Friday, September 4, 2009

TRAFFIC SUSPENSE

TRAFFIC SUSPENSE
Introduction:
Railway earnings are accounted for when they are accrued. Obviously there exists a gap between earnings when they are accrued till the time they are realized and this gap is known as Traffic Suspense.

Importance of traffic suspense:
The following table would reveal the importance of traffic suspense.
a. gross earnings
b. – traffic suspense
c. = gross traffic receipts
d. – total working expenses (working expenses + appropriation to DRF and Pension fund
e. = net traffic receipts
f. + net misc receipts( misc earnings – misc expenditure)
g. = net railway revenue
h. – dividend payable to general revenue
Gross surplus/shortfall

If gross surplus is to be increased either gross traffic receipts have to be increased or total working expenses have to be reduced. If gross traffic receipts have to be increased gross earnings have to be increased and traffic suspense has to be reduced. Thus the increase or decrease of the Traffic Suspense affects the gross surplus/shortfall and has an important bearing on the viability of financial results of a railway.

Constituents of traffic suspense:
I station outstanding

II accounts office balance sheet outstanding

III cash in transit

Constituents of station outstanding:

a. ADMITTED DEBITS: during the internal check in the traffic accounts office, irregularities like short collection of revenue are detected and an error sheet (Form A 2802, Para 2802 A II) is sent to the station. On receipt of the error sheet, SM is required to fix the responsibility of staff in the matter and recover the amount through the pay sheet of the staff whose responsibility has been so fixed. However when the amount is substantial, the same has to be recovered in installments. The salary recoveries are advised through the Credit Recovery Advice (Form A 2811, Para 2811 A II) by the bill drawing authorities. As per the extant rules all admitted debts are to be cleared at once thereby SM/Commercial staff discharge their liability fully. Railway Board have insisted that all debits less than Rs 100/- should be paid in cash duly obtaining a Misc Cash Receipt for the same.
b. DISPUTED DEBITS: When an error sheet is sent to the SM but the staffs concerned do not own the responsibility for the lapse, the reasons for the same have to be communicated to the accounts office through one of the foils of the error sheet and on examination, credit is allowed, if the grounds of withdrawal of debit are satisfactory. There may be disagreement between the staff at stations and at the accounts office in respect of rate or classification of commodity/concession. Effort has to be taken to clear the disputed debits. In case of goods, waiver may be applied and cleared.
c. FREIGHT ON GOODS ON HAND: When a consignment arrives at a station, the consignee is expected to take delivery of the same on production of his copy of the railway receipt. When the consignees do not take delivery of the consignment, freight on these consignments is reflected as ‘freight on goods on hand’. While the incidents of such cases may not be large, of late, there have been heavy amounts lying under ‘freight on goods on hand’, primarily because of the fact that delivery of coal wagons is not being taken by power houses promptly. Wagons loaded with coal are placed in side the sidings. Though the physical delivery takes place, the payment is not forthcoming immediately as the internal checks on the railway receipts are to be done at their offices.
d. FREIGHT ON GOODS NOT ON HAND: The main reason for the freight on goods ‘not on hand’ is the diversion of consignment. For instance a consignment is booked from station ‘A’ (originating station) to a station ‘B’ (destination station) but at a point ‘X’ between ‘A’ and ‘B’, the load is diverted to another station ‘C’. Then the freight would remain outstanding at ‘B’, the original destination station. In order to clear the outstanding at the original destinations station, an over charges sheet will have be prepared by station ‘A’ in favor of station ‘B’. A fresh invoice has also to be prepared by station ‘A’ against station ‘C’. However, station ‘A’ will issue over charges sheet/fresh invoice only, if Station Master at ‘A’ comes to know about the diversion that has taken place at point ‘X’. However the experience so far has been that the diversion particularly of coal and food grain consignments, takes place on telephonic instructions to the Yard Master and proper documentation of this transaction does not take place. The situation becomes more complex when the point at which diversion takes pale is located on a foreign railway. TIAs and Commercial Inspectors are to be deputed to the spot to verify and take stock of the situation and rectify mistakes if any.
e. WHARFAGE AND DEMURRAGE CHARGES: Wharfage charges are levied when the consignment in the railway premises are not cleared within the stipulated time. Demurrage charges are levied when the wagons are not released within the stipulated time for loading/unloading. Wharfage/demurrage chares are levied against the consignees, if they fail to take delivery of the consignments within stipulated period. Many a time, private sector firms are not prompt in payment of demurrage charges levied against them on the plea that wagons are bunched together by the railway and are pushed into their sidings when they do not have loading/unloading capacity. Each case must be thoroughly investigated on its merit and take action to recover the charges if it transpires that the railway’s action is correct or issue a waiver in case the party’s argument is accepted.
f. SIDING CHARGES: The cost of one round trip for an engine called from serving station to the ‘X’ point or siding and the return to the serving station is known as siding charges. It is based on the hauling cost per Kilo meter and all India Engine cost as advised by the Railway Board periodically separately for diesel electric and electric locomotives. It varies from train engine and shunting engine. To assess the correct charges periodic Joint Trip Trials are conducted in the presence of the siding representative, TI, CCI and TIA. Three trials are taken at a time and average is taken. Generally these charges are paid in FCNs. (Firm’s Credit Notes)

