CHAPTER NO.

1
EXECUTIVE SUMMARY
 Executive Summary

Tata Motors Limited is India’s largest automobile company. It is the leader by

far in commercial vehicles in each segment, and the second largest in the passenger
vehicles market with winning products in the compact, midsize car, and utility vehicle
segment. The company is the world’s fifth largest medium and heavy commercial vehicle
manufacturer.
Invoice Verification Process is one of the important processes in Shares Services.
So we have to study and analyze all the risk involved in the process. The main aim of any
invoice-verification process is to ensure that vendors are paid the correct amount at the
right time ( not too late but also not too early) The process should have a high incidence
of First-time matching, to ensure that as little time as possible is spent trying to manually
match invoices that appear to be incorrect.

2
 CHAPTER NO. 2
OBJECTIVE OF THE
PROJECT

3
 OBJECTIVE OF PROJECT

 Primary Objective to “IMPROVEMENT IN INVOICE VERIFICATION

PROCESS”.

 Secondary objective are as follows :-

 To Study the Risk Control Matrix & Procurement to Payment Process.

 Increase in percentage of automatic invoice verification process and to

reduced manual intervention.

 To Understand & study of Invoice verification process.

 Cost Control & Cost Reduction.

4
 CHAPTER NO. 3
THEORETICAL BACKGROUND

THEORETICAL BACKGROUND

WHAT IS INVOICE VERIFICATION ?

5
 Invoice verification allows you to capture the details of vendor invoices. If the
details of an invoice match the expected details that are specified by any related purchase
order and goods receipts, the invoice can be automatically made available for payment.
Unmatched invoices are excluded from the payment run and need to be investigated and
released before payments can be made. If this process is overly complex or conducted
inefficiently, payments made to vendors will be late. Possible consequences of this
include a loss of cash discounts and even losing the vendor account and having purchase
orders rejected by the vendor. It is essential, therefore, to understand the basic process of
invoice verification before you design or modify it. The standard process provided by
SAP is very likely suitable for most businesses, though this may not appear to be the case
at first. The standard process has many configuration options and is normally more than.
Flexible enough to cater to the needs of an invoice-verification department. You are most
likely to succeed, if you adopt the standard SAP process, rather than trying to alter the
SAP process to your current functionality. Most problems are caused by a
misunderstanding of the standard SAP Invoice Verification process, and this leads to a
design that is a compromise. So we will start with a high level view of the process.

 High-Level Process :-
The main aim of any invoice-verification process is to ensure that
vendors are paid the correct amount at the right time ( not too late but also not too early)
The process should have a high incidence of First-time matching, to ensure that as little
time as possible is spent trying to manually match invoices that appear to be incorrect. It
is important to include as few steps as possible in the process, considering that the process
of handling payments does not in itself add value to the company or to the vendor.

The main steps included in the process are as follows:-

 The capture of the vendor’s invoice details
 The matching of those details to the details that we believe to be correct

 The investigation of any mismatches

 The release for payment of matched invoices
 The accounting entries involved ( including taxes and delivery costs )

6
  The details recorded for audit purposes

It is important to keep these steps to a minimum and the SAP processes do achieve this.
Additional steps are counter- productive and add little or no additional value. Capture and
matching occur in one transaction (MIRO). This also includes the automatic release for
payment if the match is successful. The handling of mismatched invoices occurs in
transaction MRBR, which also includes the release for payment if the invoice is
successfully matched. The accounting entries are updated when the values are posted (in
both transactions), as are the records of events for audit or inquiry purposes. Effectively
these two transactions are the main steps involved. The only other transactions needed to
manage the process are inquiry or cancellation transactions. If you have built your process
to include more steps than this, you may be adding extra Complexity for little or no extra
value.

INTRODUCTION - INVOICE VERIFICATION PROCESS

Invoice Verification refers to matching the invoice to details of Purchase Order

and goods receipt before a payment on that invoice can occur. Invoices which get
matched get paid through the payment run and unmatched invoices are parked for
investigation. SAP invoice verification process in SAP R3 step by step:

1. The first step is entering vendor invoice details received into SAP. This
process is done using the transaction code "MIRO" Enter Incoming Invoice in
SAP. All invoice details such as basic data, payment details, tax details etc
can be entered using this t-code.

2. The next step involves matching the details of invoices with PO information
and goods receipt information. This step is called matching in the process
invoice verification and is done using t-code MIRO. This step can have two

7
 results. In case, the invoices match, same are automatically released for
payment in SAP through a scheduled payment run. In case, invoices
verification fails and there is a mis-match, then further investigation is
required.

3. In case invoices do not match with PO and GR details, same can be further
investigated and cleared off using the t-code MRBR. MRBR is the t-code for
releasing blocked invoices for payment once they have been matched. Such
blocked invoices can either be released manually or the same can be released
automatically by activating automatic release flag.

4. Finally, as a last step, the accounting entries for invoice verification are
updated at the time when the transactions MIRO and MRBR are posted to
SAP.

In SAP the invoice has been distinguished as follows :-

1. Invoice received with reference to Purchase Order.

2. Invoice received with reference to goods receipt all such invoices are settled
separately via material document number.
3. Invoice received with reference to Purchase Order which needs to be posted
directly to G/L Accounts or Material Accounts.

Introduction to Shared Services

8
 “Shared Services is collaborative strategy in which subsets of existing business
functions are concentrated into a new, semiautonomous business unit that has a
management structure design to promote efficiency, value generation, cost savings, and
improved service for the internal customers of the parent corporation, like a business
competing in the open market.”

- By Bryan Bergeron

A direct product of the efficiency of the business unit is increased efficiency,

value generation, and cost savings from the perspective of the parent corporation. The
goal of the Shared Services is to improve the bottom line of the parent corporation, not to
create more efficient, internally streamlined shared business unit.

Aims of Shared Services are to

 Enhance Corporate Value;
 Focus on partner service and support;
 Lower costs and raise service levels;
 Make the best use of investment in technology;
 Focus on continuous improvement;
 Harmonize and standardize common business processes to reduce duplications.
 Transfers business units non-core activities in to shared service units.

9
 IMPROTANT DATA COLLECTION FOR INVOICE VERIFICATION

All the information related to Invoice verification are stored in/retrieved from the
different master records known as central data. There are two types of data for invoice
verification required.

1. Master Data 2. Transaction Data

1). Master Data :-

Master Data

1) Material Data 2) Vendor Data 3) Accounting Data

 Master Data :-
Master data is permanent data on objects, for example materials, in the
SAP System. Every object is given a unique number by which it can be identified in the
system.

1) Material Data :-
Material data is information on the materials bought by or produced
in the company. This includes the material number, material name, units of measure,
stock data, over delivery .and under delivery tolerances, reminder keys, price control
data, and prices. Different departments in Materials Management maintain material data.

2) Vendor Data :-
Vendor data provides information on the suppliers that a company
deals with. Vendor data includes the address, bank data, possibly also the name of the

10
bank head office, the Currency of the vendor, as well as the terms of payment and terms
of delivery. The Purchasing department and Accounting department maintain vendor
data.

3) Accounting Data :-
Accounting data is used to define G/L accounts. It includes the
account name, the account type, the currency in which the account is managed,
information as to whether an account may be posted to directly, and which financial
budget it is allocated to. The accounting data is maintained in Financial Accounting.

2). Transaction Data:-

Transaction Data

1) Purchasing Document 2) Material Document 3) Accounting Document

 Transaction Data :-
Transaction data records transactions in the SAP System.
Whenever you post a purchase order, Scheduling agreement, goods receipt, or invoice,
the system automatically creates a document. The document data of a transaction depends
on the application area that the transaction belongs to. Every document receives a
document number by which it can be uniquely identified.

1) Purchasing Document :-
A purchasing document contains information such as the
vendor number, the purchase order date, the terms of delivery, the material number, and
the order quantity.

2) Material Document :-
A material document is created when a goods receipt is posted.
It includes the posting date, the quantity delivered, and perhaps also the delivery note

11
 number and the purchase order number that the goods receipt refers to. It documents the
quantity-based changes.

