ProcessFlow - 19-01-2016 Last Update

Process Flow (Leasing, MO: Operation & Finance )

- Financial Services

2

Contents

Company Overview1

Organization Chart2

Operation Process3

Finance Process4

Sales Process

Collection Process

Head Office

Securitization

Reporting

Quality Assurance

Regional Accounting

Finance Performance5

3

United Installment Sales Company Limited (UIS) a Saudi Limited Liability Company was formed in 1979 and is a member of the ALJ Group.

UIS is a market leader in Installment Sales and Leasing of automobiles in Saudi Arabia to individuals, corporate employees and companies.

With a wide network of 252 branches UIS is covering large, medium and small cities throughout the kingdom.

The company plans to expand its network to 353+ branches by 2017 to ensure unrivalled products and services to its customers.

In 2010 ALJL has been formed in preparation to be fully compliant with SAMA Regulation , ALJL took over UIS operation on Sep-2012.

Company Overview

4

UIS/ALJL OWNERSHIP STRUCTURE

5

Organizational Structure

6

Associates Distribution

Central RegionBranches: 65

Employees: 630Finance Dev.:18

Northern RegionBranches: 51

Employees: 456Finance Dev: 14

Eastern RegionBranches: 53

Employees: 626Finance Dev.: 15

Western RegionBranches: 64

Employees: 702Finance Dev.:19

Southern RegionBranches: 51

Employees: 632Finance Dev: 16

Other Head Office Departments:Securitization 5H.O. Support 24System Support 6Financial Reports 5Quality Assurance & Kaizen 7Collection Center 12Management Support 2Deputy CFO 1CFO 1Total H.O 145

7

OPERATION PROCESS SALES

8

Guest is given price

range to choose

from and then select

the car

Fill New Guest

record card

Guest comes to branch

Guest is provided

with multiple finance options

Cont’d. on next slide

Operation Process -Sales

9


Search the guest credit history through ALJISR

database

Salesman gives details

of requirements

Finance quotation is given to

guest based on his choice

Fill credit forms & approval

from Branch

Manager

Cont’d. on next slide

The ContractID

Identification letter

Driving license

proof of residence

10

Issue the insurance certificate for all sales

The ALJR-sales issues invoice

After receipt of invoice, the

Branch Manager and Auditor approve and issue to ALJR

the car release note

The Customer Pays the 1st

rent, Advance payment, Issue

expense

The Branch Manager,

after approval of

credit, issues purchase

order

ALJR-sales prepares

plate, registration documents and release car to the customer

INVOICE

Release Note

Purchase Order


11


Step 1

Step 2

Step 3

Step 4Step 5

Step 6

Step 7

Step 8

Guest come to branch

Choose car & Finance option

SubmitDocuments

Credit forms approved

PurchaseOrder

Invoice, Registration,

Releasenote

Guest Receive car

12

OPERATION PROCESS COLLECTION

13

Cashier checks the due date of payment in the collection records

The customer is informed of due dates as per the agreement

Operation Process -Collection

Call the guest for follow up

Call guarantor and relatives

Follow up via Fax, calls etc. to customer’s employer

The vehicle is repossessed with help

of police

The claim against the customer is made with the help of Govt. authorities such as court, Police and Chamber of Commerce

Leasing ContractsInstallment Contracts

One Month Due

6 Weeks Due

2Month Due

More than Two Months

The payment is due next month from date of sale

14

Operation Process -Sales The contract can be terminated at / before maturity for any of the following reasons:

12345678

89

Customer Wants to Buy

Customer Returning Vehicle

Re-Lease

Customer Refusing to Pay

Change from Lease to Installment

Vehicle Theft

Total Loss ( Major Accident )

Death of Customer

Too Many Accidents

Transfer Contract form one guest to another

910

15

Internal Control Process

Sales Control

Receivables Control

Cash Control

System Control

Leased Vehicles, License Control

Repossessed / Ex-Lease Vehicles Control

Stock Control

23

FINANCE PROCESS REGIONAL ACCOUNING

Finance Team

24

Finance Process – Regional Accounting

4

5Cash & Bank NEXT

At Last Day of the Month

Check cash and bank transactions to correct any wrong accounting treatment.Cash And Bank Manual

Cash Balance

Sales & Purchases

Fixed Assets

Reconcile actual cash balance with cash books balance, check high cash balance.

