AGENDA
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Sherry DePew
Your Vendor Master File - A Strategic
Resource
Key Goals
Vendor File Issues
A Vendor Management Program
Best Practices
Questions and Answers
Slide 1
Your Vendor Master File A Strategic Resource
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Vendor file is a key corporate resource
Ownership belongs in AP (87%)
Many disbursements are made to payees that
typically do not have involvement with
purchasing
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tax payments, garnishments, employee
reimbursements, donations and customer
refunds are some examples
Limit who can add or update vendors
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People who can add or update vendors must
not be allowed to process transactions such
as invoices and purchase orders
Slide 2
Your Vendor Master File A Strategic Resource (cont’d)
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Federal, state, international laws and
regulations make it important to keep your
vendor file accurate
Eliminating duplicate payments, strategic
price negotiations and accurate financial
reporting are impossible without a clean
vendor master file
Jon Casher (IOMA vendor file management
expert) says that any vendor file with over
1000 suppliers will require the aid of an
outside expert to effectively manage
Slide 3
Key Goals Vendor Master File
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Make accurate and timely vendor payments
Reduce duplicate payments
Comply with laws and regulations
Catch / reduce fraud
Know where you spend money
Know your vendors
Save money
Company wide tracking requirements
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Diversity
Business Continuity
Treasury
Procurement (Contracts)
Slide 4
Know Your Vendors
How are these related?
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Marriott
JW Hotels
Renaissance
Courtyard
Residence Inn
Fairfield Inn
TownePlace Suites
SpringHill Suites
Ritz-Carlton
ExecuStay
Executive Apartments
Slide 5
Comply with Laws & Regulations
Some Laws and Regulations
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Independent Contractor and 1099-MISC
Non-Resident Alien and 1042S
Gramm Leach Bliley Privacy Act
Health Insurance Portability and
Accountability Act (HIPAA)
Office of Foreign Assets Control (OFAC)
Foreign Terrorist Organizations (FTO)
Bureau of Industry and Security Lists
Patriot Act
Sarbanes Oxley
Other - Industry, Country, State specific
Slide 6
Cause and Effect
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Third party recovery efforts show the majority
of duplicate payments today are caused by
vendor set up problems and related suppliers
Records show that 7% of the vendor
population changed their name or corporate
structure each year prior to July 2008
Experts predict that by the end of 2009 the
rate will increase to 11 to 15%.
If duplicate vendors are identified and merged
in the vendor database over 75% of duplicate
payments can be eliminated
Slide 7
Return on Investment
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Purchase Smarter
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Process Smarter
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Know your full spend with the supplier and it’s
family to negotiate better pricing
Reduce the vendors in your pull down list to
eliminate confusion and errors at the
requisition, purchase order, and voucher level
Pay Smarter
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Get the payment to right place the first time
and eliminate stale dating, phone calls, past
due invoices and statement research.
Slide 8
Vendor File Issues
Some Vendor File Problems
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Missing or Invalid Tax Ids.
Missing or Incorrect 1099 Categories
Names Inconsistent with Tax Ids.
Vendors tied to inventory items with very low
turn rates.
35% - 65% of “active” vendors are one-time
vendors
Resource requirements result in a reactive
approach to updates
Electronic payments/purchase orders
eliminate the dependency on good vendor
data
Slide 9
A Vendor Management Program
Assess
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Survey Current Situation
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Identify and collect ALL relevant
documentation
Identify ALL vendor files and data sources
including those used for e-procurement, epayment and p-cards
Review and verify your actual Vendor Setup
and Maintenance Processes and Controls
against documentation
Centralize the collection, storage and updating
of all vendor related requirements in an
environment accessible to invested users
Slide 10
A Vendor Management Program
Cleanup (cont’d)
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Other Vendors You May Want to Look At
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Federal Government Departments and
Agencies
States
Local Governments
Postal Service
Garnishments
Petty Cash
Foreign
One Time
Slide 11
A Vendor Management Program
Cleanup (cont’d)
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Review Possible Duplicates and Decide
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Impact of rules on other files/tables
Which to keep
Which to drop
Which to merge
Slide 12
A Vendor Management Program
Re-Assess
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Verify New Adds and Changes against
Guidelines and Standards
Review and revise procedures, guidelines
and documentation, as required
Train and/or Re-train, as required
Utilize the next generation tools to prevent
duplicates
Remember to be successful this will have to
be a process, not a project
How do companies manage this without
adding people?
Slide 13
A Vendor Management Program
Enhance
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IRS TIN - Name Consistency
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OFAC and FTO Checks
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Verify Name and TIN against IRS data
Check vendors against OFAC / FTO list and
other lists
Utilize 3rd Party Databases
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Add D&B Numbers
Add SIC or NAICS codes
Add Credit Information
Obtain W-9 or Substitute
Obtain Minority Owned Business, Women
Owned Business status, etc.
Slide 14
Vendor Master File
Enhance (Continued)
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Verify vendors against internal database and
check to published lists
Restrict adding and updating
Review all adds and changes
Secure a W-9 or substitute
Purge and cleanup every year
Use standard rules for names
Use USPS and UPU rules for addresses
Capture phone & fax number
Involve purchasing for any new vendor who
will be issued a purchase order
Slide 15
Vendor Master File
Enhance (Continued)
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Lexus Nexus
Bank Account Validation
Diversity
Business Continuity
Scheduled & Ad Hoc Blanket Updates
Vendor Self Service
AuditSolutions 2008
Slide 16
Copyright © IOMA 2004 - 2008
Slide 17
Copyright © IOMA 2004 - 2008
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