3) Accounting Document :-
An accounting document is created when a goods receipt
(unless the goods receipt is not valuated) or an invoice is posted. It contains details of
the individual postings with the account number, posting key, and the amount. It
documents the value-based changes.

SOURCE OF INVOICE VERFICATION PROCESS

1) The User :- Document date, Purchase Order number, Invoice amount, tax amount,
terms of payment.

2) Purchase Order :- Vendor, terms of payment, currency Invoice items.

3) Purchase Order History :- Quantity, Amount.

4) R/3 System settings :- Rate at which tax is calculated.

5) Vendor Master Record :- Bank Information.

 NEED / REQUIRMENTS OF INVIOCE VERIFICATION PROCESS :-

a) To proper co-ordinations of the entire department involved. Viz., finance,

receiving, inspection, storage, excise, accounting & payment.

b) To determining – purchase procedure to see that purchase are made after making
suitable enquires & most favorable term.

c) To preparation of budget concerning material supplies & equipment to ensure

economy in purchase & uses.

12
d) To use of standard form placing the order, noting receipt of goods, authority of
issue.

e) To operate of a system of internal check, so that all transaction involving

material, supplies & equipment purchases are approved & automatically
checked.

f) To storage of all the material & supplies in a well designated location with
proper safeguards.

g) To development of the system of controlling account & subsidiary records

which exhibit summary & detailed material cost at the storage of material
receipt & consumption.

h) To regular reports of materials purchase, issue, stock obsolete, goods return,

spoiled & defective unit.

13
 Top Level Flowchart Accounts Payable

Start

Vendor Master Account

Maintenance is updated Closing
with details of vendor Activity

Purchase Order is raised &

rates of the materials are
fixed

Materials recd in
TML

Excise Inspection
Invoice
Postin Stores Ack.
data entry of materials
g

Incorrect
Invoice Then the
Utilize verification bill goes in
materials error.
Correct
Manually
Invoice processed
corrected &
Retrospective then
processed

Hundi
Price Increase. Price
Supplementary decrease Provide TDS,
payments acceptanc Interest
debit notes
recovery Reconciliation- 14
e Forms.
 Payment Run

(payment made

to

vendors/bank)
Hundi
Normal Advance
Paymen
Payment Payment
Local cheques
t
Data transfer from HDFC

A/c. to A/.c Transfer

END

DUTIES & RESPOSIBILITIES INVOICE VERIFICATION PROCESS

To ensure that Invoice verification is carried out accurately and for all goods receipts.

The Duties & Responsibilities entire process is handled by supervisor / officer:-

 Invoice verification is done at consignment CCR-(consignment control reference)

level by using SAP Transaction Code MIRO. At the time of payment (to vendor &
other agencies), the debits are made to the GIT (vendor code is also mentioned in
this ledger account). Such payments made for a particular consignment is
identified in and linked with the bills received.

 A manual voucher is prepared by the accounts officer and the total value of
consignment in Indian Rupee is worked out for the consignment by adding
customs duty net of CENVAT, freight, if any, & amount paid to foreign vendor.

15
  The total list of payments made to the vendor is obtained through FBL1. This
amount and the freight amount if any is also noted in the manual voucher.

 The (foreign currency) amount as appearing in the system is compared with the
hard copy of the invoice. This is to ensure that all amounts paid are considered in
SAP. The freight amount is also recorded in the voucher from the system.

 The invoice verification in system is done by using SAP transaction code “MIRO”
and the necessary parameters are entered in SAP. Parameters are invoice date,
amount in INR CCR reference number and vendor total.

 During the verification process, the quantity as per the PO and the quantity
actually received are compared and if a shortage is noticed, the proportionate
amount is calculated manually and debited to ledger account Claims recoverable
(117200).

 The clearing and inward charges are also included in the same document.

 In the process of invoice verification the difference between GR valuation &

actual debits in GIT is debited / credited to Loss / Gain A/C (A/c code 231905 and
281905). The difference is mainly on account of exchange fluctuation and
valuation of custom duty, freight, etc.

If there are any errors messages, the document is put on hold and is attended to later.
On rectification of the errors the entry is posted in SAP.

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• INVOCIE VERFICATION DONE BY FOLLOWING MANNER :-

INVOICE VERIFICATION PROCESS

MIRA (Data Entry)

i.e. (invoice data entry)

STORES
ACKNOWLEDGEMENT

EXCISE POSTING

QUALITY ASSURANCE
INSPECTION

FINANACE DEPARTMENT
(PAYMENT)

1. STORES ACKNOWLEDGEMENT:-

 CONTROL OJECTIVE : To ensure that quantities received are recorded

accurately.

The Stores Department performs in the following stages:-

 The materials cleared through CRDO (Central Receipt Documentation Office)

are received at the Stores. Stores in CVBU covers over 50 locations spread
throughout the CVBU / PCBU.

 The activities in the Stores in each location are managed by the respective
Department / Division Head. In Chinchwad Foundry, the Stores Officer /
Personnel physically verify the material and inform the concerned Officer in
CRDO to prepare GIN for the correct quantity.

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 If the physical quantity received at Stores is different from the quantity for which
GIN is prepared, the Stores Officer / Personnel reverses the GIN in SAP and
forwards the documents back to CRDO for creation of new GIN.

 The Stores Officer / Personnel receive the corrected GR tag and other documents
again from CRDO and enter the correct quantity again in SAP.

2. EXCISE POSTING :-

 CONTROL OJECTIVE :- To ensure CENVAT is availed accurately and

completely for applicable cases.

The EXCISE Department performs in the following stages:-

 Excise Cell- CRDO and Excise cell – finance handle the posting of duties (excise
/ countervailing duty) for domestic, MASOP, Repairs and imports respectively.

 After preparation of GIN, excise posting is done for availing of excise credit in
case of excisable goods.

 CRDO/GDC personnel select the respective GIN, for which the duties are
calculated by system as per rates in the master. The CRDO/GDC excise cell
verifies the same with the physical copies of the challans and post the excise
invoice.

3. MIRA (Invoice Data Entry) :-

 CONTROL OJECTIVE :- To ensure the invoice is recorded accurately and

completely in the system in a timely manner to facilitate payment to vendors.

The MIRA (Invoice Data Entry) Department performs in the following stages:-

 MIRA is performed in SAP in background through program name

ZSRM_BDC_MIRA to automatically populate relevant details to facilitate

18
 accurate preparation of MIRA (Invoice data capture) in SAP if Data is available
through SRM.

 MIRA is performed to capture Invoice details in SAP to perform three way

matching and facilitate invoice verification process.

 Invoice data is captured by CRDO/ GDC personnel through T_CODE MIRA

where system has not done the Invoice data capture as mentioned above. The
following fields are updated while preparing the MIRA:- Invoice no., date,
amount and vendor code.

 A control report is verified by Officer Shared services to identify duplicate

MIRA and the same are deleted.

4. QUALITY ASSURANCE INSPECTION :-

 CONTROL OJECTIVE :- To ensure materials of good quality are accepted and

recorded in a timely manner.

The Vendor Quality Assurance (VQA) Department performs quality

assurance activities in the following stages:

 The ADD / VDD which is involved in developing parts finishes the activities
related to development and obtains the sample part from the vendor. The
activities performed by VQA, related to the sample approval is covered in PPM
Domestic Auto Sample Approval process.

 After the activities performed in PPM Domestic Auto Process sr no 6 are

completed, the VQA completes any testing and send a report to the ADD/ VDD.
The ADD/ VDD perform additional activities and obtain samples on a larger
quantum to verify the consistency of the supplier to supply parts on a larger scale.
VQA completes an evaluation of the Quality with support from ADD / VDD.
This documentation is covered in PPM Domestic Auto Production Part Approval
Process.

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  After the part design, vendor etc are finalized and orders are placed on the
suppliers by Buyers. On receipt of the materials on a regular basis, VQA
performs quality assurance activities at the time of receipt of material.

