On the “fun” and “Pain” of Finance
When it comes to finance, the first feeling is often dull, the same, every day in the face of a pile of unemotional mass of data. But there’s more to the numbers, and the fun is often in them.
fun
Error data terminator
Information flow system, transaction flow system and other systems, people tend to pay attention to the consistency of data, as long as the field can have a value or whether the cascade between the data is correct. However, finance focuses on the availability and accuracy of data. From the perspective of financial accounting, it verifies whether the use of data is correct and whether the business process is correct. Simply put, “AT this time, IT should be B rather than A”. For example: the number :00001, but there are two names (Merchant company, Merchant Limited), corresponding to non-financial systems, it does not matter, as long as the number is not changed, because the business logic is connected and driven by the number. But for the financial system, the payment, tax ticket and so on will have big problems, financial requirements data in different stages can have different versions, but not allow the same stage n versions. The data reflected by the financial system at this stage is accurate and does not allow ambiguity. Information flow, transaction flow, payment flow and other data flow is the end purpose of the financial statement, then any error is not allowed.
High value field experts
The first requirement for PM and DEV of financial system is to have closed-loop thinking, to understand how data comes, how data is processed, and what is the subsequent processing of data. So when you’re working on a project, you have to understand the various upstream systems, understand their business processes, understand their system architecture, understand their data structures, understand their code. At the same time, we also need to know clearly what to do with the data generated by the financial system and how to use it. The upstream and downstream (regulatory or financial reporting) must be understood on each financial project to ensure that the entire link is correct. Over time, you will be familiar with all the business processes and financial processes of the entire company, no problem with the domain expert.
The pain
Communication and promotion
The financial project will spend more time on the communication of business process and data process. When the business process is unreasonable and error data is generated, it has to spend more time to push the upstream system for improvement and act as QA for the upstream system. All these are laborious and time-consuming things.
Rapid development of business
With the rapid development of the offline business, the online business system did not follow up in a timely and rapid way. As a result, the offline and online business systems went off the rails, resulting in the data not meeting the financial expectations. This is the root cause of the inconsistency of industry and wealth. In any company with rapid business development, this situation cannot be avoided. For the financial system, the only way is to comprehensively monitor abnormal data, and then push forward the upstream system iteration after finding abnormal data.
Concept of settlement
Professional meaning: settlement is an accounting term that refers to the summary and accounting of all income and expenditure in a certain period of time. Settlement, also known as monetary settlement, is a monetary receipt and payment behavior caused by economic activities such as commodity trading, labor supply and capital allocation among economic units under the condition of commodity economy.
Collodially speaking is: both sides in a certain period of time to produce a transaction, based on the transaction to collect or pay the amount of a series of behavior.
Settlement is divided into payable settlement and receivable settlement. The following content mainly introduces the payable and settlement system system for To B.
The settlement case
To help you understand this, let’s take an example of b-side purchasing.
On January 5, 20 and 29, the merchant company purchased drinks from The backgrain, worth a total of 200,000 yuan. Merchant company received many pen’s receipt, the system in no. 2.1 to generate statements, food after the check payment amount (200000), gave the merchant company 200000 payment invoice, check the invoice and settlement in real after make out an invoice amount is correct, according to the actually paid amount (200000) to generate the payment sheet, the estimated payment date (on February 15th) capital group went outside to play.
Important concepts involved in the case:
- Contract company: also called the main company, is the party A in the contract. The above example of a merchant company.
- Party B (entity supplier/contracted supplier): Party B in the contract. This is the end of the above example.
- Master data (product information, store information, etc.): This master data is the basis for generating transaction data. For example, commodity information, commodity settlement is the settlement of goods. The above example drinks.
- Contract/Agreement: The settlement is based on the contract/agreement. The settlement period, amount to be paid, fees, etc are all based on the contract agreement.
- Transaction data: Transaction data is the detailed data of settlement. The transaction data in a certain period are summarized in multiple dimensions to form a bill. The receipt for the above example.
- Bill: it is a statement, a summary of transaction data in a certain period. It includes payment for goods, expenses and so on.
- Advance payment note: the amount document prepaid to Party B’s company in advance, which is calculated based on the proportion of the amount in the purchase order.
- Tax bill (invoice receivable): For Party A’s company, for the invoice of payment for goods, party B’s company needs to issue the invoice receivable.
- Bill of payment: a document based on a bill to produce a payment. One-time payment can be made for multiple statements of the same Party.
Settlement business process
The settlement business process is generally divided into four phases (as shown in the figure above) :
Business negotiation stage
At this stage, all the system can do is maintain and manage the information flow data. Most of the work is done offline by the purchasing staff.
The information flow is divided into master data and contract agreement data.
Master data will include: product information, store information, warehouse information, contract company information, supplier information, cost type information, and so on.
Contract data can be classified into various categories, such as frame contract and one-time contract based on time cycle. Based on the transaction data type, it can be divided into: commodity contract, lease contract, asset contract and so on.
After the completion of this phase, there will be a contract agreement with legal effect, and the subsequent phase will be completely in accordance with the contract agreement for transactions and settlement.
Trading phase
In the transaction process, the management of transaction flow data is mainly aimed at ensuring the accuracy and predictability of transaction data, so as to minimize human intervention. To achieve the state of various documents to reverse;
Realize intelligent order and so on. For example: a series of processes from “purchase order – > delivery order – > Receipt”.