Review the sales price, car model, discounts, finance rate, MO rate , rebate, cash back, exceptions, sales credited to the right dealer

Check fixed assets to ensure proper entry on ORACLE-FA

Collection

Reconcile cash transactions with amounts debited to the customer account statement for first rent, advance payment, issue expense, monthly rent

Close Period at branches

Upload data to data warehouse

Data Received In Head Office

25

4

5Reconcile &

AnalyzeNEXT

At Day 2 (GL Interface)

Reconciliation to all Trial Balance Accounts

ALJR Centers

& DealersCampaign Intra

Company

Balance confirmation of all ALJR centers with FSO branches,Dealers send claims to review after checking transfer amounts to central sales or dealer bank account, reconcile with VB

ALJID marketing occasionally announce campaigns for leasing customers, finance team prepare monthly campaign summary report, to ensure proper application of campaign prices and discounts

Review Intra accounts among all Company’s branches to ensure zero balance

Create Batch file for all Auto JV’s

Posting Data From FS system to Oracle GL


26

4

5

Expenses NEXT

At Day 5GL is closed, No further entries are accepted

Bank Recon.

Loans Summary

Prepare all Bank Reconciliations (264 Bank Account)

Check Associates loans and ensure proper entry on ORACL-HR,Delivering Loans Summary Report to HR-HO,

Review all expenses to be in line with the manual of authority, ensure all original documents attached with the receipts.


27

4

5

Maximum 12th of each Month

Month file is closed , signed by Account Manager, Submitted to Quality assurance Dep’t.(submission date & accuracy and quality is the basis for associates monthly evaluation )

Add to that daily tasks that happen through the month :

Cash Payment Approvals For Branches

Transfer Contracts from Customer to Customer

Total Loss & Stolen cars Compensation

FA Purchase Requirements From Branches

Compare all bank standing orders with customers account statement


FINANCE PROCESSSECURITIZATION

28

29

SECURITIZATION It is a financial technique that pools homogenized assets (lease and installment receivables) together and turns them into tradable securities portfolio.

It is a modified Mudaraba by which bank is only acting as a Fund Administrator on behalf of the Investors of an investment fund specially designed for a specific portfolio of receivables, and ALJUF acting in the capacity of an Agent for the Administrator

Objectives Risk Management. Increase Liquidity

Securitization

UIS Seller

BANK

Purchase Amount

Securitized Pool

Monthly Collection

Repayment of Principal

and Net Profit

UIS ServicerPOOLS OF LEASE ASSETS AND INST. A/R

SPV

Less UIS Service Fees

True Sale Service Agreement

Finance Process - Securitization

22

Deal Generating Steps

Selected Contracts(Pool)

Receivable available to sale

Eligibility

criteria

Send to management for approval (FC, FD)

Prepare pool documents

External AuditCheck the pool

Sign the Agreement & receive the principal

Monthly Bank report& Bank transfer

At maturity date,Final Settlement

Prepare all

related JV’s

duringwhole

process

31

32

Eligibility criteria - Sample

33

External Audit Check the poolExternal auditor choose around 5 big branches to check , from that branches receivable the auditor randomly select a sample test contractsIn which the auditor check the following:

- ID Letter is attached- Customer ID- Customer Driving License- Residence prove- Customer residence location map- Customer sign all required papers as company policy- Customer salary/ age is recorded correctly- Customer salary to lease payment is as company policy- Customer status (Fleet/Retail)is recorded correctly

After the auditor rest assure to the data accuracy provided to the bankthe auditor send a clearance to Bank

