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Part 2: 8 Steps to Clean-Up Your Vendor Master File Data

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Niek Dekker
7 Min

In Part 1 of our three-part series on Vendor Master Files, we explored the pre-clean-up stage. The primary objective of the pre-clean-up stage is to determine the rules by which your organisation will data.

Having consistent rules that are followed by all members of your Accounts Payable team is critical for achieving and maintaining data integrity. With the average Vendor Master File containing up to 25% anomalous data, all that incorrect information exacerbates the risks of errors and fraud.

In this second part of our 3-part series, we explore the steps you should be following when undertaking a clean-up.

i)      Download and Back-Up Data

It is important that the clean-up process be handled methodically. The last thing you want to do is accidentally purge data that you actually need to retain. That’s why before you get started with this process, it is advisable to ensure all your critical Vendor Master File data is backed-up to a stand-alone device.

ii)     Close Any Open/Pending Items

When embarking on a major clean-up of your Vendor Master File, the first step you should always take is to close any open items. This is necessary as many ERP systems will not allow changes to be made to supplier details if that supplier has open or pending items.

You should also ensure that any completed or expired Purchase Orders are closed.

When it comes to any invoices that are open, review them and decide whether to issue a payment before closing them off.

You should also reconcile open disbursements and close any that remain uncashed.

iii)      Inactive Suppliers

The main objective of a Vendor Master File clean-up is to achieve a high degree of data integrity. A key element of this is purging or blocking any inactive suppliers.

Any Vendor Master File containing large volumes of outdated, redundant or inactive supplier data is exposing your organisation to a greater level of risk of errors or fraud. For example, a disgruntled employee may be tempted to defraud your organisation by generating false invoices under the name of an inactive supplier.

Inactive supplier data can also result in a higher risk of duplicate payments. In the event that a once inactive supplier becomes active again, your Accounts Payable team may inadvertently create a second entry in the Vendor Master File under the supplier’s name, resulting in duplicate payments.

In the pre-clean-up stage, you should have decided how to define an inactive supplier.

Typically, this will be based on the number of months since they were last active. A supplier that has been inactive for at least 12 to 18 months is a normal standard. Make sure you don’t inadvertently purge or block recently added suppliers that have yet to become active. Suppliers onboarded within the last 180 days should not be purged or blocked.

In addition to the inactive suppliers, there may be other recently active suppliers who should also be blocked or purged. For example, there may be suppliers that you onboarded because your organisation was making a one-time purchase from them. If you are certain that you will not be transacting with them again in the future, it would be appropriate to purge or block them as well.

iv)     Special Classes of Suppliers

There may be certain classes of suppliers that need to be treated differently, for example, contractors or freelancers.

You will need to determine whether they should be cleaned in the same way as other suppliers, excluded from the clean-up process, or whether to defer making a decision until a later date.

Additionally, you should decide whether to prioritise certain classes of suppliers for cleaning. It may be appropriate to focus on cleaning those suppliers you transact with regularly. It is particularly important to ensure these suppliers’ data is accurate and updated.

It may also be a good idea to prioritise any suppliers with whom you’ve experienced problems in the past, such as poor communications or incomplete/incorrect invoices. Our experience shows that such suppliers are more likely to have incorrect data in the Vendor Master File, so it makes sense to prioritise them.

v)     Incorrect Supplier Data

Cleaning up your Vendor Master File data requires more than simply blocking or purging inactive suppliers. There may be active suppliers in your database with specific data-points that are inaccurate or outdated.

First and foremost is the supplier name. It is critical that you have consistent naming conventions for your suppliers. In Part 1 we discussed strategies for ensuring consistent naming conventions.

Click here for further information on the risks of inconsistent naming conventions.

In addition to the supplier name, other supplier information may change over time, such as primary contact information, banking details or supplier addresses.

When undertaking a clean-up of your Vendor Master File, this is also the ideal opportunity to determine whether this other data is valid or obsolete.

By initially purging and blocking inactive suppliers, it will then be easier for you to go through the remaining active suppliers in order to determine the accuracy of their various data-points.

Some of the other supplier data you should be seeking to clean-up include:

  • Primary Contact Names
  • Addresses and Contact Information
  • Insurance Certificates
  • ABN/ACN and GST Status
  • Special Payment Terms or Default Discounts
  • Banking Information

vi)       Primary Contact Names

Cleaning-up your Vendor Master File is also the ideal opportunity to ensure the accuracy of the names of any of your suppliers’ primary contacts. Addressing issues with suppliers is always a challenge, particularly if your Accounts Payable team lacks up-to-date information about who the primary contact is.

In Part 1 we explored strategies for establishing consistent rules for encoding names into your Vendor Master File, including details such as whether to include punctuation.

When it comes to titles, such Mr, Ms, or Dr, it is best to have these as options in a drop-down menu where possible.

vii)      Addresses and Contact Information

One efficient way to ensure that supplier addresses and telephone numbers in your Vendor Master File are accurate is through the use of data cleansing tools.

These cross check your data against other databases and may even be able to fix any obvious anomalies. They may even be able to ensure that data formats are standardised.

You may be required to export your data to Excel first before running it through the verification tool.

Many of these tools are not perfect, but they should be able to handle a large portion of your supplier data, leaving a limited number of suppliers that you need to check manually, thus saving you a considerable amount of time and effort.

viii)     Identify and Remove Duplicates

Duplicate entries for suppliers can be a major challenge for any organisations. All too often inconsistent naming conventions see Accounts Payable teams create multiple entries for a supplier in the Vendor Master File.

This significantly increases the risk of duplicate payments – so it should be a top priority for you to remove duplicates when cleaning-up your Vendor Master File.

Start by developing a strategy for identifying duplicate supplier accounts. You should search for duplicates using a range of data-points, not just the supplier name. For example, check multiple entries with matching address fields, primary contact names, telephone numbers, email domain names and ABN/ACN numbers.

Duplicate matching should take place after you have cleaned-up and standardised these fields, as it will make it more likely you will successfully identify matches.

Where possible, wildcard searches can be a great technique to identify duplicates. When searching for a name or address, insert an asterisk before or after truncated search criteria. This will bring up results where the truncated search criteria appear anywhere in the field.

For example, if you are searching for duplicate accounts for BlueScope Steel, a wildcard search may see you entering Blue* – this should return any results beginning with the word Blue. By doing this, you will identify:

  • BlueScope Steel
  • Blue Scope Steel
  • BlueScope Steel Pty Ltd
  • any other creative way your AP staff may have entered the supplier name in the system.

Once you identify potential duplicates, determine whether they are in fact the same supplier. If so, decide which of the entries to retain, how you will merge any relevant data and which entry to purge/block.


How can eftsure help?

Cleaning your Vendor Master File is a major undertaking for any organisation.

It can be particularly challenging if inconsistent supplier data has been added to it over many years without being regularly maintained. However, data integrity is a critical control that can help you avoid costly errors and fraud.

Eftsure makes achieving and maintaining a clean Vendor Master File much simpler. By cross-checking your Vendor Master File data against our database of over 2 million Australian organisations, you will quickly be able to identify potential anomalies in your data.

For example, you can check the accuracy not only of supplier banking data, but also ABN/ACN registration numbers. This makes it easier to identify outdated and duplicate suppliers.

By making use of automated systems such as eftsure, you can ensure you achieve best-practice continuous controls monitoring when it comes to your Vendor Master File.

In the next part of this series, we will explore the post-clean-up phase, so you can maintain a clean Vendor Master File long into the future.

For a full demonstration of eftsure’s capabilities, contact us today.

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