requirements of the customer, the details are either uploaded into the
customer websites or invoices sent out to the field for submission to the customer.

 Billing based on Customer Time sheets:

28
 Project Admin Team need to choose the option for ‘Client Time sheet’ as ‘Yes’ when they
are creating the new Projects associated with this type of requirement.

For all such projects where billing need to be based on the client time sheet, Project
Admin Team need to either record efforts spent by their resources either through online
pages (or) upload using the Client Time sheet upload facility given in PeopleSoft. They
may also send the details to India Finance Billing Team.

 The details to be captured shall be the employee details, the period and the billable hours.
This facility shall be available with the Finance Executive - AR as well who may upload
this approved data on receipt from delivery.

 As these time / effort details have been uploaded by managers or above, there is no
separate approval required for these details. All the above-mentioned efforts in hours are
considered as billable hours by billing system.

 From capture billing info file and not generate billing file> Finance Executive - AR
receives the time data from the delivery team at the end of each customer billing calendar.
For some customers, Finance Executive - AR accesses the time details from the customer
website. Further, for some customers, auto mails are received directly from the customer
time-tracking system.

 From capture billing info file and not generate billing file> Depending on the
requirements of the customer, the details are either uploaded into the customer websites
or invoices sent out to the field for submission to the

Invoice generating process both on the basis of Syntel Timesheet and

Customer Client Sheet:

29
 Finance Executive - AR can generate the billing worksheet based on the
approved/submitted time sheets (Syntel / Customer time sheets) for the applicable pay
period. Following conditions are observed by the billing system while generating the
work sheet.

 Approved bill rates on either role based (or) employee based are available for all the
billable resources whose time sheets are being considered for billing purpose.

 Aggregate of employee wise billed quantity and billable quantity doesn’t exceed the
maximum billable quantity defined in the SOW (based on the terms of SOW & Project
definition).

 Aggregate of role wise billed quantity and billable quantity doesn’t exceed the maximum
billable quantity defined in the SOW (based on the terms of SOW & Project definition).

 Aggregate of the role wise billed amount and billable amount doesn’t exceed the
maximum billable amount defined in the SOW (based on the terms of SOW & Project
definition)

 Time sheet span falls within the approved time span (From – To Date mentioned in the
SOW lines) on the SOW for the resources who have been deployed on the project.

 OT Rate is considered in case employee had worked for additional hours as per the
timesheet.

 Once the worksheet generation is completed for the billing services rendered by resources
working on Time and Material basis, Finance Executive – AR can review the work sheet
and confirm so that final invoices can be generated.

 Finance Executive - AR can approve all submitted billing worksheets or selectively

approve billing worksheets for which information is correct.

30
 Once the billing worksheet is submitted for billing, invoice gets generated in new status
in PeopleSoft in the specified unit for that project. The status of such invoices in the
system is ‘New’ and all its fields are editable at this stage.

 All invoices with ‘Ready’ status are finalized by running the process ‘Generate billing’ in
the PeopleSoft. Upon such action, Accounts Receivable records get updated and the
invoice becomes non-editable. Thereafter, the General Ledger (‘GL’) team runs Journal
Generator on a regular basis and the general ledger gets updated.

 Once the invoice gets finalized, the respective billing information gets updated in the
SOW billing lines sent for billing.

 For resources not having a valid SOW invoices shall not be generated. The check for the
same shall be at the worksheet level which checks the above conditions

 Billable expenses (Pass through transactions)

 From capture billing info file and not generate billing file> Billable expenses are billed
once they are processed and paid by the Company.

 At the time of creation of project Id, the Delivery department specifies as to whether the
expenses are billable or not. However, despite selecting ‘No’ option at that time, the
employee may flag the expense as billable and the project manager may approve it.

 In addition to expenses routed through Accounts Payable module/Employee Expense

Sheet, there are certain expenses that are processed manually such as billable expenses
paid by Syntel India / other group companies.

 <New> Report on client billable expenses is downloaded every month to raise Debit Note
on client for Syntel Limited.

31
 But for other group company’s employee, a separate report on employee’s expense comes
to the India Finance Billing Team on monthly basis through mail.

 Invoices / debit notes are generated manually in PeopleSoft through AR Module in

respect of the above mentioned expenses.

