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Cash Management System PDF
Cash Management System PDF
Undertaken at
BY ABHISHEK S. IYER
07017788813
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To Whom It May Concern
Certified that the Summer Training Report submitted in partial fulfillment of Bachelor of
Commerce (Hons) [BCOM (Hons.)] to be awarded by G.G.S.I.P.University, Delhi 2013-16,
and Enrolment No. 07017788813 has completed under my guidance and is satisfactory.
Date:
Designation:
2
PROJECT INDEX
TOPIC PAGE NO
Certificate 03
Acknowledgement 05
Chapter I:Introduction 06
Chapter V: Dabur India Ltd. – Agreed Terms and Conditions with Bank 49
List of Tables 56
References/Bibliography 57
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ON COMPANY’S LETTER HEAD
CERTIFICATE
This is to certify that Abhishek S. Iyer, a student of Bachelor of Commerce (Hons.) (B.com (h), a
class of 2013,Vivekananda Institute of Professional Studies, Affiliated to GGSIP University bearing
Enrolment No. 07017788813, has undertaken the Summer Internship Training at
DABUR INDIA LIMITED during 1st June 2015 to 31st July under my supervision & guidance. He has
conducted a study & completed the Project on Cash Management System (CMS).
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ACKNOWLEDGEMENT
I would like to take this opportunity to thank and extend my sincere gratitude towards
Mr. Rakesh Arora, Dabur India Ltd. & Mr. Randhir Singh Azad,
School of Business Studies (SBS),VIPS, G.G.S.I.P University whose valuable guidance and
knowledge helped me to work on this project. This project could not have been completed so
successfully without their valuable guidance and support.
Abhishek S. Iyer
(07017788813)
B.com (Hons.)
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Chapter-I: Introduction
1.1
Introduction:
(a) Cash Management comprises of a series of activities aimed at efficiently handling the inflow
and outflow of cash. This mainly involves diverting cash from where it is to where it is needed. In
other words, cash management is the optimization of cash flows, balances and investments.
Cash‟ in this context, may refer either to cash in the form of currency, or to other equivalents such
as cheques, drafts, deposits, among others. While organizations may hold other assets which can
potentially be converted to cash, cash management essentially deals with the management of liquid
cash and near-cash assets such as marketable securities and time deposits, which can be readily
converted to cash.
a. Transaction: Ready cash balances are vital for routine transactions including
purchases, operating expenses, wages, and other payments such as dividends, taxes
and so on.
b. Precaution: There may be unanticipated cash requirements as a result of sudden
increase in inventory costs, delay in collection of receivables, among others. And
maintaining ready cash balances is essential to deal with such unforeseen expenses.
c. Speculation: Reserving cash balances is also crucial when firms anticipate decline in
prices of raw materials, reduction in interest rates for buying securities, availing
early payment discounts, among others.
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Components of Cash Management
1.1.2. Cash Concentration: This is a quick and cost-effective method of moving funds
from different accounts spread across the country to a single monitored and managed
account. This allows businesses to maximize the use of available cash, and to optimize
returns on consolidated balances.
1.1.3. Financial Risk Management: Risk management is the process of measuring risk,
and developing and implementing strategies to manage and mitigate risk. Financial
risk management plays an important role in cash management, because it focuses on
managing risks in relation to changes in interest rates, commodity prices, stock prices,
exchange rates, among others.
3. Integrated Services: Corporate customers prefer a single platform for all their
financial needs in place of disparate systems. Hence the focus is on integrating cash
management systems with other activities involving the bank. For example, linking
of ERP solutions with banking systems facilitates cash management by enabling
effective trade finance process and investment management, among others.
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(c) The Role of Technology in Optimizing Cash Management: (Implementation strategy of
concept in your present study)
Cash management solutions are not new. The market is mature and many banks offer efficient cash
management solutions. But market forces, economic conditions, and changing corporate trends
have generated opportunities for further innovations in this space.
