7.0 Brief Introduction:

It was observed that the payment to the Suppliers after receipt of materials in MDL stores was getting delayed in many cases causing disappointment in the suppliers. A study on delay in payment to the suppliers beyond 30 days during last 3 years was carried out.

7.1 Background:

Based on the study of the various reasons of delay related to various activities in Stores, Inspection, Commercial and Finance Department were noted. These activities include preparation of GRN (Goods Receipt Note) document in SAP, inspection by Inspection cell (jointly with WOT/SOT for project items), correspondence with Commercial/Supplier for non-compliance, short supply, shortfall of requisite documents if any, forwarding signed copy of GRN to Commercial, Invoice certification by Commercial w.r.t. PO Terms, forwarding certified bills to finance with all relevant documents as per payment terms, scrutiny and processing of bills by finance, treasury. The practical delays in all these activities add to the overall delay in payment to the suppliers. It was observed that the delays are generally on MDL side or sometimes on the supplier side also in providing clarification/rectification to the non-compliance in supply w.r.t. PO terms.

7.2 Implementation:

Though the overall period is defined for making payment to the suppliers after receipt of materials, a need was felt to fix the maximum time frame for each stage to make payment within 20 days. Accordingly, a systemic improvement was suggested and implemented through CMD’s memorandum as under.

(i) Raising of GRN by Store- 2 days from receipt of goods

(ii) Receipt inspection and processing of GRN in SAP & distribution of signed GR/IR: within 2-10 working days depending on nature and volume of consignment.

(iii) For service contracts, service entry in SAP and WDC -Within 7 days of work completion and then Preparation of Service Entry Sheet in SAP by user – within 3 days

(iv) Certification by Commercial after checking requisite documents, BGs w.r.t. PO – Within 4 days after clearance of GRN.

(v) Payment by Finance - Within 4 working days, w.r.t. PO terms after receipt of clear GRN in SAP and certification by Commercial. In case of Cost plus items where MDL mandated to submit hard copies to customer for submitting claim bills, bill payment be undertaken on the basis of hard copy of clear GRN.

(vi) A checklist of applicable documents to be submitted with Invoice by supplier is to be specified in PO by Commercial. If supplier fails to submit requisite documents within reasonable additional time (i.e. 2-3 days), invoice to be returned to supplier and be deleted from SAP. Incorrect invoices w.r.t. GST, HSN etc to be retuned immediately for re-submission. However, cases of returning invoices should be minimum and be considered as last resort.

(vii) Existing practice of review of delayed payment by functional Director with respective HODs based on list of delayed invoices, generated by CIT may be done on monthly basis.

(viii) Utmost priority be accorded for timely payment to MSMEs.

(ix) MSME invoices are separately identified in SAP and be monitored closely.

7.3 Impact and Benefits:

With ref to the Systemic Improvement suggested as above, the cases of payment to the supplier are monitored closely and given priority. The responsibility at each stage has been increased. The delay is minimized.

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