 Generally, billable expenses are invoiced (debit notes) to the customers at the beginning
of the subsequent month for the previous month, billing date being last date of the
previous month, unless there is specific requirement from the client to invoice it at
different periodicity and on different dates.

 In addition to above, in certain cases, at times, billing team generates a billing schedule
for such pass through expenses. This is primarily done in the case, wherein the expenses
have not been claimed by the employees on deputation for on-site projects.

 State Taxes

GL team creates individual codes for all State taxes in PeopleSoft. At the time of raising
an invoice, the Billing Executive selects the relevant State code and taxes are
automatically computed and posted in ledger. Only the GL team can create new codes
and modify the existing ones.

Process Maintain customer files, collections and tracking receivables

Process Billing Supervisor/ Collection Officer
Owner
Process High
Importance
Event type Boundary/ Ledger/ Internal

 Maintain customer master files

 Customer id is created in PeopleSoft. The following process is followed for creation of a

customer:-

32
 Intimation is provided to the Global Finance Billing Team through mail indicating the
need of creating new customer.

 Intimation is sent out to the sales / delivery field for completion and submission to Global
Finance Billing Team for creation of customer ID.

Based on the details the customer ID is created in PeopleSoft. The format includes the
complete details about the customer and the customer contact. The following are few of
the fields in the template:-

 Customer Name
 Customer Address
 Country
 Pay Terms and currency
 Tax Applicability
 Contact Person – Name, Title, phone numbers etc.

 Once the information is updated in PeopleSoft, a unique numerical identity is allotted in

PeopleSoft for the customer. Simultaneously a customer contact is also created, which is
mapped to the customer. The template files are saved in a separate folder.

 The PeopleSoft Team links the PeopleSoft Financial Customer with the CRM Customer
Once the linking is done, the sales / delivery field can create the needed project in
PeopleSoft by selecting the deals. Contact Information can be added by the project admin
team in PeopleSoft.

 Collections

 changed...earlier <30 days from invoice> Credit period to the customer is decided based
on the customer relations and terms and conditions as mentioned in the SOW.

33
 All ‘Checks’ are received at Troy office. Upon receipt of,’ Checks’ the Finance
Coordinator (Troy office) fills pay-in slip and deposits them in bank on the same day.
The pay-in-slip, ‘Checks’ and the supporting documents are scanned and uploaded on the
server in a separate folder.

 On a daily basis, this folder gets replicated on the network used by Global Finance Billing
Team in India and is accessible only to the concerned members of India Finance Billing
Team. Finance Executive - AR prints the scanned copy and keeps it for record purposes.

 Global Finance (General Ledger ‘GL team’) downloads bank statement of all accounts on
a daily basis and forwards the same to Treasury Team & India Finance Billing team. In
addition to this, the Coordinator at Troy office ends the details pertaining to such wire
transfers received from clients, in form of scanned documents. In certain cases, India
Finance Billing Team obtains such details from website of the customers.

 Content changed... conveys same meaning> after this the Finance Executive – AR
updates the standard Excel sheet maintained by the AR team, where he updates the date of
receipt of payment against the particular client and particular amount.

 Finance Executive - AR updates all collections made during the day in the Accounts
Receivable (‘AR’) module by entering the collection details in regular deposits under
online payment icon. After entering all details an automated deposit id is generated in
PeopleSoft. This deposit Id mentioned against the corresponding collection entry made in
the standard Excel sheet maintained by AR team.

 This deposit Id is entered in the apply payment icon of the AR Module and posting is
done by creating worksheet in PeopleSoft Upon such action, he creates rows equaling
number of ‘Checks’/ wire transfers specified, for entering the collection details.
 It is mandatory to link each collection entry to one or more deposit ids. In case the total
of individual collection details do not match with the total collections entered against the
deposit id or project id has not been selected for all amounts collected, the system does
not allow the Finance Executive - AR to proceed.

34
 Once this panel is finalized, the Finance Executive - AR is required to link each collection
to specific invoices in the next panel, wherein the invoice number can be inserted against
which collections are outstanding are listed.

 In case of part/ excess payment received against the invoice, the Finance Executive - AR
modifies the invoice amount and links it to the collection and upon such action, system
automatically computes the remaining (or excess) amount against that invoice and
displays the same in a separate row. However, if the invoice amount is not overwritten or
amount overwritten does not match with the collection amount linked to the invoice, the
system does not allow the Finance Executive - AR to proceed further.

