In Part 1 of our three-part series on Vendor Master Files, Vendor master file best practices, we explored the pre-clean-up stage. The primary objective of this stage is to establish rules for maintaining vendor master data effectively.
Having consistent rules that all members of your Accounts Payable team follow is crucial for maintaining data integrity. With the average vendor master file containing up to 25% anomalous data, incorrect information increases the risk of errors and fraud.
In this second part of our series, we delve into the steps for an effective master data cleansing process.
The vendor master data cleansing process should be methodical. Before starting, ensure all critical vendor master file data is backed up to a stand-alone device to avoid accidental loss.
The first step in cleaning your vendor master file is to close any open items. Many ERP systems may not allow changes to supplier details if there are open or pending items. Ensure all completed or expired Purchase Orders are closed, and reconcile open disbursements.
The main goal of a vendor master file clean-up is to achieve a high level of data integrity by purging or blocking inactive suppliers. Inactive supplier data can increase the risk of errors like duplicate payments. During the pre-clean-up stage, you should have defined an inactive supplier, typically based on inactivity for 12 to 18 months.
Certain suppliers, such as contractors or freelancers, may require different treatment during the clean-up. Decide whether to clean them like other suppliers or prioritize those you transact with regularly to ensure data integrity.
Cleaning your vendor master file involves more than purging inactive suppliers. Active suppliers may have outdated or incorrect data points, such as primary contact information, banking details, or addresses. Ensuring consistency in naming conventions and verifying data such as ABN/ACN and GST status is crucial.
Cleaning your vendor master file is the ideal time to verify the accuracy of primary contact names. Consistent naming conventions should be established for encoding names, including titles like Mr., Ms., or Dr., ideally in a drop-down menu.
Using data cleansing tools can ensure the accuracy of supplier addresses and contact information in your vendor master file. These tools cross-check data against other databases, fixing obvious anomalies and standardizing formats.
Duplicate entries for suppliers are a significant challenge that can lead to duplicate payments. Identifying duplicates using multiple data points, such as address fields, contact names, and ABN/ACN numbers, should be a priority. Wildcard searches can help uncover inconsistencies in supplier names.
Cleaning your vendor master file is a significant task, especially if inconsistent data has accumulated over years. However, data integrity is essential for avoiding costly errors and fraud.
Eftsure simplifies the vendor master data cleansing process by cross-checking your vendor master data against our database of over 2 million Australian organizations. This helps in identifying outdated and duplicate suppliers, ensuring clean vendor master files.
In the next part of this series, we will explore the vendor master file maintenance (post-clean-up) phase to maintain a clean vendor master file long-term.
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