Although traditionally a large number of these solutions have been windows-based, with many
corporate customers embracing internet banking, several banks are now migrating to browser based
solutions. Technology has been the driving force in optimizing cash management solutions for
corporate customers:
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1.3 Scope of Project:
Cash management solutions are now widely being adopted, and hence there is likely to be an
increase in the number of vendors offering these solutions. Correspondingly, corporate customers
are also likely to become more demanding, thereby promoting more intense competition amongst
vendors. Here are some areas with scope for improvement which vendors can focus on, to provide
better services than their competitors:
Eliminating Disparate Systems: Different cash management solutions are being offered for
diverse segments. And as businesses grow, managing these disparate systems is increasingly
becoming a challenge. Hence vendors should come up with a single platform which can
support various cash management products and services as the business grows.
Customizable Solutions: Banks today offer similar solutions to all corporate customers
irrespective of their size and business. Hence vendors should try to come up with a
customizable platform which can cater to the specific needs of different businesses.
Unified System: Integration of corporate customer systems with banking systems can be very
helpful in reconciliation of internal systems with banking systems, and can support account
management between the bank and customer. And this offers great scope for vendors.
Today, banks are leveraging cash management systems as a tool to build long-term trust with
corporate customers, because these systems will empower bank‟s customers to be empowered
and manage their liquidity position at any given time, thus building a trust and strengthening
the relationship that goes beyond transaction banking
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1.4 Company Profile
1.4.1 Name of the firm/company:-
Dabur India Limited
Corporate Office:
Kaushambi
Ghaziabad - 201010
Uttar Pradesh, India
Tel: +91 (0120) 3982000 (30 Lines); +91 (0120) 3962100, 39412525, 4182100
Registered Office:
8/3, Asaf Ali Road,
New Delhi – 110 002
Tel: +91 (011) 23253488
Dabur India Ltd is one of India‟s leading FMCG Companies with Revenues of over
` 7,806.4 Crore & Market Capitalization of US $5 Billion. Building on a legacy of quality and
experience of over 131 years, Dabur is today India’s most trusted name and the world’s
largest Ayurvedic and Natural Health Care Company.
Dabur India is also a world leader in Ayurveda with a portfolio of over 250 Herbal/Ayurvedic
products. Dabur's FMCG portfolio today includes five flagship brands with distinct brand
identities --Dabur as the master brand for natural healthcare products, Vatika for premium
personal care, Hajmola for digestives, Réal for fruit juices and beverages and Fem for fairness
bleaches and skin care products.
Dabur today operates in key consumer products categories like Hair Care, Oral Care, Health
Care, Skin Care, Home Care and Foods. The company has a wide distribution network,
covering over 5.8 million retail outlets with a high penetration in both urban and rural markets.
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Dabur's products also have a huge presence in the overseas markets and are today available in
over 60 countries across the globe. Its brands are highly popular in the Middle East, SAARC
countries, Africa, US, Europe and Russia. Dabur's overseas revenue today accounts for over
30% of the total turnover.
The 130-year-old company, promoted by the Burman family, had started operations in 1884 as
an Ayurvedic medicines company. From its humble beginnings in the bylanes of Calcutta,
Dabur India Ltd has come a long way today to become one of the biggest Indian-owned
consumer goods companies with the largest herbal and natural product portfolio in the world.
Overall, Dabur has successfully transformed itself from being a family-run business to
become a professionally managed enterprise. What sets Dabur apart from the crowd is its
ability to change ahead of others and to always set new standards in corporate governance &
innovation.
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1.4.3 Company’s vision & mission:
VISION
"Dedicated to the health and wellbeing of every household"
PRINCIPLES
OWNERSHIP
This is our company. We accept personal responsibility, and accountability to meet business needs.
PEOPLE DEVELOPMENT
People are our most important asset. We add value through result driven training, and we encourage
& reward excellence.
CONSUMER FOCUS
We have superior understanding of consumer needs and develop products to fulfill them better.
TEAM WORK
We work together on the principle of mutual trust & transparency in a boundary-less organization.
We are intellectually honest in advocating proposals, including recognizing risks.
INNOVATION
Continuous innovation in products & processes is the basis of our success.