 In case customer has not communicated the invoice details against which the collections
have been made, Finance Executive - AR links the amount to ‘On-account receipt’ under
the project id and follows up with the Project Manager / Engagement Manager for the
same.

 Upon linking collections to invoices, Finance Executive - AR activates the ‘run function’
on PeopleSoft to update Accounts Receivable’ ledger. Further, such information gets
updated on PeopleSoft on a daily basis by way of an electronic interface, wherein Sales
and Delivery personnel can view it. Further, ageing reports are also generated from
PeopleSoft (earlier Syntranet, both cases).

 <earlier- at the end of the month> At the regular interval, GL team runs ‘Journal
Generator’, wherein all collection entries get posted into ledger.

 In the event of dishonor of cheques, (new) If the collections falls in the same month and
the invoices are not knocked off against the collection then the Finance Executive – AR
cancel the payment but if the collection falls in the next month and invoices are knocked
off against the invoice then the fresh invoice raised with same number precedent with the
Alphabet A. However, in such case, the Accounting date being the current date, ageing
report will not reflect the correct ageing of amount.

 Tracking of receivables:

35
 The billing team generates the following reports from PeopleSoft to track the receivables:

 Collection report (summary/ detailed)

 Ageing report

 Project invoice status report

Sales personnel are entrusted with the primary responsibility for collections of dues. The
India Finance Billing team follows up with the Sales personnel for collections on a
regular basis. Sales personnel/DM/EM/BU head can download the ageing report for their
own verticals through the PeopleSoft.

A weekly call is scheduled for each Business Unit Head and his reports (includes DDs,
EMs and Sales persons). A detailed discussion happens between the Delivery team, sales
team and Global Finance team where the collections update is taken and a heads up is
given in case any delays are observed.

On a monthly basis, the India Finance Billing team along with Sales and Delivery
personnel estimates the amounts doubtful of recovery on a specific identification basis.
These estimates are reviewed by CFO and CEO. Further; all irrecoverable balances are
written off. All such write offs are approved by CFO and in case, amount exceeds USD 2
million, by CEO as well.

Accounts Receivable Management specialists can help you in a variety ways:

 It can cut and maintain your average collection delay

 It can lessen your direct and indirect expenses
 It can considerably reduce your bad debt
 It can tell you various ways to take advantage of your cash-flow
 It can help you capitalize on your internal resources
 It can maximize your interventions on sales, service and market share.

Whether or not to offer credit is generally dictated by industry practice & is management
design practice. Generally there are five ‘C’s of credit analysis which are Character,

36
Capacity, Capital, Collateral, and Condition.

But in IT company like SYNTEL if you start study on accounts receivable management
you automatically face various other term like People soft or SAP application,
Automation, onsite & offshore transaction etc.

Since SYNTEL is situated in Special Economic Zone (SEZ) and Software Technology
Parks of India (STPI) area so I also focus on SEZ & STPI related filing in next topic i.e.
“Data Presentation and Analysis” which includes [Creation of Deal, Statement of Work
Order (SOW) & Master Service of Agreement (MSA)], Billing includes Onsite Offshore
Transaction, Foreign Remittance against Exports, Softex Form, FIRC. All thus are
mandatory to follow in IT Company, Especially if company situated in SEZ and STPI
location so company have to follow the Softex form Part compulsory which help the
company in Taxation purpose from RBI point out. So let us discuss with all this point in
next page clearly.

DATA PRESENTATION AND ANALYSIS

This is divided as follows shown in table

A. Deal ID Creation
B. SOW & MSA
C. Billing
D. Foreign Remittance against Exports.

37
 E. Softex Forms

A) Deal ID Creation:
Accounts receivable department in an organization must be strong to have smooth flow of
working capital requirement. In SYNTEL account receivable procedure is start with deal.
Complete step wise procedure is given below.

 Enquiry & deal: Generally contract began with client’s enquiry. But in SYNTEL most of
their consumers are regular so they know terms & condition of SYNTEL. But still
negotiation is must, so in first step negotiation is has done. In this step the client mention
his various requirement & condition in term of Time line, Budget, Involvement, Scope,
Quality, Quantity, and Procurement & Risk. In an every business the need of client is very
crucial; SYNTEL is considering this fact very well.

