Case Study On Suppliers’ Reconciliation

As we started digging deeper into the problems, we found various inconsistencies in the process resulting into mismatch. Some of the issues were:

1. Purchases are through PO whereas payments were made from petty cash. Hence, once GRN is raised, that amount is shown outstanding in supplier’s account whereas in reality payment was made through petty cash.
2. In some cases, payments were made on the basis of invoices, though no POs were raised, as purchase amounts were not known. For example, there was a contract entered into with a supplier for picking up garbage. The rate was agreed per MT. Since the quantities to be purchased were not known at the time of entering into a contract, there was no specific PO to be paid against. To top it up, some payments were made in petty cash and some through checks.
3. Where there were contracts for services, no one could raise a GRN and the ERP always gave picture that no supplies were made. Accountants refused to make any payment to the party for the want of GRN and when payments were made under pressure from senior management, it reflected as advance to the supplier.
4. Pricing for the same supplies was different for each depending on various factors. Hence, an accountant without looking into specific contract would reject the payment for discrepancies.

There were many issues relating to people. Wherever staff was transferred from one project to another, they refused to take any responsibility for the work done prior to their arrival on the particular project.