INTEGRITY
We are committed to the achievement of business success with integrity. We are honest with
consumers, with business partners and with each other.
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MISSION
To maximize shareholders‟ value, by offering superior quality nature based products, that
contributes in improving consumers‟ life in personal care, health care and foods.
ODONIL NATURE
HOMMADE SPRAY
CAPSICO
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1) Health Care
3) Food Products
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4) Home Care
5) Ethical
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1.4.5 Organization structure of the company:
% 52 WK 52 WK
COMPANY NAME LAST PRICE MARKET CAP
CHANGE HIGH LOW
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Dabur India Ltd. (DABUR) - Net Sales
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1.5 Industry Profile:
Hajmola , Real & Dabur ranked among India‟s Most Admired Brands
G. Wide distribution network covering 2.8 million retailers across the country
17 world class manufacturing plants catering to needs of diverse markets
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Chapter 2:
The company maintains bank accounts in all towns through Dabur owned Depots.
(Cheques/ drafts received from customers (now here customers are referred to as stockiest) in
nearby places are sent for local clearing to initially collect funds in these bank accounts.
This has reduced the average collection period (as compared to the time it would take if customer
cheques were first received at head office and then sent for out-station clearing) thereby increasing
the velocity of cash inflows. Funds thus collected at the depot towns are each day transferred to the
company‟s head office or corporate bank accounts.
The company has a “sweeping arrangement” with the bank at head-office by which any of the funds
transferred from the depot towns are automatically applied towards settling the company‟s cash
credit loan from the bank and reducing its debit balance. These steps have resulted in reducing and
controlling the cost of interest to the company. When the company has surplus funds, the company
invests the same in short- term investments or instruments like Mutual funds and Govt. securities.
Cheque
PSBC Sorting Deposit in
Bank
Invoice
Parking Acknowledgment
Generates
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Company has “Pre-Signed Blank Cheques” (PSBC) from all the stockiest.
The company receives at least 3 cheques from them. (Security Feature)
•HDFC Bank
North zone Delhi
•Bank of America
East zone Kolkata
•RBS
West zone Mumbai
The company has different terms and conditions with every bank according to CMS terms
negotiated by various banks. Headquarters Dabur Tower, Kaushambi, Sahibabad, Ghaziabad -
201010 (UP), India
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Chapter 3: Payment System in Dabur India Limited
3.1 Cheque
3.2 RTGS
3.3 DD
3.1 Cheque- If there is bouncing of Cheque, and then stockiest would have to pay 3 times the
original amount to the company (Cheque bouncing amount). If the cheque is bounced more
than 3 times the company would block that account.
Cheque Banked
Bouncing Report
Reverse Document
Number
Technical Bouncing
Non-Technical Bouncing
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Processing of Cheque in Dabur India
Cheque
comes in
Cheque
Inventory
Invoice Generation
Truncation is the process of stopping the flow of physical cheque issued by a drawer at some point
with the presenting bank en-route to the drawee bank branch. In its place an e-image of the cheque
is transmitted to the drawee branch by the clearing house along with the relevant info like data on
MICR band, date of presentation, presenting bank.
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This effectively eliminates -
Non CTS cheques were later on was not entertained in DIL and letter was issued regarding
clearing the Non CTS cheques on regular basis (every week).
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g. The return file /data sent by the drawee banks are processed by Clearing house in the
return clearing session in the same as presentation clearing
h. The „clearing cycle‟ is treated as complete once both the above sessions are
successfully processed.
CTS 2010 Standard
Standardization of cheque forms(leaves) in terms of size, „MICR‟ band, quality of paper,
pattern, design of cheque, watermark, bank‟s logo in invisible ink, „VOID‟ photograph
and standardization of field placements on cheques are key factors that enables the secure
mechanism of cheque processing. This all reduces the incidence of cheque misuse,
tampering and alterations.
Growing use of „multicity‟ and „payable-at-par‟ cheques, „CTS‟ introduction and „Speed
clearing‟ uniformly led across the banking industry.
