Centralization of Finance Functions
From Store-Level Operations to Head Office Shared Services
Version: 1.0
Executive Summary
This document outlines a comprehensive plan to centralize the finance
functions of all three stores (and future expansions) into a single, efficient
Shared Service Center at the Head Office. The current decentralized model
has served the company well during its growth phase, but with three stores
now operational and more planned, centralization will:
Reduce operational costs by eliminating duplicate roles
Improve internal controls and prevent fraud
Provide real-time financial visibility to management
Standardize processes across all locations
Free up store staff to focus on customers and sales
Section 1: Current State Analysis ("As-Is")
1.1 Store-Level Overview
Data
Finance Softwar
Location Entry Key Characteristics
Staff e Used
Staff
Store 1 Old Handles own finance
3-4
(Current 4 persons Softwar + External
persons
HO) e Warehouses finance
New
3 Independent
Store 2 3 persons Softwar
persons operations
e
External 1-2 (Handled Old GRNs created
Warehouse persons by Store Softwar locally, sent to Store
s (x2) each 1) e 1 for payment
~8-10 14-17 people
TOTAL 7 persons Mixed
persons handling finance
1.2 Current Process Flow
PURCHASING → Purchase Order generates → GOODS RECEIVING → Stock
Checker counts → Marks damaged goods → Sends invoice to Data Entry →
DATA ENTRY (3-4 people) → Manually creates GRN in software → Sends to
Finance → FINANCE DEPARTMENT (4 people) → Token System → Person 1
verifies & "Posts" → HOD categorizes → Payment Voucher issued → VENDOR
→ Returns on specified date to collect payment (cash/check)
1.3 Key Problems Identified
Problem Area Current Issue Business Impact
Duplicate Data Stock Checker counts → Data Entry Wasted labor hours, increased
Entry types → Finance verifies error risk
Poor vendor relationships,
Vendors wait outside, called in one
Token System inefficient use of finance staff
by one
time
Software Store 1 (Old), Store 2 (New), Cannot centralize with two
Inconsistency Warehouses (Old) different systems
Paper-Based Physical invoices, handwritten Slow processing, storage
Process notes, paper files issues, difficult to search
Segregation of Same person can count AND enter?
Potential for theft/fraud
Duties Gap (Risk identified)
Vendors must visit store twice (once
Vendor Payment Vendor dissatisfaction,
to submit invoice, once to collect
Inefficiency delayed payments
payment)
Section 2: Proposed Future State ("To-Be")
2.1 New Process Flow (Centralized)
HEAD OFFICE (PURCHASING TEAM)
↓
Creates Digital PO in NEW SOFTWARE (Centralized)
↓
SUPPLIER DELIVERS TO STORE/WAREHOUSE
↓
STOCK CHECKER (at Store/Warehouse)
↓
1. Counts physical goods
2. Issues HANDWRITTEN RECEIPT SLIP to vendor driver (Proof of Delivery)
3. Enters receipt into tablet/computer → Creates DRAFT GRN
↓
STORE MANAGER (at Store/Warehouse)
↓
Reviews spot check → Digitally APPROVES GRN (Four Eyes Principle)
↓
SYSTEM → GRN is locked, visible to HO Finance instantly
↓
VENDOR → Submits invoice at store (gets it scanned) OR emails to HO
↓
HEAD OFFICE FINANCE TEAM
↓
Matches invoice with approved GRN → Schedules payment
↓
PAYMENT PROCESSED → Via Bank Transfer (NEFT/RTGS/UPI) for most vendors
OR → Via Store IMPREST FLOAT for daily/perishable vendors
2.2 Special Case: Daily Payment Vendors (Dairy, Bread, Vegetables)
Element Detail
Challenge These vendors need immediate cash to buy next day's stock
Solution Store Imprest Float System
HO provides Store Manager with ₹50,000 float (cash or company debit
How it Works
card)
Stock Checker receives → Store Manager pays from float → Vendor sign
Daily Process
receipt
Stock Checker enters GRN in system → Store Manager marks "Paid -
Digital Trail
Imprest"
Replenishme
Weekly summary sent to HO → HO replenishes float