INVOICE VERIFICATION PROCUREMENT CYCLE

• The procurement cycle may consist of eight processes:

Purchase Order
Purchase Order

8. Payment
1. Requirements
determination
2. Source
determination
7. Invoice verification

Purchase Order
Purchase Order
6. Goods receipt and 3. Requisition assigned
inventory management to a Vendor

5. Order follow-up 4. Order processing

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 IMPORTANT ACCOUNTS FOR INVOICE VERIFICATION

The following accounts are particularly important for Invoice Verification:-

1) Vendor Accounts :- There is a separate account in the sub-ledger for each vendor that
all amounts concerning this vendor are posted to. Making a posting to the vendor account
is not the same as making a payment; payment is only made when the Financial
Accounting department posts the vendor's payment to a bank account.

2) Stock Accounts :- In the R/3 System, you do not set up a separate account for each
material. Instead, different materials with similar features are grouped together in a
common account (for example, raw materials: acids). The account relevant for a material
is defined in the material master record when a material is created. The system only posts
to the stock account when a price difference occurs for an invoice.

3) GR/IR Clearing Accounts:- The GR/IR clearing account is an “intermediate” account

between the stock account and the vendor account. At goods receipt, the net invoice
amount expected is posted to the stock account. The offsetting entry is posted to the
GR/IR clearing account. This posting is then cleared by an offsetting entry on the vendor
account at invoice receipt.

4) Tax Accounts :- The system makes postings to special tax accounts when invoices
include tax.

5) Price Differences Accounts :- Price differences have to be posted to a price

differences account if price differences have occurred in an invoice and when invoices are
posted net and no posting can be made to the stock account.

6) Cash Discount Clearing Account :- When you post an invoice net, the cash discount
amount is taken into account in the invoice, it reduces the value of the items; the
offsetting posting is made to the cash discount clearing account, which is then cleared
when payment is made.

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7) Freight Clearing Account :- The stock account is debited with the planned delivery
costs at goods receipt and the system makes the offsetting posting to a freight clearing
account. This posting is then cleared by an offsetting entry to the vendor account at
invoice receipt.

INVOICE VERIFICATION PROCESS TYPES

Invoice Verification types are as follows :-

INVOICE VERIFICATION TYPES

1) Automatic Invoice Verification

2) Manual
Invoice Verification

1). INVOICE VERIFICATION PROCESS (AUTOMATIC) :-

 CONTROL OBJECTIVE :-
To ensure that automatic invoice verification
performed by SAP is accurate, complete and performed in a timely manner. Officer/
Supervisor-shared services, on a daily basis, performs refreshing of invoices in SAP
through T_Code MIR6 to offer unprocessed invoices for automatic Invoice
Verification.

The list of invoices pending for verification is displayed. The list contains the
following details:-

 The document number [LIV No.]

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  Items
 Entering invoices
 Invoicing party
 Name of the invoicing party
 The amount claimed by the party

 The difference amount due to which the bill is in error

 The reference [invoice number]
 Posting date [LIV creation date]

All the invoices are selected, refreshed & scheduled for background verification.

The system processes the invoices in background where the following activities
are completed :-

 MIRA i.e. invoice data entry is done.

 Excise posting is completed

 Stores acknowledgement is done

 Quality Assurance inspection is done

Where anyone of these activities is not performed, SAP ensures that the invoices are not
processed until all the four activities are completed.

Further, SAP performs the three ways checking of invoice with the PO and the GIN.
Three possibilities exist as a result of three way matching :-

Sr.No. Possibilities Treatment

1 Supplier’s Post the invoice and transfer the liability from GR/IR a/c
invoice = PO = to the vendor a/c. (refer Accounting entry sheet for
GIN detailed entries)

23
 2 Difference SAP throws the invoice in error and Invoice is
within defined automatically verified.
tolerance limits

3 Difference SAP throws the invoice in error and Invoice is manually

beyond verified
tolerance limits

 CLEARING OF VENDOR A/C [DOMESTIC] :- AUTOMATIC CLEARING

This process documents the clearing procedure of vendor A/cs are :-
 During the generation of accounting entries at various stages like at the time of
preparation of GIN , GL Account 191100 (GRIR- Goods Receipt/ Invoice
Receipt) gets credited and at the time of invoice verification the vendor account
gets credited and 191100 GRIR Debited. This credit and debit for the same
amount gets cleared through automatic route.
 Similarly the vendor Account automatically gets cleared wherever the assignment
(inv ref) and amount (debit=credit) are equal.
 The automatic clearance of the vendor accounts is carried out on the daily basis.
 If the account is not cleared automatically, due to mismatch in assignment
(invoice ref.) or minor amount difference, it is to be cleared through Manual
Route.

 Advantages of Automatic Invoice Verification :-

 Process efficiencies.
 Reduce payables cycle delays.
 Reduce approval delays.
 Match invoices with Purchase Order automatically.
 Increased productivity.
 Reduced invoice processing costs by eliminating paper.
 Elimination of manual data entry with higher data quality.

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 Benefits / Uses of Automatic Invoice Verification :-

 Automatic Bill Processing

 Round Off
 Amount credited to supplier Bank Account directly
 A/c. to A/c. transfer for vendor other than BMS (Bill Marketing Scheme)
 For Supplier Relationship Management (SRM) vendors, MIRA creation by CRDO
(Central Receipt Documentation Office)

 Mails are being sent to the vendor informing them the amount of bill of exchange
generated.
 Centralized payment for various Tata Motors Ltd. Location.
 Display of invoice data of SRM vendor error clearance.
 Recovery of debit notes
 Rate increases / decrease provision /recovery entry is generated by the system.

2). INVOICE VERIFICATION PROCESS (MANUAL) :-

 Control Objective :-
To ensure that invoices which are not posted through
automatic route are cleared and posted accurately through manual error clearance
route in the correct accounting period. The documents in error are selected
individually for error clearance. The message box appears on the screen in which
system displays error message.

 Types of Manual Invoice Verification Error : -

1. Rate Difference ( Higher/Lower Rate)
2. Sales Tax /Vat Difference
3. Incorrect Mira Multiple Gin
4. Incorrect Invoice Amount Entered
5. Supplementary Condition PO Type
6. ZM 30/ZM40 PO condition type

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 7. PO Condition Type
8. BMS Discount In PO But Given By Vendor
9. Calculation Mistake By Vendor
10. Credit Quantity Zero Table Update Problem
11. Excise Duty Difference
12. Excise Duty Not Updated
13. Fright Payment Through MIRO
14. GR Attached To Wrong MIRA Document
15. Incorrect MIRA Punching – Calculation Tax Not Ticked

16. Incorrect MIRA Punching – Transaction. Type

17. Material Shortage
18. PO Locked
19. Part Rejection
20. Process Rejection Materials Sent For Outside Processing

 Benefit / Uses of Manual Invoice Verification

 Goods Inward Note Generation.

 Logistic Invoice Verification Preparation.
 A/c. to A/c. transfer is done if there, some error in the automated part of it.