34

Monthly Bank report & Bank transfer

35


36


37


38

FINANCE PROCESSHEAD OFFICE

39

Finance Process – Head Office

HeadOffice

HOLoans

HRSettlement

s

Commission & Incentive

Payroll

Related companies

Payments

BankReconciliation

Morabahat

40

Finance Process – Head OfficeHO

Loans

- Receive the request after HR recommendation

- Accountant prepare the loan complying with the policy and determines any exceptions

- Review it by the CA & FC review the authority and forward it for approval up to the required level

- Settle the loan by :

Daily Process

Personal

CarHome

Appliances

Payroll Accountant

Supplier

Toshiba Branch Manager

41

Finance Process – Head Office Daily Process

EOS Settlement

HRSettlement

s

Business TripsCash in Lieu

Tickets / daysMedical / Car

InsuranceExceptional Incentives

Advance Cash from Salary

Accountant, CA Reviews E-Form, FC approves, HR prepares settlement request

Reviews data and calculates the due amount according to the policy and manual of authority , HR prepares settlement request

Reviews financial data ,records in data base and HR ORACLE , send to HR dep’t. for archiving send settlement order to the casher.

Receive Notes from ALJULMO , charge the company and the associate according to their share.

Receives commission request , Operation management gives the approval, senior Accountant review the from, and FC approves

Receives all requests , supervisor review and approved by FC, send the request to be settled by payment department.

42

Finance Process – Head Office

4NEXT

Day 16 to 19Receives monthly regional earning & deduction reports

DataEntry

comparative I-FILE

Day 20 to 21Records all company payroll actions in HR Oracle

Day 22 to 24Prepares comparative statement report , reviews all payroll recruitments and terminations

Day 25 to 26Prepares and reviews the final payroll reports, approved by Dev. FCs, create I-FILE

UploadData

Earning & Deduction

Day 27 to 28I-FILE uploaded to HSBC,sending cash payment Notes orders

Payroll Process

43

Finance Process – Head OfficeMonthly Manpower Accounts

Reconciliations

Prepares and provides all manpower data for Flash purposes.

Makes all accounts reconciliation for all manpower accounts like all type of loans , EOS Provisions , Ex-Gratia , In lieu days/tickets….etc.

Receives and reviews all accounts reconciliation (by CA)

Payroll Process

44

Finance Process – Head OfficeOther Type of Payroll Runs

Semi-annual Housing Allowance

Ramadan Bonus

Quarterly Bonus for branches

Receives data, execute pre-run, review all results, any correction needed, run the final process and settle the payment by IFILE bank payment or cash payment.

Payroll Process

45

4

5Set

TargetsNEXT

Day 3 to 6Branch Managers set the sales & collection targets for next month

DataEntry Calculation Final

Report

Day 7 to 10Branch Managers enter the Actual month results for both the sales and collections.

Day 11 to 16Calculates incentives based on the policy , then approved by GM & MD.

Day 17 to 20Prepares the final report and Approved by Operation Management then uploads data to HR Oracle

Finance Process – Head OfficeCommission & Incentive

46

Finance Process – Head OfficePayments ( Daily activity)

Head office dep’t. handles all company payments for associates and all suppliers ( centralized approach )

Receive Payment

request in Mostanadaty

system

Review and

approve as per

manual of authority

Issue payment order, signed as per manual of authority.

Pay the amount through

cash, bank transfer or

cheque payment

Receive Review Issue Pay

47

Finance Process – Head OfficeBank

Reconciliation

Day-to-Day bank collection recording,for installment and leasing customers for 10 banks

Bank collection

Provides support for 264 bank accounts,

Handles bank pending items

Handles point of sales error and problems,

Provides all bank statements for reconciliation purposes.

Bank support

Provides all interest data for Flash

Prepares bank reconciliation for 66 bank accounts ,

reviews all accounts (local / foreign currency)

Reconciliation

48

FINANCE PROCESS Fixed Assets

49

Finance Process – Head OfficeFixedAssets

Process assets purchasing requests received from purchasing department for all branches and head office,

Review pre approved budget ,

Prepare comparative report,

Supervisor approves the request and comparative and FC.

