1.System of tracking the Cheque Numbers entered into the system with the Physical cheques in hand 2. Weeekly Reconciliation with the Bank 3. Restrict the user from accepting entries over exposure limit
Electronic Clearing System payment method shud be introduced in order to avoid defaluts, commission of branch/franchise shud b made at the month end and not immediate(this will also help less WC requirement) also there shud be no commission on defaulting transcations, it will indirectly work as penalty for default
Control must be there for even any best planning... Ask any software guy that make your franchise and your head office connected in such a way that until franchise back up person at the end of the day not enter the detail of cheques means cheque number, exact amount,issuing bank,client id, your system should not accept the uploading.In franchise office one middle level manager must make sure in his daily report to confirm the receipt of cheques as his independent report which will make cross check for Head Office and that A.B.C manager should be respobsible for his report and ofcourse Brach Head also. Above this, remiseres should be officially appointed by Brach Head but approved by Head Office after assessing their previous track record and must be guided company policies. Staff at Franchises must be trained and ask them to strictly follow the rules and tell them the what bad results can come from eveb minute mistake may out of ignorance and this problem is created by them themselves.
As per case given above, i critically analysed the problem for entering the wrong cheque information in the system which is demonstrated the compliance risk at result the liqudity risk faced by the broking firm and burdned with extra interest cost if client is retained with extra cost and creating the good reputation of the firms revenue will be generated in the future doubled the amount of interest cost if we are able to increase the client base with little bit of leverag of your additional cost on your client by additional margine and stricly compliance system
In my opinion the common problem as narrated in the study note. Problem arises due to lac of proper monitering of system, some franchies and Branch Manager got chance to take misadvantages from the existing system. How to Manage the Fund and monitor the Sales & Sales collection to avoid this type of fake transcations. First of all as per software available for transcation and cllection monitering system, the person who check the daily transcations of franchies and Branches with the transcation statement with cash management system details where the all deposits of cheques/DDs will be tallied with the transcation statement. All indivisual client either from franchies or from Brach will be alloted separate ID then we can easily monitor recipt and payment balance and detail of clients who are having large no. of outstanding and fake cheque nos will be easily findout.On the basis of shortlisted list daily monitoring person can easily brought this type fraud in notice of management and immediate action will be taken to avoid the further fraud or malpractices in the transcations. the person responsible will be penalised. This will improve the working and liquidity of cllection of cash controlled.
Assumptions : Brokerage 1% Interest p.a. : 10% Due amt : 120 million in 30 days Monthly chq rcvd by branch / franchisee = 300 No. of Branchs/franchiee = 200
a) Assurance of cheque received physically. I have account in Emirates Bank, Dubai where this system is there. Innovative Automated Machines detects the cheque by scanning micr,chq no., a/c no. etc. accepts the cheques uploads image of the cheque to clearing systems checks that micr chqno a/cno. = final no. shuld not be duplicate. Cost per cheque : 0.005% of brokerage.
b) Head office has to tieup with some bank for cheque discounting of system cheque disc.system for 1 million / branch = 200 million aggregate it should be short term for 5 days. every 5 days interest should be calculated. interest should be : 0.030% for 5 days. (0.18% p.m. & 2.16% p.a.) Interest difference = 10% - 2.16 = 7.84% (saving to cover the atm cost per br)
if solution seems working then pls donate 25,000/- to CRY / UNICEF or anywhere.
Hi, My suggestion is to create a back office alert system where cheque receipt is delayed by a maximum of 2 days and send a note to the respective clients by charging their penalty. I think this will work.
install a cheque deposit machines in the office:introduce a system of tracking the cheques deposited for clearance at respective banks:reward the branches in terms of %of cheques cleared in 1 day or 2 days like that:make incentives too strong .
One of the solution would be to decentralise the collection and billing system.
However, as per the Rules of Stock Exhanges, only Brokers are allowed to collect cheques from its clients and not the franchicees. In such a case the broker can open branch / franchisee wise bank accounts with CC facility in its own name and issue POA to the managers to manage its cash flow (restricting to only Inflow if required). In such situations the Managers will have to ensure the collections for the bills raised by them otherwise they will have to bear the interest cost on their respective bank accounts.
This will ensure accountability and streamline the cash flow of the broker branchwise. It will also make accounting and budgeting earier.
This story is very interesting;educative & an eye opener.I think solution lies in either having a direct debit system installed in the system(if technically feasible) or at the end of each day a team of Internal auditors must check all the transactions to ensure that cheque details are correct and are in reality do exist & banked.