ERROR CLEARANCE - (MANUAL INVOICE VERIFICATION)

 Category I reasons for the invoices in error :-

Sr. No Reasons for Variance Treatment

Wrong Invoice Value feeding while doing
1
(Mira)
The invoice amount is changed as
· If the invoice date is outside current
per the physical copy of invoice
financial year
and invoice is posted
· Calculate tax field is not ticked while
doing the MIRA i.e. ( invoice data entry)
· T_Code field is wrongly selected i.e.
instead of “ Invoice” while doing MIRA
· In respect of multiple items in a challan,
MIRA is prepared for some items only
2 Rate Difference:

26

· System value (Basic- as per SAP) >
supplier’s invoice amount
3 Discount condition not updated in PO
4 Wrong Sales Tax Code
5 Wrong excise entry by Excise Cell
Invoice consists of freight and misc.
6
charges
The invoice goes into error due to freight
and misc charges as the system does not
consider supplementary conditions in PO
for Automatic IV.
Basic amount is changed as per
the physical copy of invoice and
invoice is posted
Basic amount is changed as per
the physical copy of invoice and
invoice is posted
The tax code is changed as per the
invoice and buyer is informed to
update the correct tax code in PO
to avoid re-occurrence of this
error
Excise department is informed by
shared services, GIN is reversed
by CRDO and excise posting with
correct amount is made by excise
cell and invoice is posted
Such invoices are cleared through
GOODS / Planed delivery cost
option available during Manual
IV

 Category II reasons for the invoices in error :-

Sr. Reasons for

Treatment
No Variance
In certain cases (due to system limitations) where GIN
Wrong excise entry cannot be reversed and Excise cell takes credit through
1
by excise cell : manual route and FI document number is informed ,
based on which IV is done.
Rate inclusive of If the invoice goes into error due to rate inclusive of ED,
2
excise duty the variance is debited to loss account 231905 .
If the diff is significant then the vendor is debited
considering that the excise duty benefit is very low.
This can be reversed based on the approval from buyer
Vendor is debited by creating a line items through A/c
3 Rate Difference
191140
System value (Basic-
as per SAP) <
supplier’s invoice
amount
4 Other reasons
Short qty , partial Vendor is debited by creating a line item through A/c
rejection 191140/ Loss is booked by debiting 231905
Inwarding against
incorrect part , PO
Weighment difference
MASOP cases, CST
exempt cases

27
 INVOICE VERIFICATION CONTROL BY TOLERANCE GROUP

Tolerance groups are defined based on the following logic, in vendor master, through
which SAP controls the Invoice Verification process.

 Tolerance group F001 :-

The difference between the Total value calculated by system
(in SAP) Vs Total value as per vendor’s invoice is +/- INR 10.00/- or 0.10% of invoice
value, the difference is absorbed by Tata Motors Ltd.

 Tolerance group is X001 :-

The difference between the Total value calculated by system
(in SAP) Vs Total value as per vendor’s invoice is > Rs 10.00 upto Rs 50000, the
difference is credited to provision account & includes the logic of tolerance Z001 also.

 Tolerance group is Z001 :-

The difference between the Total value calculated by system
(in SAP) Vs Total value as per vendor’s invoice is < Rs 10.00 upto Rs 500000, the
difference is debited to vendor.

 Tolerance group is Y001 :-

The difference between the Total value calculated by system
(in SAP) Vs Total value as per vendor’s invoice is upto 1 % of System value, the
difference is absorbed by Tata Motors Ltd.

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Introduction On SAP:-

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Today’s generation of SAP solutions is designed to deliver a better return on your

technology investment. Through their rich, industry-specific functionality, they help you
improve the business processes that matter most to your company. Through their open
architecture and virtually unlimited scalability, they help you leverage your existing
technology assets.
And through their easy implementation, they start delivering results more quickly than
ever before.

COMMON VALUES

29
All SAP solutions share common values, including:
Seamless integration: - Removes the barriers that stand between people, systems, and
information
Scalability :-Accommodates virtually unlimited growth

Adaptability: - Allows easy customization of features and functions and helps you cope
with constant change
Ease of implementation: - Helps you get up and running sooner
Lower total cost of ownership: - Helps minimize long-term costs
Industry expertise: - Supports the real-world processes you employ every day. These
advantages add up to a faster and greater return on investment. And that makes SAP a
wise investment for your company’s future.

“Sap has a clear superiority in the market. It has a large presence and good support, so
we chose the SAP ERP solution for our company .the result have definitely exceeded our
expectations.”

SAP OBJECTIVE
• Rationalize business processes across all manufacturing units
• Improve efficiency by reduction in effort duplication
• Reduction in operational costs
• Reach and respond to the customer rapidly

Why SAP
• It was the clear leader in the market for such solutions
• It was the best package available for automotive industry
• Multiple functionalities were covered

Benefits of SAP
• Enterprises integration
• Financial benefits of reducing inventories
• Better control of receivables

30
• Significant reduction in time taken for financial consolidation
• A single unified database

CHAPTER NO. 4
COMPANY PROFILE

31
 COMPANY PROFILE

HISTRORY OF THE TATA GROUP

Jamsetji Nusserwanji Tata

“What advances a nation or community is not so much to prop up its weakest
and helpless members, as to lift up the best and most gifted, so as top make them of
the greatest service to the country.”
Jamshetji Tata (Founder TATA Group)

A TATA Motors is the part of TATA Enterprises – one of the most successful and
oldest private groups of India. Since the time TATA Motors commenced manufacturing
commercial vehicles in 1954, the company has established a strong foundation in
automotive manufacture, within an enduring commitment to quality. Today TATA
Motors is in production of leadership with an annual production of over 200000 vehicles
in the 2 – 65 ton range. TATA Motors design and manufactures most of its machine tools,
processes, equipments, heavy dies, metal patterns and electronic controlling for machine
tools.
THE TATA GROUP comprises 93 operating companies in seven business sectors
information systems and communications, engineering, materials, services energy,
consumer products, and chemicals. The Group was founded in the mid 19th century, a
period when India had just set out on the road to gaining independence from British rule.
Consequently, Jamsetji Tata and those who followed him aligned business opportunities

32
with the objective of nation building. This approach remains enshrined in the Group’s
ethos to this day.

As much as institution it is a business corporation, the Tata Group is unique in

more ways than one. Established by Jamsetji Tata, the Group has grown into one of
India’s biggest and most respected business organizations, due to its entrepreneurial
vision, its commitment to ideals that put people before profits, and its fortitude in the face
of adversity.
PURPOSE
Our purpose is to improve the quality of life of the communities we serve. We do
this through leadership in sectors of national economic significance, to which the group
brings a unique set of capabilities. This requires us to grow aggressively in focused areas
of business. Our heritage of returning to society what we earn evokes trust among
consumers, employees, shareholders and the community. This heritage is being
continuously enriched by the formalization of the height standards of behavior expected
from employees and companies.
The Tata name is a unique asset representing leadership with trust. Leveraging
this asset to enhance Group synergy and becoming globally competitive is the route to
sustained growth and long- term success.

FIVE CORE VALUES

The Tata Group has always sought to be a value driven organization. These values
continue to direct the Group’s growth and businesses.
Integrity: We must conduct our business fairly, with honesty and transparency.
Everything we do must stand the test of public scrutiny.
Understanding: We must be caring, show respect; compassion and humanity fro work
the benefit of the communities we serve.
Excellence: We must constantly strive to achieve the highest possible standards in our
day-to-day work and in the quality of the goods and services we provide.
Unity: We must work cohesively with our colleagues across the group and with our
customers and partners around the world, building strong relationships based on
tolerance, understanding and mutual cooperation.

33
Responsibility: We must continue to be responsible, sensitive to the countries,
communities and environments in which we work, always ensuring that what comes from
the people goes back to the people many times over.

HISTORY OF TATA MOTORS

Jamsetji Nusserwanji Tata who conceived the very idea of establishing this company was
born in a family of Parsi in 1839.
At the age of 29 he started a private trading firm with a capital of just 21,000.
With the share of the profit which he earned from that firm he along with his friends
started a textile mill in Bombay; the modern Mumbai. He sold this mill after 2 years.
In the year 1874 he floated a company named “THE CENTRAL INDIA
SPINNING, WEAVING AND MANUFACTURING COMPANY”. At the age of 47, he
took on the job of making a sick mill healthy. They used to buy sick firms and put life
into it and sold them thereafter.
In 1902, he decided to choose the unknown path to give India steel, hydroelectric
power and technical education of a higher order.
Unfortunately he died in 1904, but the members of his family and his friends
continued to go on and on, they expanded his work and today they are one of the biggest
business empires of the world.
In the year 1907 the “TATA IRON AND STEEL COMPANY” was started in
Jamshedpur Jharkhand.