Approve Request(Daily process)

Assets addition & deletion in FA ORACLE (1-30)

Run FA monthly process with ALJR (1-5)

Post data to GL (4 or 5)

FA Run

FA reconciliation (6-9)

AM reviews all accounts reconciliation

Reconciliation

50

FINANCE PROCESS of Insurance Credit and Receivables

Management

Outline

ProcessFlow

System ,Policies And Control Out Put

www.alj.com

Process Flow

InsuranceClaim

Management

Finance

Process

Operation Process

Finance Process of Premiums Insurer issue the

Dr.Notes and send it to ALJF

Generate the file form

B.Object System

053

Insurance products 338314 Unit

We have two

policies TPL / OD

Insurance companie

s MALATH

AXA Insurance Credit and Receivable

Management

Review the reports and send it to

Insurance COMP.

Review and paid as the Payment

Plan

We confirm the balance with insurer

Insurance products 338314 Unit

Operation Process ( Claims Management )

Receivables

Payables

Claims

Management's

www.alj.com

Payment Approval due to

costumer's (2600 Per Month )

T.Loss /Stolen

(1100 Per Month )

All the Amounts Recovered due to

Insurer Cash/Bank /Cr-Dr

Notes ( 6500 Case Per Month)

System, Polices and Control

System

• Oracle ( JVS)• Business Object ( Reports of OD-

TPL) • FS System ( Cash/Bank) • Excel

Polices • All the Transactions in our

Department have Polices/ Agreements

Control

• All the Transactions pass to TBL have Analysis for each Account / Confirmation balances for the Insurer Accounts.

www.alj.com

Out Put

Insurances

Companies

External. Audit 15% from

all Requirement

s

Quality Assurance

32 Ctrl Account per

Month

Regions

www.alj.com

Claims- Payment Approval to

Costumers - Recoveries from

costumers

Premiums - TPL Renewal/Add/Del

100% to Maltha

Premiums - OD Renewal/Add/Del

60% to Maltha and 40% to AXA

Daily Approval

Payment to Customers 130 Per Day

Monthly

Approval of Total loss and Stolen

1100 Per Month

57

FINANCE PROCESS QUALITY ASSURANCE

58

Finance Process – Quality Assurance

1- Review Monthly Accounts files received from regions.

2- Deal with external audit as a single contact point.

3- Deal with internal audit team.

4- Handle zakat issues.

5- Handle accounting for all new SPVs ( Taif Raeda, Taif First. …. Etc. )

6- Any other special tasks assigned by management.

7- Review and verify the Financial Statements and its related issues.

Audit

59


Audit ZAKAT

1. Provide the Zakat Advisor with all requirements related to the registration of the new Companies and the branches in DZIT.

2. Prepare fomrs of the annual Zakat Return.3. Prepare Zakat Payments.4. Respond the DZIT Inquiries.5. Review the Objection Letters before the representation to

DZIT.

60


1. Verify different formulas applied in the system .2. Indicate any gap between Finance , Operation and IT procedures.3. Prepare Service Level Agreement for all business user problem that gets

solved within SLA and prepare SOP for that 4. Ensure monthly that System generated reports from FS system are as per

the user demand5. Review Auto JVs and reports generated by the system including:

a) Revenue Reports. b) Insurancec) Deferred income d) Terminatione) Depreciation f) Sales & purchaseg) Provision h) Collection

Audit Zakat System

61

FINANCE PROCESSREPORTING

Finance Reporting Process

Monthly Tasks

Annual Tasks

62

Quarterly Tasks

MIS

Assignment by Staff

Monthly TasksFlash Report

Close to Actual monthly Income Statement reports, with related supporting schedules and variance analysis and is used in the monthly BOD meeting presentation.

