Professional Documents
Culture Documents
AP-As-is New Version - Final
AP-As-is New Version - Final
Contents..........................................................................................................................................................1
1.00 Master data creation........................................................................................................................5
1.01 Supplier Master Data creation...............................................................................5
2.00 Procurement for export Orders...................................................................................................6
2.10 Foreign Import...........................................................................................................................6
2.11 Foreign Import with L/C.........................................................................................6
2.12 Foreign import with L/C and shipping guarantee...............................................7
2.13 Foreign import without L/C...................................................................................8
2.14 Foreign import with Free of cost (FOC)................................................................8
2.15 Sample at FOC with bulk price adjustment..........................................................8
2.16 Foreign services without L/C................................................................................. 9
2.17 Quality and similar claim from suppliers and customers ‘as suppliers agent’. .9
2.18 Price adjustments................................................................................................... 9
2.19 Freight amount within commercial invoice price................................................9
2.20 Inspection shortage but payment as per invoice.................................................9
2.21 L/C margin............................................................................................................. 10
2.30 Local Import for export orders...........................................................................................11
2.31 Import with L/C..................................................................................................... 11
2.32 Import without L/C............................................................................................... 12
2.33 Import with goods receiving acknowledged without receiving delivery........12
2.34 Sample at FOC....................................................................................................... 12
2.35 Sample payment with Bulk invoice.....................................................................12
2.36 Quality and similar kinds of claim.......................................................................13
2.37 Future or previous price adjustment..................................................................13
2.38 Inspection shortage but payment as per Invoice..............................................13
2.40 Procurement for export orders from EPZ.......................................................................13
2.41 With LC and shipping guarantee.........................................................................13
2.42 Without LC............................................................................................................ 14
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2.43 Inspection shortage but payment as per Invoice..............................................14
2.50 Goods and services procured internally for export orders........................................14
2.51 Wash...................................................................................................................... 14
2.52 RMG Sewing.......................................................................................................... 15
2.53 Accessories and packaging.................................................................................. 15
2.55 Embroidery, printing etc......................................................................................15
2.60 Transfer pricing (within LE) for export orders...............................................................15
2.61 Wash...................................................................................................................... 15
2.62 RMG Sewing.......................................................................................................... 16
2.63 Accessories and packaging.................................................................................. 16
2.65 Embroidery, printing etc......................................................................................16
2.70 Local procurement for export orders...............................................................................16
2.71 Procurement of goods/services with PO............................................................16
2.72 Subcontract bill – Sewing, Washing, Embroidery and Mending......................18
2.73 Procurement of goods/services without PO......................................................19
2.80 Local cost of imported items for export orders..........................................................20
2.81 LC opening related bank charges........................................................................20
2.82 Freight................................................................................................................... 20
2.83 Custom and port charges.....................................................................................21
2.84 C&F agent expenses............................................................................................. 21
2.85 Local transport charges........................................................................................21
2.86 Loading/unloading and other expenses.............................................................21
2.87 Financial Charges.................................................................................................. 22
3.00 Bulk procurement for deemed export....................................................................................22
3.01 Import of Dyes and Chemicals, Paper and Accessories items etc....................22
3.02 Purchase from local market with PO..................................................................22
4.00 Procurement for Projects.............................................................................................................22
4.01 Import for Projects............................................................................................... 22
4.02 Local purchase for projects..................................................................................24
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4.03 Sub contract for projects.....................................................................................26