Mr. J R D Tata Mr. Ratan Tata

When the Tata motors started it was known as “THE TATA ENGINEERING
AND LOCOMOTIVE COMPANY”. It started its operations in the year 1945 in an old
workshop of the East Indian Railways at Jamshedpur. Over a period of 15 years a total of
1,155 locomotives steamed out from the workshop as well as 950 road rollers, 5000

34
railway wagons and several boilers. The company however was heavily dependent on a
single customer; the railways. So TELCO looked for diversification.

After a few years the Tata’s signed an agreement with Dailmer-benz A.G. to start
an assembly and manufacturing plant for commercial vehicles. The chairman and
managing director was chosen to be Mr. S. Moolgaokar.
Over 70% of the medium and the heavy commercial vehicles on the Indian roads
were made by the TELCO. It was able to manufacture 99.8% of its parts in India itself.
TELCO, the child of Tata steels is the largest shareholder of the Tata industries after the
financial institutions.
Mr. Ratan Tata succeeded Mr. Sumant. Moolgaokar as the Chairman of Tata
Motors in the year 1992. In the year 2003, on 29 th of July, on the occasion of the birth
anniversary of J.R.D. Tata the name of TELCO got changed to “TATA MOTORS
LIMITED”.
VISION AND MISSION

“THE LANGUAGES MAY DIFFER, THE SCRIPTS MAY VARY BUT THERE IS

ONE SYMBOL THAT WILL ALWAYS MEAN THE SAME THING” – “TRUST”

VISION

To be a world class corporate constantly furthering the interests of all its stakeholders.

MISSION

For Shareholders:- To consistently create shareholder value by generating returns in

excess of WACC during the upturn and at least equal to WACC during the downturn of
the business cycle.

For Customers:-To strengthen the TATA brand and create lasting relationships with
customers by working closely with business partners to provide superior value for money
over the life cycle.

For Employees:- To create a seamless organization that incubates and promotes

innovation, excellence and the TATA core values.

35
For Vendors and Channel Partners:- To foster a long-term relationship so as to
introduce a broad range of innovative products and services, that would benefit our
customers and other stakeholders.

For Community:- To proactively participate in reshaping the country’s economic growth

and to take a holistic approach towards environmental protection

COMPANY PROFILE

Type Public (NYSE: TTM)

Founded 1960

Headquarters India

Industry Automotive

Products Commercial Vehicles

Revenue 35651.48 crores (USD 8.8 billion)

Website www.tatamotors.com

TATA MOTORS PROFILE

Tata Motors Limited is India's largest automobile company, with revenues of Rs.
35651.48 crores (USD 8.8 billion) in 2007-08. It is the leader in commercial vehicles in
each segment, and the third largest in the passenger vehicles market with winning
products in the compact, midsize car and utility vehicle segments. The company is the
world's fourth largest truck manufacturer, and the world's second largest bus
manufacturer.
The company's 22,000 employees are guided by the vision to be "best in the
manner in which we operate best in the products we deliver and best in our value
system and ethics."

Established in 1945, Tata Motors' presence indeed cuts across the length and
breadth of India. Over 4 million Tata vehicles ply on Indian roads, since the first rolled
out in 1954. The company's manufacturing base in India is spread across Jamshedpur
(Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh) and Pantnagar (Uttarakhand).
Following a strategic alliance with Fiat in 2005, it has set up an industrial joint venture
with Fiat Group Automobiles at Ranjangaon (Maharashtra) to produce both Fiat and Tata

36
cars and Fiat power trains. The company is establishing two new plants at Dharwad
(Karnataka) and Singur (West Bengal). The nation-wide dealership, sales, services and
spare parts network comprises over 3500 touch points; Tata Motors also distributes and
markets Fiat branded cars in India.
In January 2008, Tata Motors unveiled its People's Car, the Tata Nano, which
India and the world have been looking forward to. A development, which signifies a first

for the global automobile industry, the Nano brings the comfort and safety of a car within
the reach of thousands of families. When launched in India later in 2008, the car will be
available in both standard and deluxe versions. The standard version has been priced at
Rs.100,000 (excluding VAT and transportation cost).
Designed with a family in mind, it has a roomy passenger compartment with
generous leg space and head room. It can comfortably seat four persons. Its mono-volume
design will set a new benchmark among small cars. Its safety performance exceeds
regulatory requirements in India. In terms of overall pollutants, it has a lower pollution
level than two-wheelers being manufactured in India today. The lean design strategy has
helped minimise weight, which helps maximise performance per unit of energy consumed
and delivers high fuel efficiency. The high fuel efficiency also ensures that the car has
low carbon dioxide emissions, thereby providing the twin benefits of an affordable
transportation solution with a low carbon footprint.
Besides product development, R&D is also focussing on environment-friendly
technologies in emissions and alternative fuels. Through its subsidiaries, the company is
engaged in engineering and automotive solutions, construction equipment manufacturing,
automotive vehicle components manufacturing and supply chain activities, machine tools
and factory automation solutions, high-precision tooling and plastic and electronic
components for automotive and computer applications, and automotive retailing and
service operations.
True to the tradition of the Tata Group, Tata Motors is committed in letter and
spirit to Corporate Social Responsibility. It is a signatory to the United Nations Global
Compact, and is engaged in community and social initiatives on labour and environment
standards in compliance with the principles of the Global Compact. In accordance with
this, it plays an active role in community development, serving rural communities
adjacent to its manufacturing locations. With the foundation of its rich heritage, Tata
Motors today is etching a refulgent future.

POSITION IN THE GLOBAL MARKET

The collaboration with Dailmer-Benz ended in 1969 and thereafter TATA motors
began marketing vehicles under the TATA brand name carrying the famous ‘T’ emblem.
TATA Engineering one of India’s largest private sector companies with a turnover of
over Rs. 80 billion in the countries leading commercial vehicle manufacturing company
and has significant presence in multi – utility and passenger car segments. The widely
successful TATA Indica, a Euro-3 compliant vehicle, is the country has first indigenously

37
designed, developed and manufactured passenger car. TATA Engineering followed that
up with the TATA indigo, a sedan that was launched in December 2002. The comp also
makes several other passengers vehicles including Safari, Sumo, and Sierra. The
company’s products have received wide acceptance not only in India but also in the

Middle East, Asia, Africa, Australia, Latin America and Europe.

MANUFACTURING UNIT

Tata Motors owes its leading position in the Indian automobile industry to its strong focus
on indignation. This focus has driven the company to set up world-class manufacturing
units with state of the art technology. Every stage of product evolution-design,
development, manufacturing, assembly & quality control is carried out meticulously.

Jamshedpur:-
Established in 1945, the Jamshedpur unit was the company’s first unit and is spread over
an area of 822 acres. It consists of 4 major divisions – Truck Factory, Engine Factory,
Cab & Cowl Factories, and the Novus.

Pune :-
The Pune unit is spread over two geographical regions Pimpri (800 acres) and Chinchwad
(130 acres). It was established in 1966 and has a Production Engineering Division, which
has one of the most versatile tool making facilities in the Indian sub-continent.

Lucknow :-
Tata Motors lucknow is one of the youngest production facilities among all the Tata
Motors location and was established in 1992 to meet the demand for Commercial
Vehicles in the Indian market.

Uttarakhand :-
The company has set up a plant its mini truck, ace, etc. at Pant Nagar in Uttarakhand. The
plant will begin commercial production during the course of the year.

38
 ASSOCIATES

Over the years, Tata Motors has made substantial investments in building
companies that add value, facilitate and support its diverse range of business
activities.