The set of minimum security features would not only ensure uniformity across all cheque
forms issued by banks in the country but also help presenting banks while scrutinizing/
recognizing cheques of drawee banks in an image- based processing scenario. „Indian
Bank Association (IBA)‟ and „National Payment Corporation of India (NPCI)‟ are
coordinating with the banks on implementation of the new standard.
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Picture 3.1: Depicting the new CTS cheques which are under the process.
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3.1.2 Magnetic Ink Character Recognition (MICR)
MICR encoding or say MICR line is at the bottom of the cheque and other vouchers and typically
include the document type indicator, bank code, bank account number, cheque number, cheque
amount and a control indicator. The technology allows MICR readers to scan and read the info
directly into a data- collection device.
The MICR „E-13B‟ font has been adopted as the international standard in ISO 1004:1995, but the
„CMC-7‟ font is widely used in Europe.
1. Cheque serial number of 6 numeric digits preceded and followed by a delimiter. The
alpha-numeric prefix to the serial number should be printed outside the code line in close
proximity, just above the read-band in normal ink.
2. Sort field or the city/ bank/ branch code number consisting of 9digits followed by a
delimiter. The first 3digits (numeric) represents city, the next 3digits (abbreviation-alpha
code) indicate the bank and last 3 indicates the unique branch code. It is unique.
Allotment of branch codes is by the President of the Clearing house of which the bank is a
member
3. Account number field, consisting of 6 digits followed by a delimiter, is an optional field.
In case of Govt. Cheques issued by RBI alone, the account number is of 7digits. The Govt.
account number is of 10digits i.e. 7digits occurring in Account number field and 3 in
transaction code field.
4. Transaction code field comprises of 2 digits in all instruments except Govt. cheques drawn
on RBI which have 3digits. Control documents, batch and block tickets have 3digit
representation in the transaction code field.
5. Amount field, it is the last field and consists of 13 digits bounded on both sides by a
delimiter. The amount is encoded in paisa without the decimal point.
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3.1.3 Endorsement of cheques
Position of Special crossing stamp- Preferably at the top left corner with a slanting
of 60 degrees to the base
Suggested specimen-
Additional Safeguard- The crossing stamp should be affixed in such a manner that
to the extent possible it does not deface „A/C Payee‟ crossing made by the
customer.
Clearing Stamp
The clearing stamp indicates particulars regarding the name of the presenting bank/
branch (alpha codes), date of presentation and type of clearing. Encoding machines
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are programmed to affix the clearing stamp on the reverse of the cheque
simultaneously while encoding the amount.
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3. What was the process followed by banks for collection of outstation cheques before the
introduction of Speed Clearing?
A person who had an outstation cheque with him/her use to deposit it with his/her bank branch.
This bank branch is called the Presenting branch. The cheque, was sent for collection to the city
where it was payable / drawn called Destination center or Drawee center. The branch providing
the collection service is called the Collecting branch. On receipt of the cheque, the Collecting
branch use to present the physical instrument in local clearing at the drawee bank branch
location through its branch at the drawee bank branch location. Once the cheque was paid, the
Collecting branch use to remit the proceeds to the Presenting branch. On receipt of realization
advice of the cheque from the Collecting branch, the customer‟s account was credited. This, in
short, is the process of Collection before the introduction of Speed Clearing.
When a cheque was accepted on a collection basis by a bank, the customer‟s account was
credited only after realization of proceeds. In the absence of a clearing arrangement at the
Destination center, the Presenting branch was sending the cheque directly to the Destination
branch for payment. On receiving the proceeds from Destination branch, Presenting branch
follow the practice of crediting the customer‟s account.
4. How long does it take for getting credit of an outstation cheque sent on Collection basis?
Generally, it takes around a week to three weeks‟ time depending on the drawee center and
collection arrangements to get outstation cheques realized on a Collection basis.
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6. How does the Speed Clearing work?
Banks have networked their branches by implementing Core Banking Solutions (CBS). In CBS
environment, cheques can be paid at any location obviating the need for their physical
movement to the Drawee branch. Cheques drawn on outstation CBS branches of a Drawee bank
can be processed in the Local Clearing under the Speed Clearing arrangement if the Drawee
bank has a branch presence at the local center.