5.00 Non business procurements.......................................................................................................26
5.01 Non business procurements................................................................................26
6.00 Procurement of assets and CAPEX...........................................................................................27
6.01 Import of Capital machinery and others assets with LC...................................27
6.02 Local procurement of capital assets and spares................................................27
6.03 Capital expenses for existing assets...................................................................27
6.04 Spares and other items procured with Machinery and other equipment’s....28
6.05 Import of inventory items other than export contract.....................................28
7.00 Local Procurement of goods and services.............................................................................28
7.01 Local Procurement of goods or services with P. O............................................28
7.02 Local Procurement of goods or services without P.O.......................................30
7.03 Procurement from Inter-companies and inter unit...........................................33
7.04 Discount/ Freight.................................................................................................. 33
7. 05 Intercompany/unit expense allocation..............................................................33
7.06 Maintenance expenses with reference to specific assets/utilities...................33
7.07 Vehicle maintenance expenses with tracking vehicle reference......................34
7.08 Purchase without supplier...................................................................................34
7.09 Payroll related invoice.......................................................................................... 34
8.00 Tax and VAT......................................................................................................................................35
8.01 Withholding Tax................................................................................................... 36
8.02 Withholding VAT.................................................................................................. 36
8.03 Periodic VAT reporting with expense.................................................................37
9.00 Bank Guarantee and Shipping Guarantee.............................................................................37
9.01 Bank Guarantee.................................................................................................... 37
9.02 Shipping Guarantee.............................................................................................. 37
9.03 FDR lien for Guarantee......................................................................................... 37
10.00 Invoicing Currency.......................................................................................................................38
10.01 Foreign currency Invoice....................................................................................38
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10.02 Invoice currency other than payment currency...............................................38
11.00 Invoice approvals..........................................................................................................................38
11.01 Invoice approvals................................................................................................ 38
11.02 Batch approvals.................................................................................................. 38
11.03 Invoice Hold........................................................................................................ 38
12.0 Payments............................................................................................................................………… 39
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1.00 Master data creation
1.01 Supplier Master Data creation
After receiving an invoice we check supplier name into system. In case of a new supplier, we
generate a manual request to authorized person to create supplier name into the system with
cross validation with IT Team.
Apart from suppler name, IT department generally adds supplier address and contact number
into the system with other required information.
AP team periodically checking duplicate suppliers name gradually and update supplier master
data.
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2.00 Procurement for export Orders
2.10 Foreign Import
Accounts payable work flow chart for foreign Import
6
After shipment, suppliers send vessels details with non-negotiable copy documents to our
Logistics Department and Bank & LC Team. Then they check the documents with LC terms and
same copies are sent to our C& F department for tracking vessel information.
C&F agent informs Bank & LC regarding vessel information and request Bank LC department
and logistics to collect original shipping documents from bank for clearing goods.
At present accounting entries are generated during document retirement as per commercial
import statement. Process up gradation is undergoing to accounting for payment against
suppliers and inventory recognition on receiving materials by warehouse.
7
Accounts payable-Supplier 5,000
JV Inventory 10,000
Advance to Parties 10,000
Generally suppliers send sample at FOC but landed cost and other cost incurred in this case.
At present these receiving are not accounted.
8
BP Accounts payable- foreign 10,000
Bank Account 10,000
2.17 Quality and similar claim from suppliers and customers ‘as suppliers agent’
If any fabrics or other direct materials are rejected from Q.C department, we then issue debit
note against supplier for defective or inferior quality of goods.
At present such freight value are not recorded separately but accounted properly with
inventory value.
2.20 Inspection shortage but payment as per invoice
Generally Fabric received from suppliers with Rolls with certain quantity each and Standard
group confirmed quantity after inspection by inspection team. Most cases quantity after
inspection did not matched with Supplier Invoiced Quantity and results in short receiving.
At present some cases we have to pay for full invoiced amount although shortage declaration
by Inspection Team.
9
2.21 L/C margin
In terms of importing capital machinery, spares, dyes and chemicals and others, we have to
deposit margin into bank as lien for the LC opening at the time of LC opening. Margin is
refunded, when original shipping documents are released.
In this case, bank keeps aside fund as margin and provide us advice, accordingly, we show
advance against L/C in the books of accounts.
10
2.30 Local Import for export orders
Accounts payable work flow chart for Local Import
When documents are checked from our end, we send Journal Voucher with related
documents to Bank & LC section for Issuance of IC as per LC terms.