• Telco Construction Equipment Co. Ltd. (Telcon)

• Tata Technologies Ltd. (TTL) and Tata Technologies Ltd., USA (TTUS)
• HV Axles Ltd. (HVAL)
• HV Transmissions Ltd. (HVTL)
• TAL Manufacturing Solutions Ltd. (TAL)
• • Sheba Properties Ltd. (Sheba)
• Concorde Motors (India) Ltd. (Concorde) [formerly known as Minicar
(India) Ltd.]
• Tata Daewoo Commercial Vehicle Company Ltd (TDWCV)
• Tata Motors Insurance Services Ltd. (TMISL) [formerly known as
Concorde Motors Ltd.]
• Tata Motors European Technical Centre plc
• Hispano Carrocera
• TML Financial Services Limited (TMLFSL)

39
 ORGANIZATIONAL STRUCTURE

CHAIRMAN

MANAGING
BOARD OF DIRECTORS
DIRECTOR

PRESIDENT

VICE PRESIDENT

SENIOR GENERAL MANAGER

GENERAL MANAGER EXECUTIVE GRADE

DEPUTY GENERAL
MANAGER

DIVISIONAL MANAGER

SENIOR
MANAGER
MANAGEMENT GRADE
MANAGER

ASSISTANT MANAGER

SENIOR
SUPERVISOR

SUPERVISOR

OPERATIVES

40
 Flow Chart Giving An Overview Of Various Section Under TATA MOTORS LTD.

Tata Motors Ltd.

Manufacturing Unit Sales Organization Corporate Affairs &

Finance

Jamshedpur Pune Lucknow Uttarakhand Singur

HR Production Purchase ERC

Shared Services Business Planning Treasury

Centrally Locally

41
 PRODUCTS

COMMERCIAL VEHICLES

2 Man
Power Dept.

1.1.1 Medical
& Health
1. Tata Ace 2. Tata Ace Magic
3. Tata TL/Telcoline/207 DI Truck 4.Tata 407
5.Tata 709 E 6.Tata 1109
(Intermediate truck) 7. Tata 1510/1512 (Medium bus)
8.Tata 1610/1616 (Heavy bus) 9.Tata 1613/1615 (Medium truck)
10.Tata 2515/2516 (Medium truck) 11.Tata Novus (Heavy truck)
12.Tata Winger

BUSES
1. Star bus 2. Globus

Military Vehicle
1. Tata 407

2. Tata LPTA
713TC (4x4)

42
3. Tata LPT 709 E

4. Tata SD 1015TC (4x4)

5. Tata LPTA 1615 TC (4X4)(4X25) 6. Tata LPTA 1621TC (6x6)

PASANGER CARS

INDIGO INDICA INDICA CNG

INDICA V2 PETROL INDIGO MARINA SUMO GRANDE

THE MOST AWAITED PEOPLES CAR “NANO”

43
Concept Vehicles

Passenger Cars Segment also include:-

1. Indigo XL 2. Indica V2 3. Indica Xeta 4. Indica
Turbo
5 Fait Cars 6. Safari 7. Safari Dicor 8. Sumo Victa

Concept Vehicles also include:-

1. Aria Roadster 2000 2. Aria Coupe 2001 3. Tata Indiva 2002
4 Tata Indigo Advant 5. Tata Xover 2002 6. Tata Cliffrider 2006
7. Tata Elegante 2007

MILESTONES

It has been a long and accelerated journey for Tata Motors, India’s leading automobile
manufacturer. Some significant milestone in the company’s journey towards excellence
and leadership.

1945 • Tata Engineering and Locomotive Co. Ltd. was established to manufacture

44
 locomotives and other engineering products.
1948 • Steam road roller introduced in collaboration with Marshall Sons (UK).
1954 • Collaboration with Daimler Benz AG, West Germany, for manufacture of

medium commercial vehicles. The first vehicle rolled out within 6 months of
the contract.
1959 • Research and Development Centre set up at Jamshedpur.
1961 • Exports begin with the first truck being shipped to Ceylon, now Sri Lanka.
1966 • Setting up of the Engineering Research Centre at Pune to provide impetus to
automobile Research and Development.
1977 • First commercial vehicle manufactured in Pune.
1985 • First hydraulic excavator produced with Hitachi collaboration.
1993 • Joint venture agreement signed with Cummins Engine Co. Inc. for the
manufacture of high horsepower and emission friendly diesel engines.
1998 • Tata Safari - India's first sports utility vehicle launched.

• Indica, India's first fully indigenous passenger car launched.

2003 • Tata Indigo station wagon unveiled at the Geneva Motor Show.

• On 29th July, J. R. D. Tata's birth anniversary, Tata Engineering becomes

Tata Motors Limited.
2004 • Tata Motors and Daewoo Commercial Vehicle Co. Ltd. sign investment
agreement
• New Tata Indica, Sumo Victa & Indigo Marina launched

• Tata Motors lists on the NYSE

2005 • Tata Motors rolls out the 500,000th Passenger Car from its Car Plant Facility
in Pune.
• Branded buses and coaches - Starbus and Globus - launched

• Tata Ace, India's first mini truck launched

2006 • Tata Motors first plant for small car to come up in West Bengal.

• Tata Motors introduces a new Indigo range

2007 • Tata Motors' integrated Customer Relationship Management (CRM)- Dealer
Management System (DMS) initiative crosses the significant milestone of
covering 1000 locations in India and abroad.

• Tata Motors introduces Magic & Winger - creates new segments in urban
and rural passenger transportation.
2008 • Tata Motors Ltd. Enters into definitive agreement with the “Ford Motor

45
 Campany” for the purchase of Jaguar & land rover.

• Tata Motors unveils Tata Nano, the People’s Car, at the 9th Auto Expo in
Delhi on January 10, 2008

CHAPTER NO. 5
RESEARCH METHODOLOGY

46
 RESEARCH METHODOLOGY

 WHAT IS RESEARCH?

Research in common parlance refers to a search for knowledge. It is a

SCIENTIFIC and SYSTEMATIC search for pertinent information on a specific topic. It
is actually a voyage of discovery .It can also be said to be a movement on a path from the
known to the unknown. Research is an academic activity and as such the term should be
used in a technical sense.
RESEARCH is thus an original contribution to the existing stock of knowledge
making for its advancements. It is the pursuit of truth with the help of study, observation,
comparison, and experiment. In short the search for knowledge through objective and
systematic method of finding solution to a problem is “RESEARCH”.

 According to Clifford Woody :-

“RESEARCH comprises defining and redefining problems,
formulating hypothesis or suggested solutions; collecting organizing and evaluating
data; making deductions and reaching conclusions; and at last carefully testing the
conclusions to determine whether they fit the formulating hypothesis.’

RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research problem. It

comprises of the various steps adopted by the researcher along with the logic behind it.
Following steps were involved:
1. Objectives of study
2. Method of data collection
3. Source of data collection
4. Selecting sample size
5. Area and period of study
6. Limitation of study

47
1. OBJECTIVES OF THE STUDY

• Improvement in Invoice Verification Process.

• To Study the Risk Control Matrix & Procurement to Payment Process.

2. METHOD OF DATA COLLECTION

The study is based on facts and figures collected by the internal website of
Tata Motors Ltd. (http://cvbubses & mytatamotors on the TATA Motors intranet)

3. SOURCES OF DATA COLLECTION

This data and information collected for the purpose of study is divided into
two forms:
1). Primary Data: - Primary data is that which is not published but it is very
useful data. So, the information was collected by discussion held with the
executives of accounts and finance department.

2). Secondary Data: - Secondary data consist of the information that already exists
or someone has collected it for specific purpose.

4. SAMPLING
In order to collect the reliable information, I have studied all the process of
each plant of Tata Motors.

5. AREA AND PERIOD OF STUDY

The area of my study is within the company Tata Motors Limited,
Commercial Vehicles Business Unit (CVBU). I studied the automatic & manual
invoice verification, Risk Control Matrix & Procurement to payment process.
The study was conducted for the period 25.05.2008 to 25.07.2008.

6. LIMITATION OF STUDY

48
 The study is based on the information updated on website. No physical
evidence is verified by visiting each location.

CHAPTER NO. 6
DATA ANALYSIS &
INTERPRITATION

49
 DATA ANALYSIS & INTERPRITATION

INVOICE VERIFICATION ERROR

01.04.2008 TO 11.06.2008

PLANT – CVBU

SR. NO PARTICULAR VOLUME

1 MIRA 601
2 STORES 717
3 QA 3731
4 EXCISE 1835
5 FINANACE 12383

TOTAL 19267

PLANT :- CVBU

1 2
3% 4%
3
19%
1
2
3
4
4 5
5
10%
64%

INTERPRITATION: - From the above table, it can be seen that, major 64% of the
invoices are pending in Finance Department for Manual Invoice Verification.