A complete ERP system usually contains the following documents:
- Purchase order
- Distribution of single
- receipt
- Adjust the single
- requisition
The receipt is the leading role of the settlement, when the receipt is finished, the system will be settled.
Settlement stage
When the documents (receipt) in the transaction process reach the end state, that is, the settlement state, and the settlement time agreed by the contract agreement, then the documents will automatically enter the settlement stage.
The settlement stage is divided into three parts: settlement statement, tax bill and payment.
statements
A few important concepts in a statement:
The settlement cycle
- Monthly settlement: according to the natural month, will circle the transaction data of a month, in the first of the next month out of the bill.
- Half month: according to half month, will circle half month’s transaction data, in the 16th of each month or the first of the next month respectively out of the bill.
- Daily settlement: according to the day, will circle the trading data of the day, T+1 bill.
- Weekly settlement: according to the week, will circle the trading data of the week, next Monday out of the bill.
Payment for goods
Specific transaction data, such as the receipt of goods, assets, and services in a supply chain system; Data such as payment plan in flag contract.
cost
The cost calculated based on the cost items agreed in the commercial terms of the contract and the cost algorithm. Also mentioned above is the classification of expenses (i.e., debit or ticket deduction)
Expected payment date
The date of payment as agreed in the contract agreement.
Based on the settlement cycle, the system will automatically summarize the transaction data and expense data on the day of payment to generate the settlement statement.
The settlement statement will be faced with problems such as lack of transaction data, temporary adjustment of cost algorithm, wrong information of commodity tax rate, and invalid contract.
Tax bill
After the settlement statement is generated, the tax bill matters are involved. Will be based on the contract agreement agreed in the payment before the ticket or ticket after the payment of processing.
Tax ticket is generally divided into: special ticket, general ticket, electronic ticket. Different types of tickets involve different tax rules.
Either way, the following issues are involved:
- Problem of make out an invoice
- This ticket problem
- The problem of verifying the authenticity of invoices
- How does the invoice automatically match the settlement statement
payment
When the settlement is ready for payment, the payment can be generated automatically or manually (the settlement team/the procurement center). After the payment is approved, the payment can be made directly through the bank and the enterprise.
Then payment takes on the responsibility of how to pay, how much to pay, check before payment, check after payment, and so on.
Accounting period
The company will settle accounts every month, so it will do the provisional estimate voucher payable on the generated settlement statement; Make payment vouchers for successful payment, and then make financial statements based on these vouchers;
It aggregates information flows, transaction flows, payment flows into financial statements. A settlement process thus forms a closed loop.
The service object
A settlement process requires the participation of people from all departments and positions in the company, including the following important departments, but not all of them.
The settlement group
The most important department responsibilities include the following
- Responsible for checking the statement: after the system check, it will be checked manually.
- Collect invoice: urge supplier invoice and collect receivable invoice.
- Responsible for invoice: generate invoice task, urge colleagues of tax group to invoice.
- Responsible for generating payment orders.
Tax group
- Invoice, from hope/Ming Shuo and other tax control software invoice
- Declare dutiable goods
Capital group
- Actual payment, in charge of bank client operation
Procurement of China
- Early business negotiation and contract signing
- The problem of feedback
- Post-maintenance communication
supplier
- Purchase order processing
- Check the bill
- Input payment invoices and send paper invoices
- Invoice for charge
Other functions…..
Document of settlement
The settlement process involves the following important documents:
- Purchase order
- receipt
- Bill (statement)
- Advance single
- Receipt of invoice
- Payment order
The following figure shows the relationship between each document:
Two points to note:
- If the purchase order is prepaid, then the corresponding bill can not be paid again. At this time, the bill only needs to cancel with the advance payment.
- Bill in the payment terms of the first ticket after payment, need to review the invoice, after the passage of payment.
Product Architecture diagram
Documents from generation to settlement, to payment, to accounting will involve the following systems
The reconciliation system will carry the reconciliation between the settlement system and other systems in terms of data, status and amount.
Settlement system
Goal of online settlement system
-
Improve human efficiency, release people
-
Solve system/business pain points
- Big data processing problems
- Lack of data, cost rate adjustment, commodity tax rate error and other problems
- Invoice verification, matching statements and other issues
- Capital risk control
- The real-time problem of bank reconciliation
Settlement System Achievements
- The amount calculation in the system is accurate, and the cascade relationship is accurate. The amount of each dimension is 100% the same.
- System capacity and throughput are easy to scale horizontally.
- Settlement multi-dimensional check, check accuracy of 99.99%.
- Multi-dimensional anti-weight payment and check before payment, the payment accuracy is 100%.
Thinking and Interacting
- In the case of more than N upstream systems, how to ensure that the settlement system is immune, as little as possible, to maintain high availability?
- In the case of large amount of data, how to ensure that the settlement system can be high-performance, real-time calculation of accounts?
conclusion
Above, I have shared with you the knowledge context of the financial technical team in the settlement system of the financial system. The technical details will be introduced in the following chapters. If readers have ideas or suggestions, please leave us a comment.
If you are interested in relevant financial techniques, you are welcome to join us. Resume can be sent to: [email protected] (email subject: Convenient Bee financial technical team).
The author
Student Zhou, head of financial technology group.
Mr. Zheng is a senior engineer of the financial technology group, the founder of the settlement system, and deeply involved in the design, development and maintenance of the financial system. Now I am working with my friends to contribute to the mission and vision of “Quality life and Convenience in China”.
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