Your master vendor file (MVF) can help simultaneously boost compliance, monetary savings, payment accuracy and business relationships.
That is, if you maintain it well, which seems to be a sticking point for many companies nowadays.
Ready for the ‘new normal’
Amid the daily grind, managing the MVF is one of those tasks that can fall by the wayside for A/P.
In fact, two in three companies admit they don’t have a regular process for cleaning master vendor data, according to research from Apex Analytix.
Plus, the recent months have been extremely hectic for most, meaning your MVF may have fallen even lower on A/P and Purchasing’s list of priorities.
It’s understandable. But as you transition into a “new normal,” it’ll be essential for your A/P team to get your file cleaned up, so they can continue to ensure accuracy and compliance for payments.
With a file as massive and complex as your MVF, sometimes the hardest part is knowing where to start. Here’s a three-step plan to break it down that you can share with your team:
1. Deactivate vendors. A/P will want to do three sweeps of your MVF, one for each of the following:
- vendors that are never used
- vendors that haven’t been used in 18 months (or the timeframe you use to constitute “inactive”), and
- duplicate vendors. (These are arguably the hardest to spot. Advise staffers to look for vendors that have error-prone nuances, including abbreviations like “Inc.” versus “Incorporated, initials like “IBM” and alternate shipping/billing addresses.)
It’s best to deactivate and archive (not permanently delete) vendors in case your company ever needs to reference their info or work with them again.
2. Refine what remains. After those three sweeps, you should have a more concise MVF. Now, look at what’s left. A/P can fill in any gaps or empty fields for all its active vendors. As staffers are going through, they’ll also want to check that even completed entries follow your formatting guidelines.
3. Verify tax info. Perhaps the most vital piece of data you have for each vendor is its TIN. So, after making sure names, addresses and other fields are correct, A/P can also run TINs through IRS’s TIN matching tool. Come year-end, your team can get a jump on filing requirements, knowing they’ve already confirmed vendor TINs.
You can instruct your team to use the plan above at routine intervals for larger purges. And to maintain a clean MVF on a regular basis, have them keep these additional tips in mind:
- Be thorough before adding a new vendor. Just searching the vendor’s name before creating a new entry isn’t enough. To avoid duplicates, A/P should conduct multiple searches using variations of the vendor’s name, address, etc.
- Link related vendors. If someone’s adding a new vendor entry and there are any parent or subsidiary relationships, the staffer should take a minute to get familiar with them and merge or link vendors as needed.
- Handle exceptions. Of course, instances that aren’t accounted for in your MVF rules are bound to come up. (For example, what if you have multiple payment terms with one vendor? What does their entry look like?) Try to address any exception ASAP, and make sure staffers know you’re there to assist. And have A/P document how it was handled in case it comes up again.