 Project detail establishment & Project ID creation: Once the negotiation is done &
both parties are mutually agreed, new project detail is gathered. Client is responsible for
providing project detail. Once detail is gathered Project ID is created. New project ID is
including 5 digit numbers like PID: 73138, 90224, and 91245 90221etc…which is unique
& for that specific project only.

 Organizing project team & Task assignment: Delivery department (which involve in
negotiation) are responsible for creation of right project team, which must cost
effective as well as able to deliver & complete project with specific time with Quality.
Delivery team must clearly define concept to team along with duties & responsibility that
they have to perform. In this process service order is created & if assign employee is not
able to provide such he is replace with other one which is able to perform. Services
include offshore & onsite.

38
  Enter milestone detail & SOW creation: Once team is organize next project related
detail is field in PeopleSoft it’s one software where all the details are updated regarding
new project sow is an agreement which include detail of how work will be executed,
Time line schedule & other information of the project, detail of that is given below. (That
we will see in next heading).

 Organizing for time sheet or fixed price sheet: FP process will extract the Scheduling
lines information from SOW page and put it into worksheet table based on the run control
parameters. T&M worksheet generation processes summarize the timesheet data and map
the rates to the employees and inserts in worksheet table. Rates defined in SOW pages
can be Employee wise or role wise as specified in project attributes.

 Project execution & development: While on the other hand project is executed by
project management team. They can make proper development with consent of
development team & client.

 Invoice generation & collection: Accounts receivable department are responsible for
invoice generation & forward it to client. They also sent reminder to client but still if
client is not paying above case are forwarded to development team (which is in
negotiation). Development team is responsible for collection from client.
 Other formalities: The work of account receivable department is not end with just of
collection they have to perform other task like Softex filling, FIRC filing, RBI export
document filling, closer of PeopleSoft procedure of that specific project ID. We will see
all in next point respectively.
B) SOW & MSA:

I. SOW: A statement of work (SOW) is a document that captures and agrees the work
activities, deliverable and timeline that a vendor will execute against in performance of
work for a customer. Detailed requirements and pricing are usually specified in a
Statement of Work, along with many other terms and conditions.

Area’s that are typically addressed by an SOW are as follows:

39
  Scope of Work- This describes the work to be done in detail and specifies the hardware
and software involved and the exact nature of the work to be done.
 Location of Work- This describes where the work is to be performed. This also specifies
the location of hardware and software and where people will meet to perform the work.

 Period of Performance- This specifies the allowable time for projects, such as start and
end date of the projects, number of hours that can be billed per week or month, where
work is to be performed and anything else that relates to scheduling.

 Deliverables Schedule- This part lists the specific deliverables, describing what is due
and when.

 Applicable Standards- This describes any industry specific standards that need to be
adhered to in fulfilling the contract.

 Acceptance Criteria- This specifies how the buyer or receiver of goods will determine if
the product or service is acceptable, what criteria will be used to state the work is
acceptable.

 Special Requirements- This specifies any special hardware or software, specialized

workforce requirements, such as degrees or certifications for personnel, travel
requirements, and anything else not covered in the contract specifics. There are many
formats and styles of Statement of Work document templates that have been specialized
for the Hardware or Software solutions being described in the request for proposal.
SYNTEL create their own customized version of SOWs for use within their vertical that
have been either specialized or generalized to accommodate the typical request and
proposals of their client. (Sample of SYNTEL SOW is given in Annexure)

II. MSA: The master service agreement is document that contain in detail term & condition
of contract. SOW is document that contains the work schedule, payment, period etc... But
in MSA if certain work did not take place then action regarding same is mention. It
includes all terms & condition in detail. Clauses are as follows.

40
 Term of contract: This is statement regarding starting & end of effectiveness of
agreement.

 Service to be performed by contractor: This is statement regarding service that will be

performed by contractor, any additional service, independence of contractor, involvement
of client, Payment of taxes etc.

 Compensation: Include Payment of services, timesheet or fixed payment, Payment of

other misc. expenses etc.

 Obligations of Syntel: Time & place of performing services, assignment, level of

interaction between SYNTEL & client while performing services, Legal status of
employee etc.

 Obligation of client: Co-operation & involvement of client, client can’t offer

employment to any SYNTEL employee directly or thought any agency etc...

 Proprietary right: Include statement regarding confidentiality & privation of

confidential information from both the parties.

 Termination of agreement: Include clause regarding expiration of contract,

termination on or without notice, termination for default.

