While managing your master vendor file can seem like a never-ending and thankless chore, maintaining this information is imperative. Entering a supplier into your system is often the gateway to issuing payment to that individual, so ensuring that each and every one is legitimate is a challenge well worth it. Read through some of our master vendor file housekeeping tips to prevent pitfalls such as duplicate payments, fraud, and noncompliance with federal and state regulations.
|Instead of…||Decide to…|
|Allowing any employee to add vendors to and/or update the master vendor file…||Assign this permission to just 1 individual. All other employees should be required to submit a new vendor setup request form if a new supplier relationship warrants it.|
|Providing the login details of the person authorized to make master file changes to someone else while the primary employee goes on vacation…|
Designate a back-up team member and provide them with a unique login. Deactivate these credentials once the primary person is back.
|Adding or updating vendors without written standards…||Establish and socialize a clear and consistent data entry/coding policy. Spend more time ensuring entries are consistent than designing the perfect format.|
|Adding a new vendor to the master file simply because an invoice shows up from that vendor…||Search diligently for an existing record before creating a new one. Search for different permutations of their name to ensure vendor doesn’t already exist in the system. It’s important to avoid adding duplicate vendors so you can avoid sending double payments.|
|Creating vendor records as quickly as possible to get them out of the way…||Complete all data fields and familiarize yourself with parent and subsidiary relationships between vendors so you can merge or link as needed.|
|Permitting the same employee to add/update vendors, process invoices, and approve payments…||Maintain segregation of duties so separate employees perform each of these tasks.|
|Allowing vendors you no longer use to remain in the system…||Deactivate suppliers not used within the past 15-18 months, mitigating your risk of fraud by preventing scammers from trying to associate phony purchases with these accounts.|
|Deleting vendors…||Archive or deactivate vendors, retaining their information for future reference.|
|Having complete faith that all employees are trustworthy…||Run a yearly report checking employee addresses against the master vendor file to determine if an unscrupulous employee is having payments redirected to them. Pay special attention to any addresses that are PO boxes.|
|Relying on antiquated methods to maintain your master vendor file…||Implement a supplier portal, where suppliers can perform self-service account management and information updates. Require comprehensive registration information at the outset, including W-9 forms, applicable business licenses, a physical business address, and daytime phone number.|
Waiting until the end of the year to ensure vendor data is accurate or skipping vendor maintenance due to limited budget, reduced staffing, or busy periods…
|Maintain the integrity of your vendor file throughout the year. Do so with continuous monitoring and maintenance, reporting on new vendors/changes of address, and cleanups at fixed intervals. Ensure employees know the master vendor file is reviewed regularly.|
A well-maintained master vendor file provides critical business information, improves internal controls, and enables continuous improvement. It should therefore be considered amongst your most valuable strategic tools.