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A Study on the effectiveness of Order Processing ,Payment Cycle and C-

Form Collection system in Control Print Ltd.

Name Aparna R,FK-2545
Mentor Dr M Appala Raju

Literature Review

Introduction to Project
Companies often invest a great deal of time and effort in designing an efficient
strategy for processing orders and ensuring timely payments.Moreover
companies also pay tax on behalf of their customers for which customer
companies issues C-Form.So proper collection of C-Forms from clients helps to
avoid double taxation issues.Delay in their collection further affects the
payment cycle and order processing.All these ensures long term working
relationship with its supply chain partners.So for an organization to be
successful in long term it should have a proper order processing system,time
bound payment collection mechanism as well as proper maintenance and
collection of C-Forms.This study focuses on understanding these in Control
Print Ltd.
Introduction to Company
Control Print Ltd.(CPL) was founded in the year 1991. CPL is the pioneer in the
manufacturing of coding and marking solutions in India.It manufactures non-
contact type coding and marking machines based on drop-on-demand inkjet
printing technology and contact-type versatile electro-pneumatic imprinting
machines, in technical collaboration with Avery Dennison, US, a Fortune-500
company.Its coding and marking machines are used in printing variable
information like date of manufacture, batch number, maximum retail price,
expiry date, etc, on packaged goods varying from consumer goods industries
such as food, dairy and soft drinks to industrial products like cables,
pharmaceuticals, fertilisers, etc.

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Theoretical Framework

1.1 Order Processing
Order processing is a process where customer orders are received, checked for
creditworthiness then checking for product availability, and arranging for
delivery to customers is done and finally billing and maintaining records of
amounts due from customers is carried out.The main objective of this process to
ensure that the right product reaches the right place at the right time. This is a
cycle which includes recurring set of business activities and related information
processing operations associated with like providing goods and services to
customers and collecting their cash payments. (Romney and Steinbart 2008)
The actual approach to order processing will vary, depending on the complexity
of the order, and the type of products that are being ordered. In some cases, it
can be almost instantaneous. When physical goods are involved in order
processing, a more complex approach is commonly employed. Customers may
place orders by submitting a written request, by phone, or by using online order
forms that are routed directly to the seller. Each order is then routed to a
distribution center, where the type and quantity of items requested by the
customer are collected and prepared for shipping. In order to facilitate this
process, larger companies often operate multiple distribution centers that are
strategically located, allowing for the shipment to be delivered to the customer
as soon as possible. (Conjecture Corporation 2013)

Once the order is received, the customer completes the order processing by
inspecting the items that are delivered. If the items are in fact what the customer
ordered, and are not damaged in any way, then the order processing cycle is
considered complete. Should the received items be incorrect, or are damaged in
any way, then the processing is not considered complete until the issues are
resolved.
Efficient and accurate order processing is essential to the success of any type of
business. A truly efficient system will require that orders must be verified with
customers to ensure there are no questions about what the customer wants. Once
the order is verified, the items needed to fill the order accurately must be
collected in a timely fashion. After collecting the necessary products, they must
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be packaged securely and delivered to the customer within the time frame
promised. Failure to efficiently manage any of these tasks increases the chances
of disappointing the customer, and thus losing any possibility of repeat
business. (Conjecture Corporation 2013)

1.2 Payment Cycle

Once the good send by the manufacturer reaches the customer, it is his duty to
collect payment on that sales so that it completes the cycle.If payments are not
collected on a timely basis it can lead to defaulting which affects the working
capital of the firm.Higher the number of days taken to receive the payment it
increases the cash conversion cycle.From this we can determine the liquidity
risk of the company.
Usually a company acquires inventory on credit, which results in accounts
payable. A company can also sell products on credit, which results in accounts
receivable. Cash, therefore, is not involved until the company pays the accounts
payable and collects accounts receivable.

This cycle is extremely important for retailers and similar businesses.The
shorter the cycle, the less time capital is tied up in the business process, and thus
the better for the company's bottom line. (Investopedia 2010)

1.3 C Form
Form C is issued by a registered dealer(purchaser) to seller of goods in case of
Central Sales Tax so as to charge him sales tax at lesser rate and at the time of
collecting the C-Form booklet from the dept, the C-form numbers will be noted
down by dept in a register given to the companies. C-form contains of 3 copies.
One copy for the company and remaining two copies to the creditor. The
company should maintain a C-form register and mention the numbers for whom
you are issuing the C-form and invoice break-up details should be attached with
the respective C-form.(if demanded by the dept, you should produce the invoice
copies). At the time of assessement of sales tax, you should provide the
details(C-form register) to the department.One declaration in C-form can cover
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transactions of a quarter irrespective of the amount of sales that happened in that
period.