Upon accepting of bill of exchange, Bank and LC section send the voucher back with
acceptance advices to Accounts Payable team.
11
Accounting entries are as below:
On receiving approved vouchers from AP team, Bank & LC sections allow official acceptance
of back to back documents.
12
At present sample receiving are not recorded at MM and payment for such invoices are
proceeded after written confirmation from Merchant or related team.
At present some cases we have to pay for full invoiced amount although shortage declaration
by Inspection Team.
13
Goods in transit A/C 5,000
2.42 Without LC
In addition to importing raw materials through BTB L/C, we import some raw materials urgent
basis through Advance payment to EPZ Suppliers.
At present some cases we have to pay for full invoiced amount although shortage declaration
by Inspection Team.
2.51 Wash
Generally washing unit under one legal entity executed washing for other legal entities.
At present internal PO or related documentation are not maintained and accordingly
corresponding accounts payable/receivable are not maintained.
Only required financial transaction with LC and related formal documents has been generated
as per requirement of Custom Department and accounted accordingly.
14
However financial transactions for FIRST SALE arrangements has been transacted and
recorded accurately.
15
At present internal PO or related documentation are not maintained and accordingly
corresponding accounts payable/receivable are not maintained for respective units.
16
2.71 Procurement of goods/services with PO
Material requirement/requisition is being created by merchant department and send to
sourcing dept.
Sourcing dept. collect quotation from supplier and prepare CS (Comparative Statement)
Procurement committee select supplier and approve comparative statement.
After selection, sourcing department create PO and send to respective supplier through mail
or by post.
Supplier send the material based on Purchase Order along with Delivery Challan.
Q.C inspect manually.
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Audit team validate the Delivery Challan and pass the same.
Audit team send the same to Inventory team for creating the GRN and inventory team
create GRN in the custom system.
After receiving the documents, sourcing dept. approve and send to AP team,
Then AP Team check the documents and create a payments request and fill up all
information (such as: Unit name, Payments type, Supplier Name, Accounting head,
Requested Persons, Bill date & Number, TDS, VDS & Bill amount and Narration)
After creating a payments request, we send documents and payments request to audit
department.
After received from audit dept. AP team approved the bill value, adjusted advance, TDS &
VDS and other than creating liabilities supplier wise into system. Then print out the voucher
and send to cash management for create daily payment indent.
After receiving approved indent, along with AP voucher and bill document treasury team
print cheque as per indent and send to signing authority.
After signing cheque then send it to the supplier manually.
After payment is complete then send to audit dept.
Audit team bank payment voucher check and sign and then send to AP for keep it in file.
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BP Accounts Payable-Local 5,850
Bank A/C 5,850
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BP Accounts Payable-Local 6,000
Bank A/C 6,000
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After invoices are checked by merchants, invoices are sent to audit for verification, and
accounts creates a payment request in the system and is also responsible for deducting TAX
and VAT.
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3. When net amount paid to supplier:
BP Accounts Payable-Local 5,850
Bank A/C 5850
2.82 Freight
Sometimes Sea/air Freight is paid in local currency to local forwarders as per logistics
departments.
At present these costs are accounted as expense under expense heading.
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2.83 Custom and port charges
All sorts of custom and port charges are paid by C & F agent as business unit of the group.
At present invoices are generated by C&F agent for actual expenses for reimbursements and
service receiving entity has accounts these charges as expense.
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3.00 Bulk procurement for deemed export
3.01 Import of Dyes and Chemicals, Paper and Accessories items etc.
Dyes and chemicals, papers, accessories packaging materials and other materials are imported
in bulk for deemed export business units like washing and accessories, etc.
General process of executing import transactions are followed as above.
Accounting entries are as below:
JV Dyes and chemicals/ accessories/ packing materials 10,000
Cash L/C Raw materials A/P 10,000
These transactions are accounted with respective inventory items and processed as in above
2.71.