8. What are the charges for cheques cleared through Speed Clearing?
With effect from April 1, 2011, no charges will be payable for cheques of value up to and
including Rs.1 lakh by Savings a/c customers. Banks would be free to fix charges for collection
of other types of accounts for all values and also from Savings a/c customers for cheque of
value above Rs.1 lakh. Charges fixed should be reasonable, computed on a cost-plus-basis and
not as an arbitrary percentage of the value of the instrument and to be levied in an upfront
manner with due dissemination to the customers of such charges.
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3.1.5 Transaction Codes List
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3.2 RTGS-
It stands for “Real Time Gross Settlement” which can be defined as the continuous settlement
of funds transfer individually on an order by order basis
(without netting).
RTGS system is meant for large valued transactions. The min. amount to be remitted is
` 2 lac and there is no upper ceiling for RTGS transaction
a. Amount to be remitted
b. Remitting customer‟s account number which is to be debited
c. Name of the beneficiary bank and branch
d. IFSC code of the receiving branch
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3.3 Demand Draft:
A method used by individuals to make transfer payments from one bank account to another.
Demand drafts are marketed as a relatively secure method for cashing checks. The major
difference between demand drafts and normal checks is that demand drafts do not require a
signature in order to be cashed.
The company does not have a standard credit policy that could be applied to all customers.
Instead, distinct credit terms are offered to each group depending upon various factors such
as the product, place, price, demand and competition.
(A)Stockiest in Depots Town: 70% of the Company‟s stockiest are located in or
around the „depot towns‟. At these places, the company uses the cash management
system(CMS) offered by banks, stockiest cheques are collected till the end of a day are
deposited the next morning into the company‟s local bank account from where the funds are
transferred to the corporate bank account.
Earlier these stockiest used to enjoy 5 days of credit period but now the company has
decreased the time frame to one day. For new stockiest, sales are normally made on
demand draft basis. If a Stockists cheque bounces, then the party has to make payment
only by demand-draft. If a party defaults on payment (or a party‟s cheques bounce) more
than once, then for all its transactions with Dabur India in the coming year the party would
be required to make payments only by demand draft.
(B)Stockiest in Remote Areas: The remaining 30% of the turnover with stockiest take
place at remote places away from the depot towns with no easy access to banks so that the
„anywhere cheque‟ system is logically not possible. Such stockiest may be allowed a credit
period of up to 10 days. On an average, the money is credited in company‟s bank account in
3-7 days.
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Chapter 4: Application of SAP in Cash Management System
SAP stands for “System, Applications and Products”. In Dabur India Ltd, SAP is used to
manage Cash inflow and outflow in an efficient and effective way.
SAP Cash Management is used to monitor cash flows and to ensure that you have sufficient
liquidity to cover your payment obligations.
4.1 Integration
SAP Cash Management is integrated with a range of other SAP components. For example, the
liquidity forecast - in a medium to long term liquidity trend - integrates expected incoming and
outgoing payments in financial accounting, purchase and sales.
4.2 Features
Compare payment advices, Interest calculation and Returned vendor checks are dealt with the
Checks topic.
Cash concentration can be found in the Planning topic. Planning also deals with the payment
program, payment requests, bill of exchange presentation, memo record and telephone list.
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The Information System topic deals among other things with the Liquidity forecast. You can use
this to obtain relevant information in connection with customer and vendor cash flows. The
structure of the cash position and business transactions that affect the cash position are also
described here. SAP Cash Management uses the cash position to reflect movements in bank
accounts, while movements in the sub ledger accounts are represented using the liquidity forecast.
Further topics include: Payment advice journal (entered and changed planned items),
Compare and check and Reconciliation with cash management.
In the Environment area you will find functions for transferring market data to the SAP System.
Market data can be transferred using the file interface, real-time data feed or via the spreadsheet.
The areas Worklist and Change master record are also described here.
Prerequisites
In Data Setup you can find out what needs to be done before you can go live with SAP Cash and
Liquidity Management.