In case of Interstate sales ,Central Sales Tax is taxed at 2%.Tax concessions can
be availed by the dealer company if he furnishes the required proof of paying
tax on behalf of the customer.Form C is the evidence provided by the buying
dealer to the selling dealer so that he can avail the concessions.
So companies should diligently collect and maintain C-form,only upon which
the payment cycle becomes complete. (Bajpai 2013)

















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Empirical Review

Article 1: How to make your order to cycle faster?
Processing orders on time and collecting payment appropriately is the life blood
of business.About 7- 12 % of the revenue of working capital of the company is
stuck in inefficient order processing and payment collection.Improved cash
flow, reduce revenue dilution, increase customer satisfaction, and lower the cost
of operations across the entire company. Information should be collected in such
a way that it provides a details of its activities, key performance indicators
(KPIs), and drivers, andanalyzes performance against industry best-in-class.
(Genpact 2013)
Article 2: 12 ways to improve working capital, today
There is a steady deterioration in accounts receivable of most of the companies
due to inaccurate invoices,delays in collection system,inconsistent information
between the involved parties:Collections, Sales, and Customers.Electronic
companies face the problem of large volume of small-balance accounts and lack
tools to risk-segment accounts receivable portfolio and enable automated
treatments.There is also limited communication between sales and credit
regarding customer credit and accounts receivable activity. (Palmer 2013)

Article 3: Selling Direct To Pharmacy: How To Prepare Your Order To Cash
Function for a new sales model

This article studies the changes undergone in a pharmaceutical company when it
automated its processes. Shifting from the traditional wholesale model affects
the entire end-to-end process of ordering, billing, and shipping products. Of all
the emerging distribution models classical wholesale, direct to pharmacy
(DTP), and restricted wholesalethe direct to pharmacy model offers the
greatest advantages in terms of controlling how the product is sold and building
the companys brand. Under DTP, pharmacies will be less wary of order
blockages, which means manufacturers have fewer means to force timely
payments. Segmenting your customers based on payment behavior allows you
to focus on high-risk accounts. (Das 2013)


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Article 4:The key to overcoming the new normal:Better performance driven by
better financial intelligence
Stakeholders need to give due attention to day sales outstanding
behavior,working capital forecasts,credit risk chances as well. Unlike revenue
forecasts, finance reports have been inherently complex, difficult to distill,and
challenging to action without delving into third-order details.In corporations
they track six-month rolling averages on payment performance by accounts
across business units by way of using Order to Cash softwares.
(Srivastava,2012)
Article 5:Receivables Management for the long term:Balancing Collections and
Customer Service
Author states that by optimising the working capital,companies can effectively
support their processes,people and tools to improve business growth.A company
must not only seek payment but also think about how to get timely payments by
giving discounts etc.Companies face problem of defaults not only in receiving
payments but also redundancy in payments.For example in case of interstate
sales companies may have already paid tax on behalf of the customers but due
to improper filing of Form C there might be problems of not getting the tax
amount from customers which was paid on behalf of them.Companies are
mostly dependent on information technology to sort out these problems.
(Aberdeen 2012)
Article 6: Workflow Management As Means To Improve Order-To-Cash
Process In Industrial Services

The major challenges in the order-to-cash process of installation services were
identified to be lack of overall process understanding, deficiencies in visibility
and process discipline, unnecessary costs related to high rate of order changes
and rework, high level of work in progress, long order-to-cash lead time
incurring slow capital turnover. In the order-to-cash process of maintenance
services the major problems are related to discipline, communication of contract
updates and overall process understanding.

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An order-to-cash process can be divided into three stages that are order
processing,order fulfillment and payment processing. Tasks in these stages are
involved with transaction making and information processing.Some causes for
inefficiencies are change in customer orders after purchase order processed and
sales order already generated meaning that sales order must be recreated.
Disparate systems in quoting and order processing stages may cause that order
structure and content might change. Sending partial shipments and making
substitutions in case they are not communicated and agreed with the
customer.After effects include mismatch between invoice and delivery, delayed
collection of receivables.Customers willing to make bulk payments against
series of invoices instead of individual payments for ongoing basis increases the
risk of errors.This leads to collections department spends time on reconciling
payments and invoices, delay in collecting receivables.
Implementation of an efficient system to monitor these cycles resulted in
hastened order-to-cash lead time enabling more efficient use of capital;
improved control and quality; better visibility and overall process
understanding, more stable workload and flexibility to handle challenges
deriving from disparities in customer needs.
(Hirvensalo 2008)

Conclusion
The study undertaken will give a meaningful insight into various steps in an
order processing cum payment cycle,how it affects the organization and how
can it be modified for improving the revenue of the company.






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