Banking Arrangements
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There were two collection modes in IOCL: Non E-Collection Modes and E-Collection Modes. With Internet banking becoming a necessity in the business world, IOCL with the help of its bankers introduced the concept of E-collections within its working environment. Indian Oil Corporation, as stated earlier, had a centralized collection system whereas its payment mechanism was totally decentralized, i.e. Funds would flow through all the regional offices or state offices to the Head Office...
Cash Flow Forecasting
A key element of cash management involved projections of inflows and outflows of cash by the corporation. It also required constant updating on a day-to-day basis for ensuring effective fund management.
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Projections were done in two stages:
Monthly: by the 7th of every month
Rolling: by the 22nd of every month for the next month
For effective forecasting, managers at IOCL required credible information from multiple sources. The process of cash flow forecasting was on a daily/monthly basis, and employed forecasting by three months moving average, forecasting by OCC seasonal index, and forecasting by five years' trend analysis...
Looking Ahead
Though IOCL used a centralized collection system, it had a decentralized payment system. In early 2011, it started a centralized payment system but restricted it to employee payments. However, IOCL had plans to eventually centralize the whole payment system...
Exhibits
Exhibit I: Indian Oil Corporation: Leader in Downstream Industry
Exhibit II: Indian Oil Corporation: Organisational structure
Exhibit III: Indian Oil Corporation: Cash forecasting (Three Months Moving Average)
Exhibit IV: Indian Oil Corporation: Cash Forecasting (OCC's Seasonal Index)
Exhibit V: Indian Oil Corporation: Cash Forecasting (Five Years Moving Average)
Exhibit VI: Variance Analysis
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