63


Flash Report

Monthly TasksBOD Presentation

This is a Power Point Presentation based on the Flash Reports highlighting the main items in the Income Statement thru the Dashboard with selected supporting schedules and variance analysis and is presented during the Board of Directors meeting.

64

Flash Report

BOD Presentation


Monthly TasksGL Set Up

- Parallel mapping of FS System and Oracle GL and importing.

- Data transfer from Data Warehouse to Oracle System through Interface

- Flash versus actual results monitoring

- Monitoring, Processing and posting of monthly Journal Vouchers

- Trial balance monitoring, adjusting entries and closing of books in the Oracle GL System

65

Flash Report

Oracle General Ledger Setup

BOD Presentation


Monthly TasksActual Reports

Generation of financial statements, schedules, variance analysis and other related reports based on the general ledger balances.

66

Flash Report


Actual Reports

BOD Presentation


Flash Report


Actual Reports

Monthly Tasks

BOD Presentation

ALJFSO / AMUCC Package

This is a financial reports package of printed financial statements, schedules and analysis for each company under ALJFSO or AMUCC including the combined or consolidated reports of all companies under ALJFSO or AMUCC. We have the Flash and the Actuals “Financial Reports Package”.

67



Flash Report


Actual Reports

Monthly Tasks

BOD Presentation

ALM Reports

Asset-Liability Management (ALM) reports include the IFRS P&L & Balance Sheet, SAMA monitored/required ratios and other Risk Management data & analysis.

68


ALM Reports/Schedules


Flash Report

Regional Reports


Actual Reports

Monthly Tasks

BOD Presentation

Regional Reports

This covers only regional and per branch or per business unit Income Statement and selected statistical data like sales units, units in operation, receivables, overdue, overdue rate, headcount and number of branches per region.

69


ALM Reports/Schedules


External Audit Requirements

Quarterly TasksExternal Audit Requirements

- GL Accounts Mapping which will be the basis of the financial statements

- Balance Sheet- Income Statement- Other Audit Schedules like

Receivables, Collection Cost, Impairment, Allowance for Doubtful Debts movement, Operating Expenses (S&D and G&A), etc.

70



Quarterly TasksAudit Committee & BOD

Presentations

Audit Committee Meeting Powerpoint Presentation covers the Audited Financial Statements (BS, P&L & Cash Flow) as well as the supporting schedules for selected balance sheet and income statement items

71


Audit Committee & BOD Presentations


SAMA Prudential

Quarterly Tasks

Audit Committee & BOD Presentations

SAMA Prudential

SAMA quarterly reportorial requirements based on the quarterly audited financial statements which include Balance Sheet, Income Statement, Financing Portfolio, Source of Funds, Non-Performing Assets, HR data and Others)

72


Annual Tasks5-Year Budget & Business

Plan Preparation

- Update of current year files which will become the basis of the remaining forecast months and succeeding years’ business assumptions.

- Effect required changes or updates on the existing Budget Software.

- Incorporate the business strategies & assumptions into the software

- Generate the financial statements.

- Review, fine tune and finalize the resulting financial statements to ensure that they reflect the overall business plans and targets.

73

5-Year Budget & Business Plan Preparation


Annual TasksYear End Audit Requirements

74

Budget and Plan Preparation

Year End Audit Requirements


- GL Accounts Mapping which will be the basis of the financial statements

- Balance Sheet- Income Statement- Other Audit Schedules like

Receivables, Collection Cost, Impairment, Allowance for Doubtful Debts movement, Operating Expenses (S&D and G&A), etc.

Annual TasksPeriod of Examination

A 15-day period is set aside for shareholders and partner banks to submit their queries and clarifications on the audited financial statements, management reports, headcounts, organization, governance, company policies, business processes, etc. which needs to be answered as quickly as possible.

75



Annual Audit Checklist (Period of Examination – POE)


Annual TasksInsights

Insights Annual Report : Information of the company’s annual performance , activities, achievements, rewards, initiatives and coming year’s challenges.