There are various types of SAP modules but it is according to use of different- different
departments like:
SAP-FI
• Finance
SAP- SD
• Sales
SAP- MM
• Marketing
So Sap- FI is used for CMS in Dabur India Ltd. To have a control over its efficiency and
effectivity, certain SAP t-codes (transaction codes) are to be remembered such as
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“T- CODES
DETAILS
FBL5N
Customer Line Item
FBL3N
GL Line
ZCHEQINV
Cheque Entry, Deletion and
Replacement
F-02
SAP Posting
F-29
SAP Posting for Overdue
YVIRTUAL
RTGS Posting
ZFI_F29
Channel Finance Posting
F-32
Clearing
ZFB03
Voucher Printing
ZFBL3N
Report generation after posting of
cheques
YCHLEAF
Check availability of Cheques
YCBR
After Parking check details of cheques
ZCCHQ
Bank Details
YCUSTDET
Customer Details
ZAPIS_NEW
Printing of Overdue Vouchers
YPIS_NEW
Parking
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4.3 Displaying Cash Management & Forecast, Cash Management Position
Use
As already mentioned in the previous process on Cash Management, Cash Management &
Forecast/Cash Management Position are updated during the whole SD procedure - starting with the
order, then billing document, followed by cash receipt. The following sub-process will now present
the cash receipt in Cash Management Position and those changes in the planning totals connected to
the cash receipt, which are formed through open billings.
Procedure
Transaction FF7B
Code
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Choose .
Enter the following data:
Delta display Select (display changes per value date – Select (display changes per value date –
with balances as opposed to cumulative display) as opposed to cumulative display)
Choose .
If the date you entered as the planning date falls on a public holiday, the incoming payment is
reproduced on the next working day dependent on the value date.
Double-click on Banks.
Double-click on B9 (Cash rec).
The system displays the bank accounts on which the cash receipts are recorded.
The cash receipt you posted has flowed into the value date dependent balance of the DBGEING
(Europe)/CBGEING (North America) group on the planning date you entered.
In DBGEING (for Europe) or CBGEING (for North America), select the amount in the column for the
planning date you entered and choose Display list.
You should be able to find the incoming payment you posted in the list of displayed documents on
the Line Items (Module Pool)
Screen.
Choose 3 times.
Finally, you still need to check whether the amount in short-term cash management (=presentation
of the expected cash receipt from the billing) has been reduced as a result of the incoming payment.
Choose New display.
In the dialog box, enter the following data:
Display as of Noted planning date from FI document Noted planning date from FI document
Choose Continue.
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If the date you entered as the planning date falls on a Saturday or Sunday, the expected
incoming payment is reproduced on the next working day dependent on the value date. For
overview reasons select NEW ENTRY in this case and enter the previous working date as
value date (i.e. minus 1 or 2 days)!
Double click on Persons.
Double-click on the F1 (FI customers/vendors) level to display the group of customers
(already posted and thus billed values).
The sum displayed has once again been reduced exactly by your billing amount as this is henceforth
already displayed as an incoming payment on the bank account.
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2)
3)
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4)
(II) T Code – YPIS_new - Parking and Posting (CHEQUE PARKING AND POSTING
ACCORDING TO THE CREDIT EXPIRY)
42
43
(III)T- Code – FB50 - Virtual A/C Entry (Clear the GL)
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(V) T Code – ZFI_F29 - Channel Finance Posting
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(VII) T Code – ZCHEQINV – Cheques Enter, Deletion and Replacement
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4.4 Sales Order Management in SAP R/3
SAP R/3 (the "R" was for "Real-time data processing" and "3" was for "3-tier":
1) database, 2) application server, and 3) client (SAPgui)). This new architecture
is compatible with multiple platforms and operating systems, such as Microsoft
Windows or UNIX. This opened up SAP to a whole new customer base.