50
 DATA ANALYSIS
INVOICE VERIFICATION ERROR
01.04.2008 TO 11.06.2008

PLANT – PCBU

SR. NO PARTICULAR VOLUME

1 MIRA 5434
2 STORES 399
3 QA 948
4 EXCISE 1258
5 FINANACE 7526

TOTAL 15565

PLANT : - PCBU

1
35%
5 1
48% 2
3
4
5

2
3 3%
4
6%
8%

INTERPRITATION: - From the above table it can be seen that major 48% of the
invoices are pending in Finance Department for Manual Invoice Verification & 35 %
invoices are pending in MIRA (Invoice Data Entry).

51
 DATA ANALYSIS
INVOICE VERIFICATION ERROR
01.04.2008 TO 11.06.2008

PLANT – CVBU - AUTO

SR. NO PARTICULAR VOLUME

1 MIRA 2552
2 STORES 1660
3 QA 3187
4 EXCISE 1148
5 FINANACE 2301

TOTAL 10848

PLANT :- CVBU - NON AUTO

5 1
21% 24%

1
2
3
4 4
11% 2 5
15%

3
29%

INTERPRITATION :- From the above table it can be seen that major 29% of the
invoices are pending in Quality Assurance Department & 21% of Invoices are Finance
Department for manual invoice verification.

52
 DATA ANALYSIS
INVOICE VERIFICATION ERROR
01.04.2008 TO 11.06.2008

PLANT – JAMSHEDPUR

SR. NO PARTICULAR VOLUME

1 MIRA 3582
2 STORES 2682
3 QA 4487
4 EXCISE 3846
5 FINANACE 6278

TOTAL 20975

PLANT :- JAMSHEDPUR

1
5 17%
30%
2 1
13% 2
3
4
5

4 3
19% 21%

INTERPRITATION :- From the above table, it can be seen that major 30 % of the
invoices are pending in finance Department for Manual Invoice Verification & 21%
invoices are pending in Quality Assurance.

53
 DATA ANALYSIS
INVOICE VERIFICATION ERROR
01.04.2008 TO 11.06.2008

PLANT – CVBU - FOUNDRY

SR. NO PARTICULAR VOLUME

1 MIRA 23
2 STORES 2
3 QA 51
4 EXCISE 90
5 FINANACE 625

TOTAL 791

PLANT :- CVBU - FOUNDRY

1 2 3
3% 0% 6%
4
11%
1
2
3
4
5

5
80%

INTERPRITATION: - From the above table, it can be seen that major 80 % of the
invoices are pending in the finance Department for Manual Invoice Verification.

54
 DATA ANALYSIS
INVOICE VERIFICATION ERROR
01.04.2008 TO 11.06.2008

PLANT – LUCKNOW

SR. NO PARTICULAR VOLUME

1 MIRA 377
2 STORES 364
3 QA 1005
4 EXCISE 260
5 FINANACE 455

TOTAL 2461

PLANT :- LUCKNOW

5 1
18% 15%

4 2 1
11% 15%
2
3
4
5

3
41%

INTERPRITATION :- From the above table, it can be seen that major 41 % of the
invoices are pending in the Quality Assurance & 18% invoices are pending in Finance
Department for Invoice Verification.

55
 DATA ANALYSIS
INVOICE VERIFICATION ERROR
01.04.2008 TO 11.06.2008

PLANT – MAVAL

SR. NO. PARTICULAR VOLUME

1 MIRA 22
2 STORES 20
3 QA 18
4 EXCISE 49
5 FINANACE 934

TOTAL 1043

PLANT :- MAVAL

1 2 3
4
2% 2% 2%
5%

1
2
3
4
5

5
89%

INTERPRITATION: - From the above table, it can be seen that major 89 % of the
invoices are pending in Finance Department for Manual Invoice Verification

56
 DATA ANALYSIS
INVOICE VERIFICATION ERROR
01.04.2008 TO 11.06.2008

PLANT – SPD - DIGHI

SR. NO PARTICULAR VOLUME

1 MIRA 1549
2 STORES 1162
3 QA 636
4 EXCISE 1773
5 FINANACE 897

TOTAL 6017

PLANT :- SPD - DIGHI

5
15% 1
26%

1
2
3
4
4
5
29% 2
19%
3
11%

INTERPRITATION :- From the above table, it can be seen that major 29 % of the
invoices are pending in the Excise Cell & 26% invoices are pending in Mira (Invoice
Data Entry)

57
 DATA ANALYSIS
INVOICE VERIFICATION ERROR
01.04.2008 TO 11.06.2008

PLANT – RECON LKN

SR. NO PARTICULAR VOLUME

1 MIRA 23
2 STORES 2312
3 QA 0
4 EXCISE 0
5 FINANACE 134

TOTAL 2469

PLANT :- RECON LKN

4
3 5 1
0% 5% 1%

1
2
3
4
5

2
94%

INTERPRITATION: - From the above table, it can be seen that major 94 % of the
invoices are pending in Stores Department for invoice verification clearance.

58
 DATA ANALYSIS
INVOICE VERIFICATION ERROR
01.04.2008 TO 11.06.2008

PLANT – UTTARANCHAL

SR. NO PARTICULAR VOLUME

1 MIRA 282
2 STORES 626
3 QA 672
4 EXCISE 89
5 FINANACE 1765

TOTAL 3434

PLANT :- UTTARANCHAL

1
8%
2
18%
1
2
3
5 4
51%
5
3
4 20%
3%

INTERPRITATION :- From the above table, it can be seen that major 51 % of the
invoices are pending in finance Department for Manual Invoice Verification & 18 %
invoices are pending in Quality Assurance.

59
 DATA ANALYSIS
INVOICE VERIFICATION ERROR
01.04.2008 TO 11.06.2008

PLANT – TATA MARCOPOLO

SR. NO PARTICULAR VOLUME

1 MIRA 19
2 STORES 12
3 QA 47
4 EXCISE 91
5 FINANACE 53

TOTAL 222

PLANT :- TATA MARCOPOLO

1
5 2
9%
24% 5%

1
3
21% 2
3
4
5

4
41%

INTERPRITATION :- From the above table, it can be seen that major 41 % of the
invoices are pending in Excise Cell & 24% invoices are pending in Finance Department
for manual invoice verification.

60
As per the analysis made majority of the errors were of rate difference. The vendors who
are covered under VAT and their tolerance group is Z001, if the tolerance group would
have been X001 then all such errors would have cleared automatically.
The next highest contributors to the error were the invoices of the vendors who supply to
more than one location. In such cases as the vendor is covered under VAT for any one of
the location, the tolerance group updated is Z001. Since the tolerance group is updated at
vendor level and not at per purchase organization level the CST supply also comes under
the same tolerance group and the invoices which would have been otherwise cleared
automatically have to be processed manually.

As per the analysis made around 15% of the errors are due to sales code mismatch. This
means that there are more than thousand such cases for which there is tax code mismatch.
Wrong updating of sales tax code in the purchase order. It was observed that the sales
code was wrongly posted and due to which the invoices are cleared manually. For
Example: - It was found that tax code P4(ED as applicable, 4% CST) was updated instead
of 3A(ED as applicable + 12.5% VAT, Vatable and Cenvatable).

Manual Clearance of the Invoices which would have been cleared automatically.

In the analysis of the errors it was seen that there were invoices which were cleared
manually by the officers even though there was no need of the same, to rectify the same
following should be done:

Firstly, the officers should clear only those invoices for which finance pending report is
generated on daily basis. It was observed that around 30% of the total error population is
due to manual clearance of the GINs if the same is stopped than the hit rate will
automatically increase.

Secondly, the invoices which are not cleared or late cleared by excise or quality assurance
department should be made available for automatic IV even though the time limit of 15
days is expired. If the same is done the hit rate will stand automatically increased.