ACCOUNTS OFFICE BALANCE SHEET:
Vouchers along with cash are dispatched to the cash office for onward transmission to the traffic accounts office for consolidation and preparation of billing. The vouchers are of two kinds. Namely
a. Vouchers to be billed
b. Vouchers not to be billed.
While vouchers like military warrants and credit notes belong to the former category, refund orders, waiver etc belong to the latter category. The SM discharges his liability be sending the vouchers to the cash office and when they are received in the traffic accounts office, a suspense head called “Accounts Office Balance Sheet”, is operated to ensure the realization of vouchers to be billed for and JVs are put up to liquidate the accumulation of suspense under “vouchers not be billed for”.

A number of government departments have now switched over to the settlement of their accounts with the railways in cash except departments like Defense and Postal. It is necessary that the bills are made out on the basis of vouchers against the departments concerned and sent to hem promptly so as to expedite the process of their realization. A constant watch is kept by the accounts officer to see that no arrears exist under this account. Action may be taken to call for the vouchers if not submitted by stations. When bills are prepared, the suspense under ‘Accounts Office Balance Sheet’ is cleared.

CASH IN TRANSIT
Stations are remitting the cash and vouchers on a daily basis. If cash pertaining to a month is received after 3rd of the following month, the same is reckoned as ‘cash in transit’ for the month and adds to the traffic suspense for the current month. The following may be reasons.
a. INADEQUACY OF CASH BAGS AT STATIONS: The cash is sent in leather cash bags to the cash office. After emptying the same are sent back to the station through the Guard of train with an acknowledgement from the stations. In reality the return of cash bags is not as quick and some times delayed in transit. However with the introduction of Focal Point Banks which are authorized to receive the cash the incidence is reduced in large stations. In way side stations the problem persists.
b. CASH SAFES UNLOADED AT A JUNCTION BUT NOT DISPATCHED TO THE CASH OFFICE EXPEDITIOUSLY: Cash safes carrying the cash bags of branch lines are unloaded in a junction where the safes are to be loaded in nominated trains for onward transmission to the cash office. In reality, there is delay in loading and that contributes to the cash in transit.
c. EMPTY CASH SAFES NOT LOADED IN THE NOMINATED TRAINS: Some times the empty cash safes are not loaded in the nominated trains because the safes are not available or safes are defective. Thus the entire cash collection will not reach the cash office in time.
d. DELAY ON THE PART OF STATIONS: Some times the staffs at the stations fail to send the cash due to unforeseen circumstances which also contributes to the cash in transit.

From the above discussion, it is seen that prompt action at all levels of Administration whether in the form of fixation of responsibility of station staff and recovery of dues from them, preferring bills against he siding authorities by the station staff and against the government departments by the traffic accounts office, issuing waiver / freight clearance authorities by commercial department , ensuring quick dispatch and accountal of cash by the stations, cash office and commercial and accounts offices would go a long way in reducing the traffic suspense.

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