The order to cash process
Integrated with:
Configurable structures within the software that represent the legal and/or
organizational views of an enterprise
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Organizational elements form a framework supporting all business activities in
the manner desired and selected for a given instance of the software
Client
Company Code
Sales Organization
Distribution Channel
Sales Division
Sales Area
Plant
Storage Location
Shipping Point
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Chapter 5: Dabur India Ltd. – Agreed Terms and Conditions with Bank
These terms and conditions including terms under respective services section govern the CMS and
by signing the CMS designation form and / or by accepting the service proposal and/ or by using
the Banks CMS, one agree to be bound by these T&Cs at all times.
5.1 Transfers Limited to Available Funds- The bank is under no obligation to comply with
any payment instruction or to make any fund transfer that would exceed the available funds in
available limit on the Customer accounts designated for such payment instruction.
5.2 Confidentiality- The sharing, storage or transmission about Customer / his account details
within HSBC group or with any agent should be on confidential basis.
5.3 Indemnity- As long as bank is in good faith, the Customer shall indemnify the bank and
hold the bank harmless from time to time from any or all claims brought or incurred by bank.
5.4 Force Majeure- The bank will not be responsible for non-performance or delay in the
performance of one or more services caused by circumstances beyond its control such as fire,
communication/ system failure etc.
5.5 Change of Terms- The bank may modify, terminate and suspend the services including the
present T&Cs to the customer anytime with or without notice, due to change in rules, regulations
and laws set by tax authorities or Bank policies.
49
or for detecting error in the transmission of the content of the funds transfer request or
communication is adhered.
e. Customer hereby represents and warrants that these T&Cs have been duly executed
and delivered by duly authorized representative and constitutes a legal, valid and
binding obligation of the customer and shall be enforceable against customer.
f. The „Non- Residential External (NRE)‟ customer shall ensure that bank would mention
word „SOF NRE‟ in the „Tag70‟ or „Second Party Reference‟ field as appropriate
while initiating any RTGS, NEFT, IAT payments.
g. Also customer agrees to provide the Priority Payments File not later than the agreed
cut-off date and time, which is subject to change from time to time.
5.7 MIS/ Reports- Bank at its sole discretion provide info including data, instruments and
reports to Customer related to any concerned banking activity.
5.8 Waiver- If bank fails to exercise any right or privilege conferred in T&Cs shall not affect
the specified services and remain in full force.
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What are the features and benefits of our Collection services?
With HDFC Bank's Collection Services, our aim is to make your banking more efficient,
manageable and speedy. Here are some of the major features and benefits of our Collection
Services:
Features
You can manage your funds' flow position most effectively from a central location.
Avail of a range of products under our collection services to make your cheque realization and
banking more efficient.
Benefits
What are the products offered under Collection Services that you can use?
You can take advantage of the products we offer under Collection services:
Local Cheque Collections With this product, your local cheques deposited at the same location
will be realized quickly. You can make use of this product at all locations of HDFC Bank
("SPEED") and over 18 locations of our correspondent Bank ("RAPID")
Outstation Cheque Collections You can deposit outstation cheques drawn on any HDFC Bank
location at any HDFC Bank location ("SPRINT"). Also, cheques drawn on over 300 locations of
our correspondent banks ("EXPRESS") can be deposited at any HDFC Bank locations.
Transfer Cheque Collections Your local/outstation cheques drawn on any branch of HDFC Bank
Ltd. will be realized quickly though this product available at all HDFC Bank ("HBTRF") locations.
Clean Collections If your cheques are drawn on locations not covered by us or our correspondent
banks, they will be collected at any of our locations and the proceeds will be credited to your
account as soon as credit is received by HDFC Bank.
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Comprehensive MIS You will receive a detailed MIS that includes the following:
o Daily report of deposits made at various locations
o Location-wise report
o Credit Forecast report
o Monthly cumulative report - date wise / location wise
o Monthly charging statement
o Monthly cheque return statement
o Customized reports as per mutual agreement
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Chapter 6: Summary & Conclusion
The company maintains bank account at all depot towns. Cheques/drafts received from customers
in nearby places are sent for local clearing to initially collect funds in these bank accounts. This
has reduced the average collection period (as compared to the time it would take if customer
cheques were first received at head office and then sent for outstation clearing) thereby increasing
the velocity of cash inflows. Funds thus collected at the depot towns each day transferred to the
company‟s head office (or corporate) bank account. The company has a „sweeping arrangement‟
with the bank at the head office by which any funds transferred from the depot towns are
automatically applied towards setting the company‟s cash credit loan from the bank and reducing
its debit balance. These steps have resulted in reducing the cost of interest to the company.