76


Insight FYE Annual Report




Annual TasksAd Hoc Reports

This will include special tasks, projects, analysis, additional data & information required by management, internal & external auditors, treasury, consultants, government agencies & others which are assigned to the team from time to time.

77






Ad Hoc Reports & Assignments

Annual TasksConsolidation

It is the aggregated financial statement of ALJFSO as a group. The consolidation requires a set of eliminating and consolidating entries to work back from individual financial statements to a group financial statement that is an accurate representation of the group’s business operations.

78





Financial Statement Consolidation





Annual Tasks



Reconciliation

Due to the difference in the treatment and classification of some accounts, a reconciliation is prepared to ensure that both the audited financial statements and the management reports are exactly the same.

Audited FS & Mgmt Reports Recon.

79






Annual Tasks



Creation of Next Year Files

As the current year comes to a close, we need to prepare for the incoming year’s file by creating a totally different set of files which include updating of historical and Last Year data, providing for the Current Year data and establishing the Budget Year files by populating it with data from the approved budget. This may also entail deletion, addition & improve- ment of files as well as introduction of new reporting techniques to facilitate faster generation of financial reports.

80


Creation of Next Year Files



Audited FS & Mgmt Reports Recon.

MIS Reports

Oracle / GLDI

81


SAP Business Objects

• Trial Balance• Income Statement

(Monthly / YTD)• Balance Sheet• Maintenance of FSG

reports• Posting/ Reversing of

JV's• Other Reports

• Sales Units• Accounts Receivable• Overdue• Bad Debts• Amortized Payment

Schedules• Units in Operations• Other Supporting

Reports for Flash/Actual

82


ISLAM Senior Database Admin. All MIS Reports Requirements for Financial Reporting Section

Flash Reports; Presentation Data & Review; ALM/Risk Management; Prudential Reports; Regional & By Branch P & L; Variance Analysis on Opex & Non-Opex; Update of Work Assignments & Deadlines; Ad Hoc Reports Schedules & Analysis

Presentation Data and Review; FSG Reports Development & Maintenance; POE; Audit Requirements; Budget & Forecasts; Variance Analysis on Gross Profit; Exception Report, Story Charts; Ad Hoc Reports, Schedules & Analysis

Actual Reports; GL & Oracle Reports Generation; Flash & Actual Financial Package Printing; Posting of Special & Adjusting Entries; Flash vs Actual Monitoring; Subsidiaries Balance Sheet

WORK ASSIGNMENT SUMMARY BY STAFF

Review and ensure the accuracy of reports prepared by the staff; that reports are prepared and submitted on a timely basis; ensure proper and balanced distribution of workload among the staff; assist in the preparation and review of budgets for ALJUF, UIS, ALJISR & Motory; prepare Ad Hoc Reports Schedules & Analysis; initiate & propose projects to improve and increase effi ciency of the team

FIDEL Regional Accounts Manager

Chief AccountantUSAMA

REYNANTE Chief Accountant

AccountantERSHAD

83

Finance PerformanceTo ensure efficiency of finance division performance we do the following:

1) Allocation of duties per title

2) Evaluate associate performance monthly which accordingly used for:3) Semi annual Bonus4) Promotions5) Man Of The Month / Midyear /Year

6) In alignment with the Company Vision: To responsibly fulfill our guests’ aspirations, UIS Finance has initiated a survey, Internal , External, And Q12 to evaluate its overall performance, after each survey UIS Finance meet and discuss to improve quality , performance and engagement.

7) Encourage attendance discipline by applying Perfect Attendance scheme.

84

Finance Performance8) Management has launched a website for the finance department that help the

associate to find all what they need under one roof, organizational structure, forms, book library, all the manuals needed and announcements . . Etc.

9) Each transaction is delegated to an organizational position to define and limit the responsibilities within the company, this is called Manual of authority.

10) In order to reach our long term goals, a set of policies, principles, rules, and guidelines has been formulated and adopted by the organization