ACCOUNTS RECEIVABLE - PURCHASE ORDER

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  • 1. PURCHASE ORDER
    April 2011
    Accounts Receivable
    Application and Infrastructure SolutionsAustralia | Canada | France | Germany | India | New Zealand | Singapore | Switzerland | UAE | UK | USA
  • 2. Contents
    1
  • 3. Purchase Order – An Introduction.
    2
    2
  • 4. What Is A Purchase Order (PO)
    3
  • 5. Information On A Purchase Order (PO)
    Who Issues a Purchase Order?
    • Either a Purchasing Agent or a Purchase Department.
    Information On A Purchase Order?
    • It contains description of services, quantity, agreed rate, total cost, payment terms, delivery date and also includes contact information/address.
    • 6. The most important item regarding a PO, is the unique number of the PO. This number will be used to track project deliverables, milestone achieved (if any), amount paid etc.
    4
  • 7. Purchase Order – Why Demanded?
    5
    5
  • 8. Reasons For The Demand Of PO
    6
  • 9. Purchase Order – Advantages.
    7
    7
  • 10. Advantages At A Glance
    8
  • 11. Purchase Order – Workflow.
    9
    9
  • 12. PO Process Flow
    If Yes
    Purchase Department
    A
    Management’s
    Approval
    Start
    ‘X’ Service
    Client
    If No
    Stop
    Vendor 1
    End
    PO Allotted
    Project Setup & SOW
    A
    Vendor 2 (Ex: Keane)
    Vendor 3
    Contents of SOW -
    • Billing Terms
    • 13. Billing Address
    • 14. Payment Terms
    • 15. Nature of Project etc.
    10
  • 16. Purchase Order - Fact Sheet.
    11
    11
  • 17. % of PO Driven Clients - UK
    12
  • 18. Collection Against Overdue - UK
    13
  • 19. Collection Against Overdue (PO Driven Clients) - UK
    14
  • 20. % Of Disputed Invoice Against Overdue (PO Driven Clients) - UK
    15
  • 21. Issues With Purchase Order.
    16
    16
  • 22. Issues With Purchase Order
    Insufficient Fund in PO –
    Case 1.When single PO is allotted for a single project:
    • Insufficient funds in PO but still billing went ahead and raised an Invoice.
    Case 2.When there are multiple PO’s allotted in a project:
    • Suppose Billing generated an ABC Invoice of $20k ($10k from PO 1, $5k from PO 2 & another $5k from PO 3) but funds are only available in PO 1 and PO 2. As a result, the Invoice generated will be rejected by the client.
    Project
    PO 3
    2,000
    PO 1
    10,000
    PO 2
    5,000
    17
  • 23. Issues With Purchase Order Contd..
    PO Closed –
    Case 1.When single PO is allotted for a single project:
    • Timeline allotted to a PO expired but still billing went ahead and raised an Invoice.
    • 24. Fund allotted to a PO received but still billing went ahead and raised an Invoice.
    Case 2.When there are multiple PO’s allotted in a project:
    • When particular timelines allotted to the PO’s has expired but still billing went ahead and raised an Invoice then the Invoice will be rejected by client.
    • 25. Suppose we have already received payment of $20k from client and the PO’s has been closed. But still billing went ahead and raised an Invoice against the closed PO’s.
    Project
    PO 3
    5,000
    PO 1
    10,000
    PO 2
    5,000
    18
  • 26. Issues With Purchase Order Contd..
    Wrong PO –
    Case 1.When single PO/multiple PO’s are allotted against project/s:
    • When billing raised an Invoice against a wrong PO either due to manual error or against an already closed PO.
    • 27. Change request (CR) from delivery team has not been received.
    • 28. CIPI Team failed to update the change request.
    The above mentioned are the major three Issues related to PO.
    19
  • 29. Purchase Order – Implications.
    20
    20
  • 30. Purchase Order - Implications
    21
  • 31. Purchase Order - Possible Resolutions.
    22
    22
  • 32. Purchase Order - Possible Resolution
    • A PO Tracker needs to be maintained by billing team to track down all the relevant PO details because PeopleSoft does not support multiple PO’s.
    • 33. In case of a single PO, most of the required details can be tracked through PeopleSoft.
    • 34. Billing team can generate excel report through PO query including all relevant information (such as – PO number, PO amount, amount of billing already generated)
    • 35. Here Issue arises when PO is not set-up into the system, then it becomes difficult for billing team to track PO’s.
    • 36. The resolution requires continuous follow-up with delivery team and CIPI team to avoid any complexities and misunderstandings.
    23
  • 37. Thank You.
    Presentation By:-
    Ravi Singh.
    Preeti Arora.
    Swadha Mishra.
    Questions?