When the company has surplus funds, it invests the same in short-term investments or instruments
like mutual funds and government securities.
With advent of CBS and CTS, Dabur has increased its operational efficiency and decreased its
overheads and costs. Here computer software such as SAP is used to perform core operations
of banking like
a. Recording transactions
b. Interest calculations
c. Customer Records
d. Balance of payments
e. Details of Withdrawal
The new platform has changed the way bank system in Dabur India Ltd. Works. All the
services in the Cash Management System have benefitted the corporate office and banking
facilities by-
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Moreover, a Company‟s Cash Position is said to be a better indicator of the health of its
business, rather than its profit and loss statement. Hence knowing the cash position is crucial
for every business to:
And for better visibility into the cash position across banks, across borders, cash managements
crucial. It empowers businesses with the ability to forecast cash flows, plan future business
strategies, and manage cash accordingly.
6.2 Limitations:
Lack of control over cash flows and inefficient cash management can be very harmful to
business. More often than not, it is the improper management of cash that has caused businesses
to fail. Effective cash management is therefore a necessity for businesses. Companies heavily
rely on knowing their cash position to manage working capital requirements such as ordering
inventory, raw material, or
Acquisitions/expansion program, for which they need a clear idea of how much cash is
required, and when. This is enabled by Efficient Cash Management System.
a. Eliminating Disparate Systems: Different cash management solutions are being offered for
diverse segments. And as businesses grow, managing these disparate systems is increasingly
becoming a challenge. Hence company should come up with a single platform which can
support various cash management products and services as the business grows.
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b. Customizable Solutions: Company should try to come up with a customizable platform which
can cater to the specific needs of different businesses.
c. Unified System: Integration of corporate customer systems with banking systems can be very
helpful in reconciliation of internal systems with banking systems, and can support account
management between the bank and customer. And this offers great scope for vendors.
Today, company is leveraging Cash Management System as a tool to build long-term trust with
their customers, because these systems will empower them and manage companies and their
position at any given time, thus building a trust and strengthening the relationship that goes
beyond transaction banking.
Summary
With growing recognition of the need to adopt Cash Management Strategies, company is
achieving and moreover expecting more efficiency and effective solutions around -
b. standardization,
c. reconciliation,
d. integrated banking systems with corporate systems, and
e. Real-time reporting for overall view of the existing cash position.
The finance department is involved in all aspects of financial planning and control. It maintains
a quarterly score card, which helps the company evaluate the performance of employees in
terms of Cost to Company (CTC). Managerial remuneration consists of a fixed salary plus
bonuses based on performance on a variety of parameters, including maintenance of inventory
levels and other working capital items within agreed limits. The department also prepares MIS
and communicates the same to all the concerned departments. It also continuously monitors the
management of inventory, debtors and creditors to ensure that the net working capital remains
within the budgeted levels. If, for example, the investment in inventory exceeds the planned
limits due to some unavoidable circumstances, it must be offset by either an increase in
creditors or a reduction in debtors.
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List of Tables
Table 1
Table 2
Table 3
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References/ Bibliography
BOOKS
1. B. Bhattacharyya, Theory and Practice of Case Method of Instruction,
ARTICLES
WEBSITES
1. www.dabur.com
2. www.daburinternational.com
3. www.wikipedia.com
4. www.googlescholars.co.in
5. www.moneycontrol.com
6. www.rbi.org.in
7. www.sap.com
8. www.go.sap.com
9. http://www.dabur.com/Investors%20Relation-Reports
10. http://www.sap.com/bin/sapcom/en_us/downloadasset.2013-10-oct-01-18.dabur-
creating-efficient-cost-saving-shared-services-with-sap-document-access-by-opentext-
pdf.html
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