 Indemnity & warranty: Include statement regarding warranty & standard for
performance of work, intellectual property indemnity, legal & general clause
regarding the same etc.

 General provision: This is general clause & includes various statement like any
sub clause in addition to above, partial invalidity, choice of low, arbitration

There are many term & condition are included in this MSA which differs from deal
to deal. The consumer further acknowledges that the submission of the order

41
 constitute acceptance of this agreement & will bind the consumer to all of the
terms & conditions thereof. (Sample of SYNTEL MSA is given in Annexure).

C) Billing:
Billing is done in two types Fixed Price (FP) Contract and Time & Material
(T&M) Contract. Bills raised on monthly basis for Offshore and Onsite Projects.
When SYNTEL employees go to client’s venue in abroad & provide service it is
called as onsite transaction. On the other hand if SYNTEL employees provide
service from its office situated in India, it is called offshore transaction. Find the
below chart to know the process of FP and T&M billing. Where both the billings
starts from the Delivery team approval for billing line to make the invoice for
respective period and end with approval of those billing lines from Billing Team.

Procedures for Onsite & Offshore Projects Billing:

 Time Sheets are received from all the Project Managers duly initiated from the corporate
office for all the offshore employees in Mumbai & Chennai. (For Chennai – Time Sheets
are forwarded by Mr.Lakshmikant Srinivasan of Chennai.

 Time Sheets consists of Project Name, Employee No., Name of the Employee, Billable
Hours, International Project Ids duly mailed and signed hard copy by the Project
Managers.
 Only AIG project details are received from Mr. Mike Armstrong marking a copy to
Mr.Dilip Vyas who in turn verifies the same and to reports to us in case of any
discrepancy.

42
 Calculation of Hours:

 The maximum hours to be put by any person are restricted to total working days in the
month @ 8 hours a day.

 The billing hours may be increased in case the project manager has a prior approval of the
overseas engagement manager.

 All working days except Saturday, Sunday and other holidays are considered

 Billing Rates:

 The rate is uniform for all the projects throughout a quarter for both US and UK.

 The rate is increased by 2.5% of the previous rate for the next quarter. No specific
approval is required for the increase in rates.

 Debit Notes:

 Approved Expenses are to be debited to Syntel Inc. and Syntel Europe separately.

 Overtime charges paid to employees with prior approval of clients shall be considered as
expenses.

 Compilation of Billable Hours:

 All the time sheets are compiled project wise and employee wise.

 Separate spreadsheets are complied for each project.

 Project ID number are mentioned on each spreadsheet.

43
 Locations containing different type of work location and Development Units

Work Location Development Units

Chennai IC001
Chennai IC002
Chennai IC003
Chennai IC005
Gurgaon IG001
Mumbai IM069
Mumbai IM076
Mumbai IM089
Mumbai IM096
Mumbai IM097
Mumbai IM098
Mumbai IM099
Mumbai IM109
Mumbai IM112

D) Foreign Remittance against Exports:

Special Economic Zones, the new engines for export led economic growth in India,
defined as: “Specifically delineated duty-free enclave and shall be deemed to be foreign
territory for the purposes of trade operation and duties and tariffs”.

The government of India announced the introduction of SEZ in its export import policy of
March 2000. SEZ is a geographical territory which has rules & regulation different from
country’s tropical policy.

The zone’s performance interacting investment & promoting export competitiveness

seems to be directly related with the location, infrastructure facilities, Quality of
governance & incentive packages offer by govt. 100% income tax exemption on export
income for SEZ unit under section 10AA of income tax act for 5 years, 50% for next 5
years thereafter and 50% of the ploughed export profit for next 5 years.

But to get such benefits the company must prove that they are exporting, for that they
require foreign income remittance certificate. Procedure to get the same is as follows

 Remittances are received against export invoices raised on foreign parties.

 Banks issues a Foreign Inward Remittance Certificate (FIRC) against the remittances.

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 Invoices are to be submitted giving details and adjusted against the FIRC.

SYNTEL employee provide services to its customers

Invoice copies are attached with AR team Sent invoices to its

Softex foam & submit to custom. customer

Custom authorities verified & make

office.
certification of the same.
Certified Softex submitted to bank.
Bank issue acknowledgement &
reference no.
Customer direct deposit invoice
amount to bank & bank issues
FIRC against amount receive.
FIRC is for onsite, offshore & debit
note transaction, whereas Softex is
for only offshore transaction.