nt
Control HO verifies all GRNs exist before replenishing
2.3 Vendor Proof of Delivery Solution
Requirement Solution
Vendor needs proof for their
Handwritten Delivery Slip (pre-printed pad)
company
Company needs digital
Digital GRN in software
record
Stock Checker gives handwritten slip to driver IMMEDIATE
Process
then enters data in tablet
3. Staffing Comparison
Curre Propose
Role Reduction
nt d
Data Entry (Store 1) 3-4 0 100%
Data Entry (Store 2) 3 0 100%
Data Entry
1-2 0 100%
(Warehouses)
Finance (Store 1) 4 0 100%
Finance (Store 2) 3 0 100%
HO Finance Team 0 5-6 New Role
~60-65%
TOTAL 14-17 5-6
Reduction
3.1 Process Comparison
Improveme
Metric Current State Proposed State
nt
Invoice
Same day or next
Processing 2-3 days 50-70% faster
day
Time
Scheduled (e.g.,
Payment to 1-3 days after Tue/Thu) or Predictable,
Vendor submission immediate for faster
daily vendors
Twice (submit
Once (drop
Vendor Visit invoice + Better vendor
invoice) or zero
Required collect relations
(email)
payment)
Data Entry 3 touches per 1 touch (Stock 66% reduction
Points invoice Checker) + 1
approval
Improveme
Metric Current State Proposed State
nt
(Manager)
Moderate (lack Low (Four Eyes + Significant
Fraud Risk
of segregation) System Audit Trail) improvement
Managemen Delayed (end- Real-time Real-time
t Visibility of-day reports) (dashboard) control
Low (only Environment-
Paper Usage High
handwritten slip) friendly
3.2 Cost-Benefit Analysis (Estimated)
Annual
Factor Current Proposed
Savings
14-17 people @ 5-6 people @
₹2-2.5
avg avg
Lakhs/month
Staff Salaries ₹20,000/month ₹25,000/month
(~₹24-30
= ₹3.2-4.08 = ₹1.25-1.5
Lakhs/year)
Lakhs/month Lakhs/month
Stationery/ ₹50,000-1
High Low
Paper Lakh/year
Bank/ Negotiated
₹50,000-1
Transaction Mixed better rates for
Lakh/year
Costs bulk
Revenue
Productivity Store staff focus
N/A increase
Gain on sales
potential
Fraud Intangible but
N/A Reduced risk
Prevention critical
Section 4: Implementation Roadmap (0 to 100)
Phase 1: Foundation (Weeks 1-2)
Task Responsible
Software Decision: Migrate Store 1 and Warehouses to NEW
IT Tech
Software
Vendor Master Data Cleanup: Collect/verify all vendor bank Finance + IT
details Tech
Define Imprest Policy: Decide float amount (₹50,000?) and
Finance + HR
rules
Print Handwritten Slip Pads: Design and order for all stores Admin
Phase 2: Pilot (Weeks 3-5) - Store 2 First
Responsib
Task
le
Train Store 2 Staff: Stock Checkers on tablet entry, Manager on
HO Finance
approvals
Implement New Process at Store 2: Digital GRN + Manager Store 2
Approval Team
Shift Store 2 Payments to HO: Stop store-level payments, start
HO Finance
HO bank transfers
Store 2 +
Implement Imprest at Store 2: For daily vendors only
HO
Project
Collect Feedback: Identify issues, refine process
Lead
Phase 3: Migration (Weeks 6-10) - Store 1 & Warehouses
Task Responsible
Migrate Data: Old Software → New Software (vendor support
IT + Vendor
needed)
Task Responsible
Retrain Store 1 Stock Checkers: Tablet entry + Handwritten
HO Finance
slip process
Retrain Store 1 Data Entry Team: Transition to new roles HR + Store
(Admin/Inventory/E-com) Manager
Conclusion
This centralization project represents a significant step forward in the
maturity of our organization. By moving from a decentralized, store-level
finance model to a centralized Shared Service Center at Head Office, we will
achieve:
Significant cost savings (estimated ₹24-30 Lakhs annually)
Stronger internal controls and fraud prevention
Better vendor relationships through faster, predictable payments
Real-time financial visibility for strategic decision-making
Scalability for future store expansions
The plan is practical, addresses operational realities (daily vendors, vendor
proof requirements), and includes a humane approach to staff transition.