Example of Invoice Verification Error:-

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 Sr.No System Invoice
. Vendor PO No. Description Value Value Diff

Difference in Basic Rate

1 A71720 1550000720 Basic 155 130
ED 16% 24.8 20.8
Cess 2% 0.496 0.416
Total 180.296 151.216
VAT 12.5% 22.537 18.902 3.635
Total 202.833 170.118 32.715

Different VAT Rate Charged i.e. by System 12.5% & by the Vendor 4%
2 A71720 1550000720 Basic 155 155
ED 16% 24.8 24.8
Cess 2% 0.496 0.496
Total 180.296 180.296
VAT 22.537 7.21184 15.325
Total 202.833 187.50784 15.325

Difference in Basic Rate and Tax Rate, System VAT 4% and Vendor VAT 12.5%
3 A71720 1550000720 Basic 155 130
ED 16% 24.8 20.8
Cess 2% 0.496 0.416
Total 180.296 151.216
VAT 7.21184 18.902 -11.69
Total 187.50784 170.118 17.39

Difference in Basic Rate and Tax Rate, System VAT 4% AND Vendor VAT 12.5%
4 A71720 1550000720 Basic 155 30
ED 16% 24.8 4.8
Cess 2% 0.496 0.096
Total 180.296 34.896
VAT 7.21184 4.362 2.8498
Total 187.50784 39.258 148.25

Same Basic Rate but Difference in Tax Rate, system VAT 12.5% whereas Vendor
charges 4% CST

155000072
5 A71720 0 Basic 155 155
ED 16% 24.8 24.8
Cess 2% 0.496 0.496
Total 180.296 180.296
VAT 22.537 22.537
CST 7.21184
Total 202.833 187.50784 15.325

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CHAPTER NO. 7
FINDING &
CONCLUSION

63
 FINDING

 It is a speedy processing, vendor/customer satisfaction increased and manpower

reduces.

 In this process every bill is checked for certification, authorization, calculation etc.
this is called as real account verification.

 Input time and service time is considerably reduced @30% productivity at

increased by 20%. Once the data is feed to the systems tax is automatically
calculated by system. In short, the overall work of 4 hours has come down to 15
minutes.

 The productivity has improved immensely due to Automatic Invoice verification

(AIV) process, where the system processes almost all invoices and those that have
error have to be processed manually (which are very less).

 Presently almost 85% of the invoices are cleared automatically and the rest 15% is
cleared manually. As per the analysis made around 70% of the invoices going into
error constitute rate difference, around 15 % of invoice going into error tax code
difference & rest of 15 % are going to Miscellaneous.

CONCLUSION

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TATA Motors Ltd. is one of the leading companies of TATA Group. TATA is one of
the most successful and oldest private groups of India. Since the time TATA motors
commenced manufacturing commercial vehicles in 1954, the company has established a
strong foundation in automotive manufacture, within an enduring commitment to quality.
The annual production of this company is over 2, 00,000 vehicles.

There are around 25,000 employees (permanent, temporary and trainees) working in Tata
Motors. Only eighteen employees are organizing the Invoice Verification Process
activities of these entire Suppliers. Even though the volume of data entry is high, the rate
of committing error is very low. The aim of this department is to process accurate and
timely invoice to all the Supplier/ Vendors and they are achieving this target successfully.

 Improvement in quality of service to various stakeholders in terms of timeliness

and accuracy as confirmed by internal and external customer satisfaction surveys.

 Any improvements in the process are now initiated centrally and implemented at
all locations. This results in having standardized and uniform processes company
wide.

 Rightsizing of manpower resources – reduction of 25 % headcount.

 Reduction in transaction processing costs – better or equal to the best in many

areas as confirmed by the PWC benchmark study.

 Improved teamwork due to centralization of processes, leading to reduction in

throughput time for providing feedback to management

 Improved data Integrity leading to more reliable MIS reports.

 Deployment of metrics to monitor performance and identify areas for

improvement.

 Manpower development – In order to cater to the ever changing and challenging

needs of the SCC, employees are trained to handle new technology resulting in
their development leading to higher morale and better job satisfaction.

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 Migration of activities to Shared Services resulted in centralization of several
processes in one location. This greatly facilitated the documentation required for
Sarbanes Oxley compliance.

 Continue to identify opportunities to leverage the use of information technology to

achieve higher levels of automation and efficiency as well as accuracy of
transaction processing.

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CHAPTER NO. 8
LIMITATION

LIMITATION

67
This project is not exhaustive. Company does not disclose the Information to the public
and the information are highly confidential and formed a part of the company’s policy
and hence could not be show in this report.

68
 CHAPTER NO. 9
RECOMMENDATIONS &
SUGGESTIONS

RECOMMENDATIONS

 Supplier Relationship Management (SRM) should be implemented for all the

locations. If scanned copies are available for all the locations, bills can be cleared

69
 easily; no need for waiting for the bills to be submitted at the Help Desk. The
quantum of bills related queries will decrease if the invoice break up details is
seen through SRM.
 Document Imaging Services (DIS) can be used to further process documents for
other locations.
 All vendors should be covered under Supplier Relationship Management (SRM)
so that, they could provide data in the prescribed format to further streamline the
operations.
 To bring automation in clearing of A/C’s.
 Use of Voice mail for vendor queries.
 Capitalization forms presently received manually are to be made online to reduce
time lag in receiving the forms.:-
a) Up gradation of SAP version from 4.6 c to 5.1.
b) SRM implementation for service vendors,
c) Web based travel system,
d) Try to improve whatever system is in existence.
 CVBU departments Invoice verification process needs to be automated, b) Passing
of manual entry of purchase of spare parts to be shown separately as per schedule
VI requirement need to be avoided and system generated entry is expected.
 Presently almost 85% of the invoices are cleared automatically and the rest 15% is
cleared manually. As per the analysis made around 43% of the invoices going into
error constitute rate difference i.e. the base rate as per the vendors invoice is
less/more than that as per the purchase order. Out of these around 70% of the
invoices are vatable invoices falling under the tolerance group Z001. If such
invoices were updated under the tolerance group X001 than such invoices would
have got cleared automatically.

SUGGESTIONS

 Use of SAP SRM Module (Supplier Relationship Management) enabled vendors

to electronically upload their invoices thereby facilitating centralization as well as
avoiding receipt of paper documents in SSC and its entry into the system.

70
 A centralized vendor help desk with a toll-free number and a dedicated email ID
was created to ensure quick resolution of vendor queries. Yet another facility of
automatically notifying the vendor of the payments processed on a daily basis
improved the vendor satisfaction level dramatically.

 Use of SAP Workflow mechanism to notify the Accounts Payable Manager of

high value payments being processed to facilitate proper control.

 Updation and maintenance of Vendor Master for the entire company is done
centrally from the Share Services Centre.

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 CHAPTER NO. 10
BIBLIOGRAPHY

Bibliography
 Books Referred:-

 Pandey Chandra Prasanna, ‘Financial Management (Theory & Practice)’, Tata

McGraw-Hill Publishing Co. Ltd., New Delhi, Fifth Edition.

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  ‘Financial Management’, Vikas Publishing House Pvt. Ltd., New Delhi, Eighth
Edition.

 Kothari C.R., ‘Research Methodology’,Wishwa Prakashan

 Websites Visited :-

 www.tatamotors.com
 www.sap.com
 www.google.com
 http:/mytatamotors on the TATA Motors intranet

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 CHAPTER NO. 11
ACRONYMS

ACRONYMS
Acronyms are as follows:-

1 SOX Sarbanes Oxley Compliance

2 SAP System, Application & Product
3 ERP Enterprises Resource Planning

74
4 ERC Engineering Research Centre
5 SRM Supplier Relationship Management

6 MASOP Material Sent for Outside Processing

7 MIRA Invoice Data Entry
8 MP& P Material Planning & Procurement
9 TPM Total Productive Maintenance
10 SOD Segregation Of Duty
11 UAS Unloading Authorization Slip
12 SRM Supplier Relationship Management
13 CRDO Central & Receipt Dispatch Office

75