Account receivable department employee update Softex detail, bank detail &
FIRC detail in debtor’s sheet

When amount mention in the FIRC is completely received by bank, SYNTEL

submit such FIRC to bank, which finally goes to RBI.

Once FIRC reach to RBI means basic process

of accounting is complete.

E) Softex Forms

A Softex form is a document which is prepared against the Offshore Revenue of the IT
Company and submitted to Custom Office. Softex is prepared by IT Company’s which is
located in SEZ and STPI section.

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 SOFTEX FILING & CERTIFICATION

1) The Offshore Software Exports from India needs to be certified from the respective
locations, in case of Chennai and Pune, Software Technology Parks of India (STPI)
and the Development Commissioner of Customs, SEEPZ in case of exports from
Mumbai.

2) Softex form is filed within the period of 21 days from the date of invoice.

3) Total 3 sets are prepared out of One set of Softex form is accompanied with the
following
a. Annexure
b. Copy of invoice signed as certified true copy
c. Copy of contract (if not filed earlier.

4) In addition to the Softex form we need to file the following with the department. (This
requirement is presently applicable only for STPI.)
a. 3 copies of Statement of Invoice
b. 1 copy of Gist of Contract
c. Copy of Contract / SOW – certified as true copy

5) Softex form is filed only for the offshore invoices. If the invoice includes both the
offshore and onsite amount, then such invoice is also filed.

6) Copy of the full set signed and filed with the department should be kept in the office
for the record and future reference.

7) The above set needs to accompany along with the covering letter which needs to be
acknowledged by the department with sign, date and stamp.

8) One need to make continuous follow-ups with the department to get the Softex forms
and the relevant invoices certified.

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9) Once all the copies are certified, the government authorities certifying them retains
the triplicate copy, the original copies of the Softex forms is sent to RBI directly by
them and duplicate copies are returned back to us. These Softex forms are allotted a
distinct numbers called as Softex No.

10) These Softex no’s are recorded in the “Receivable Files Softex No. column” against
the relevant invoice no’s for future reference & fulfilling of other statutory
obligations

SOME IMPORTANT POINTS ABOUT SOFTEX FORMS

1) Softex forms are prepared for each project separately. As regards to Softex forms for
Syntel Inc and Syntel Europe, we prepare one consolidated Softex form for all
projects.

2) Softex forms are filed in Triplicate. All need to be signed separately.

3) If we have submitted the agreement in the previous month then we have to mark yes
or else we have to mark No and submit the copy of the SOW signed as true copy by
the authorized signatory.

4) To fill up the total value of the invoices raised during the period for which the Softex
is filed. The signed list of invoice should also be attached with each Softex forms. The
amount of both should match.

5) Softex form should contain the place, date and should be signed by the authorized
signatory.

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 Annexure to Softex Forms
1) Annexure is field for each project separately. Therefore Annexure for Syntel Inc and
Syntel Europe, we prepare one in a consolidated form for all projects.

2) The Annexure should give the following details:

a. Client Name
b. Period
c. Particulars of invoice, viz., Month, Country of export, Invoice No., Date of
Invoice and Invoice Amount (in foreign currency).

3) The Annexure should be signed by the authorized signatory.

4) It should be attached with each SOFTEX forms, thus it’s prepared in Triplicate.

STATEMENT OF INVOICE (applicable only for STPI)

Statement of invoice is filed for each project separately. As regards to Statement of

Invoice for Syntel Inc and Syntel Europe, we prepare one in a consolidated form for all
projects.
1) The statement of invoice should give the following details:
a. Client Name.
b. Contract No. and date.
c. Data Communication Service provider.
d. Custom Bonding License No. and validity.
e. Particulars of invoice, viz., Month, Country of export, Invoice No., Date of
Invoice, Invoice Amount (in foreign currency) and Equivalent Invoice amount
in Indian Rupees.
2) The statement of invoice should be signed by the authorized signatory.

3) Three copies of it should be filed.

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 GIST OF CONTRACT
1) Gist of Contract provides the brief description of a contract.