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Advance to parties A/C 1,000
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Material purchases requisition check, verify and approve by authority and send to the
procurement team for purchase.
Procurement team collect quotation from supplier, prepare CS (Comparative Statement)
and check & approved by the authority.
Then create purchase order and send to the vendor.
Project, receive goods or materials from supplier against Indent and manual goods receive
challan, get pass and supplier bill send to the procurement team.
Procurement team check and match with submitted bill by supplier.
After checking procurement team all document sends to the AP team for payment.
AP team make forwarding and sign and send all document to HO construction dept. for
approval.
After receiving approved bill from HO construction, AP team send to audit team.
Audit team check the documents, if okay then send to the cash management team for
approval sign.
AP team. Then create payment request against approved bill and send to cash management
for create indent.
After receiving approved indent, along with AP voucher and bill document treasury team
print cheque as per indent and send to signing authority.
After signing cheque then send it to the supplier manually.
After payment is complete then send to audit dept.
Audit team bank payment voucher check and sign and then send to AP for keep it in file.
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5. When net amount paid to supplier:
BP Accounts Payable-Local 5,850
Bank A/C 5,850
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Bills payable-EDF/UPAS 10,000
6.04 Spares and other items procured with Machinery and other equipment’s
We purchase machinery and other equipment’s along with spare parts with zero value.
At present all such spare parts cost are not accounted separately as inventory.
Such items are imported for non-garments business and some items for garments business.
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Bank and LC section Bank & LC section start import proceedings after due approval of
requisition/PI/PO by management.
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7.00 Local Procurement of goods and services
7.01 Local Procurement of goods or services with P. O
Department
Start
Materials by Manual house System) Requisition
End
Department
Checked by Audit
Audit
Yes No
(Out of Sysytem)
Yes
Yes
Store /Inventory
Received all
AP Voucher create
Request send to document along
Department
based on Payment
Payable
Approve voucher
Indent send to After payment Bill
Management
Department
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Material requisition/requirement is being created by Functional department in excel format
and send to store.
After received the requisition, create purchase Indent by store in house system & then send
to audit team as a hard copy for review and approval.
Approved indent sends to procurement team for process the RFQ quotations as well
comparative statement by manual.
Procurement dept. collect quotation from supplier and prepare CS (Comparative
Statement).
Procurement Committee select the supplier and approved comparative statement.
Procurement team create PO based on approved CS & approved the same by the
department in-charge.
Send the approved PO copy to respective supplier through mail or by post.
Supplier send the material based on Purchase Order along with Delivery Challan.
Quality team do the inspection manually.
Audit team validate the Delivery Challan and passed the same and send to Inventory team.
After received, Inventory team create GRN in house custom system and send to
Procurement team.
Procurement team create the Payment Request and send all set of approved documents to
AP team.
Then AP team, check the documents and fill up all information in payments request form
(such as: Unit name, Payments type, Supplier Name, Accounting head, Requested Persons,
Bill date & number, TDS, VDS & bill amount and Narration)
Then approve the bill value, adjust the advance, TDS & VDS amount and create liabilities
supplier wise into system.
After create liabilities, print out the voucher and send to cash management for creating
daily payment indent.
Chief Accountant approve the AP Voucher and send to Cash Management team.
Cash Management team create Indent in the system.
In the indent Bank Name, Account number has been mentioned by the cash management
team.
Then send this to Treasury team manually for payment.
In the system, they prepared the cheque & the send to supplier manually.
After payment Bill Voucher send to audit team for post audit.
Accounting entries are as follows:
1. When advance paid to supplier:
BP Advance to Parties 4,000
Bank A/C 4,000
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JV Material/Service 10,000
Accounts Payable-Local 10,000
i) Insurance premium:
Insurance cover note is required when opening BTB L/C. To do so, Bank L/C department assess
the insurance cost based on invoice price and submit documents to Insurance Company.
Afterwards, we pay to Insurance Company against insurance cover note through consolidated
advance.
