Supplier documentation management at a large chain of stores

Task

To get closing documents (invoices and acceptance certificates) for the executed supplies, works performed and services rendered. Transfer the documents to the accounting department.

Client

A major network of single-brand stores with products of international brands, comprising 344 stores in 36 cities of Russia.

Type of service

Operational procurement

Period

May 2016 – Until present

Case

2,546 suppliers and contractors were involved in procurement under the condition of 45% downpayment. A lot of primary accounting documents were lacking due to the absence of systematic approach to document management. The client did not have the required internal resources to collect the documents for the previous periods. Accounts receivable due to the lack of closing documentation amounted to 144 mln rubles. The contact information of suppliers was either not registered systematically or lost.

2,546 contractors supplying goods and services. Downpayment 45%
Systematic work on the collection of accounting documents was not performed
Accounts receivable amounted to 144 mln rubles

The Process

1. Data collection and analysis

We analyzed accounts receivable of the client. We identified the suppliers the debts of which amounted to 80% of the amount owed. We developed and agreed with the financial department the process of getting the closing documents from suppliers. We calculated the economic benefits obtained due to the documents received and evaluated the performance efficiency of PrECA.

We analyzed the debt and identified the main debtors
We developed and approved the document return procedure
2. Works performed

We found contact details for more than 500 suppliers, then we requested, received, and provided to the accounting department the reconciliation reports and original documents.

Results

The process of obtaining documents from the contractors with a statute of limitations of up to 3 years was transferred to PrECA and became controlled.

 

Other achievements on the project:

  • Obtained original closing documents for the amount of 83 mln rubles
  • Received and handed over to accounting department 458 reconciliation statements
  • Collected contact details for 500 suppliers and updated the database

The savings amounted to 26 mln rubles on VAT and income tax

Customer Feedback

CFO

“The PrECA people set up the process and did a great job of getting back the originals of the closing documents from the suppliers. The services rendered by PrECA have fully paid off due to the achieved effect.”

Tools

Procurement Methodology and Best Practices

  • Document management methodology: principles, procedures, instructions, registries
  • Management reporting forms
  • Best practices applied at multinational companies

Expertise of the market, category, and functional area

  • Own database of more than 5,000 suppliers
  • Public supplier databases: 2GIS, SPARK
  • Using the optimal process for collecting closing documents

Skills

  • Task management
  • Communication with stakeholders and suppliers
  • Data acquisition, structuring, and analysis
  • Standardization, unification, and optimization
  • Work with source documents

IT tools

  • Macros for processing and analyzing large data arrays
  • Experience with ERP systems – SAP, ORACLE, 1C

Project Stakeholders

Anatoliy Tsypkaikin

Project Manager

Maria Nastaeva

Operational Process Support Manager, Analyst

Stakeholders about the Project

Anatoliy Tsypkaikin

Project Manager

“Heads of financial departments often have to deal with accounts receivable, formed due to the lack of closing documents. As a result, the company overpays 32% of the cost of the supplied goods/services provided due to the income tax and VAT. If the work on obtaining the closing documents is not performed, then the receivables can reach up to 25% of the annual procurement expenses! For instance, a company with the annual expenses of 1 billion rubles may overpay 81 mln rubles just in excessive tax payments alone.”

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