2) It gives the following information:

a) Client Name & Address, Validity of contract – expiry date
b) Work order no. / Project Name
c) Work / Project description
d) Platform used (one can get this data from the PM)
e) Type of Contract – Offshore / Onsite / Fixed Price / T & M
f) Total Contract value – applicable only in case of Fixed Price contract
g) Payment Schedule, Mode of Export – Data Link
h) Approximate man hours / man month rate
i) No. of resources utilized and the period of deployment – (one can get this
information from efforts worksheet or from the efforts signed by Mehul
Dhruva or from an invoice copy)
3) Copy of the contract / SOW should be attached alongwith Gist of Contract. All the
above points (as far as possible) should be highlighted on the contract.

4) It should be signed by the authorised signatory and a single copy of the same is to be
submitted to the department.
Users & access level:

 Users List:

Data entry operator SL Finance representative entering the day-to-

day transaction data in the system not having
edit options.
Manager SL Finance representative supervising the
transactions entered and controlling the various
transactions and reports to be generated.
Auditor Having read only rights for viewing the
transactions

 Access Levels:

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 Data entry operator - Entering the data
Manager - Entering the data
- Create/edit master records.
- Editing data entered
- Enter Monthly feeds like booking rates etc.
- Generating Management reports

Auditor - View transactions/Master file data

- Take reports

2) Work flow:

 Master files are created or updated by the Manager.

 Data entry operator enters day-to-day transactions.
 Manager verifies the data entered and edit it if required.
 Manager generates reports as per the requirements.
 Auditor periodically verifies the data.

3) Master Data Management:

Master Data Management (MDM) comprises of a set of processes and tools that consistently
defines and manages the non-transactional data entities of an organization (also
called reference data). MDM has the objective of providing processes for collecting,
aggregating, matching, consolidating, and quality-assuring, persisting and distributing such
data throughout an organization to ensure consistency and control in the ongoing
maintenance and application use of this information. It is a data base which contains a
specific type of information regarding specific topic or point.
In SYNTEL there are various types of master, list of which are as follows:

 Investment type master, Bank master, Investment scheme master, fixed deposit master.
 Investment list master, User master, Tax rates master, Company master.

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 FINDINGS

1. Account Receivable management is an important activity in finance department

specially when it comes to IT Company & it is situated in SEZ area, because it has lot
of formality as per RBI rule.

2. Accounting procedure in MNC like SYNTEL is complicated because company has to

maintain onsite & offshore transaction account & strictly follow RBI rule &
regulation in terms of reporting.

3. Growth of IT company depends on :

 Performance of employees
 Procedure management (must be strict & high Quality)
 Automation (to speed up the work)

4. In comparison with other industries, in IT Company high level of strictness is

required, because risk of malpractices is more, as we have recent example of
“Satyam”.

5. Excellent knowledge of automation & MS excel is necessary.

6. Contribution of new technology is awesome; it is the performance improvement tool

with excellent speed.

7. SOW & MSA are very much needed for safe dealing & security of both parties.

8. Company which is situated in SEZ area is really benefited by millions of rupees by

merely tax saving & other incentive from government.

Suggestions and Recommendations

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 An MNC like SYNTEL, which has advance procedure, already applied automation & a
growing company; it is very difficult to find problems & provide suggestion. Still I manage to
provide little bit, list of which as follows:

 Working place for finance people must be increased. One more separate roof is needed to
accommodate all Finance people in one single department.

 Accounting & updating process must be revised to have them error free & reason for delays
must be found out.

 After “Satyam” scam it has become necessary to keep a sharp eye on each process of
organization & on its employee.

 Now a day in an IT company attrition rate is high, so company should take periodical
feedback of its employees.

 SYNTEL is doing good social work in the form of SIFE & S’PRAYAS, which they can
improve by expanding it. It may help for creating good image.

Conclusion

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Accounts Receivable comes under the main or basic part of an organization. Proper
management of it will help to improve working capital position of an organization.

SYNTEL is well established company & doing its business in most of the countries of world.
Because of its policy & work methodology it has a very long way to go. It requires growing
its business in India which will provide an additional source of fund for further expansion.

Accounting procedure in SYNTEL is very systematic but still some work is pending and
therefore they have to find the reason for the same.

Automation is an important aspect for an IT company & is needed for other companies too.
But apart from that, the protection of such system & securing privacy is more important.
System loss & spread of information may lead to heavy losses.

In an any IT company ‘process’ is a main part and it may be pointed out that SYNTEL is on
right way to maintain such processes & dealings with rare problems. This proves that the
company: “SYNTEL” is having a very long way to go.

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