After month end, they submit bills along with cover note, then we adjust the advance.
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BP Accounts payable 5,000
Factory Accounts dept. receive audited bill and send through mail set of documents of
(Electric or Gas bill) to AP team.
After receiving the documents we create a payments request and fill up all information (such
as: Unit name, Payments Type, Accounting head, Supplier Name, Bill number & date, amount
and Narration)
After creating a payments request, we approve the bill value and create liabilities supplier wise
into system. After liabilities creation, then print out the voucher and send to cash
management for creating daily payment indent.
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Head Office remittance 10,000
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Accounting entries are as follows:
Employees are allowed to use corporate mobile SIM up to a certain amount that is considered
mobile expenses monthly. Furthermore, Employees are seen to use more than the limit they
have. That is adjusted with their salary as well.
Mobile operator sends monthly mobile bill to us and after audit verifies HR data. Accounts
payable creates a payment request in the system. Initially payment is made from a particular
company and afterwards adjustment is made among sister concern units.
In this circumstance, our accounting entries are as follows:
X Unit:
i. When mobile bill received from supplier:
JV Mobile expenses 8,000
Sister concern unit-Y 2,000
Accounts Payable-Local 10,000
Y Unit:
i. When sister concern unit book expenses:
JV Mobile expenses 2,000
Sister concern unit-X 2,000
vii) Freight and B/L Charge (Export)
We pay advance for air Freight and B/L Charge in local currency to local forwarders as per
export departments.
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vii) When advance paid to supplier
Advance to Parties 5,000
Bank A/C 5,000
viii) When final bill received from supplier
Air Freight-outward or B/L Charge 5,000
Accounts Payable-Local 5,000
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7.04 Discount/ Freight
Sometime suppliers allow discounts after PO price and we adjust such discounts with invoice
value.
Sometimes we bear local carrying cost in addition to PO price and record such cost as
expense.
Such expenses are allocated monthly within intercompany units on the basis of use by manual
calculation.
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7.08 Purchase without supplier
In some cases, we pay advance (IOU) to our employees for emergency purchase. Respective
departments purchase different kinds of materials from suppliers. After purchase, they submit
approved bill to treasury for adjustment.
BP Materials 10,000
Cash in hand-IOU (Employee) 10,000
On receiving the documents from payroll, we create a payment request and create liability
into system employee wise
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8.01 Withholding Tax
At present we calculate and deduct withholding manually from supplier’s invoice as per
Income tax regulation and accordingly we deposit deducted amount into govt. treasury
through treasury challan. After depositing TAX to national exchequer, we gave copy of TR
Challan and Tax certificate to respective supplier.
In case of advance payment we only set aside taxable amount from advance. After final bill is
submitted, we create Tax payable into system and consequently we deposit into Govt.
treasury.
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Bank A/C 900
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9.01 Bank Guarantee
Generally bank is issued for utility connection, tender submission or any types of contract as
required. Accordingly we request Bank to issue bank guarantee in favor of requested
authority. Bank generally issue guarantee after getting certain percentage as Margin in FDR.
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In this cases we manually convert invoicing currency to USD and record in existing system.
Accepted bill and some other liabilities has paid on maturity or a certain prescheduled date.
Some of these are schedule maintained as a statement in existing Software.
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Even for multiple invoice payments, users individually select the invoices from the list of
values in the Indent.
Treasury team takes the bank payment voucher printout and then along with the cheque
send to authorised signatory.
After getting approval cheque disburses to supplier and collect money receipt.
Payment to the domestic supplier is generally made through pay order, Cheque and Cash.
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JV Accounts payable A/C 500
Advance to supplier A/C 500
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12.12 Payment with personal Credit cards
Payment against Compliance services is made overseas through online credit card payment.
When we receive req. by mail from compline dept. with online link. After payment is done we
maintain accounting entry as below:
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1. When cash paid for petty expenses:
CP Entertainment/ refreshment/ conveyance 6,000
Petty Cash A/C 6,000
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