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

1. Presentation by :
Arjun Mehra
SUMMER INTERNSHIP
PROJECT
A PROJECT ON DELAY IN CASH
APPLICATION PROCESS

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

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

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

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

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

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

8. F-28 - MANUAL PAYMENT

9. F-29 - CUSTOMER DOWN PAYMENT
Type of transaction- CT (RTGS/NEFT),
CQ (Cheque)
Currency (INR)
Customer account number
Details of the transaction i.e.
RTGS/NEFT/CHQ no.

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

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

12. FB-70 ENTER CUSTOMER INVOICE
SCREEN 1
SCREEN 2

13. FB-75 POST CREDIT MEMO
SCREEN 1
SCREEN 2

14. FBL5N LINE ITEM DISPLAY
Screen 1
Screen 2

15. FB08 - REVERSE GL DOCUMENT
Reference number
Present Financial year
Company code

16. ZFI_BDC_F29 – BDC REPORT
File Destination
Run time methods

17. FD10N- CUSTOMER BALANCE DISPLAY
Screen 1
Screen 2

18. CUSTOMER AGING REPORT
Screen 1

19. CUSTOMER AGING REPORT
Screen 2

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

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

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

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

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

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