Vendor File Clean Up And Management


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A 2009 presentation about the benefits of cleansing your master vendor file and tips for keeping your file clean.

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  • It would have been appropriate to indicate that many of the slides are copyrighted material developed by me (Jon Casher) when I was Chairman of RECAP, Inc. and presented at various conferences. Some of the material has been incorporated into the IOMA/TAPN AP Certification program.
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Vendor File Clean Up And Management

  1. 1. On-Demand Vendor File Management<br />April 21, 2009<br />
  2. 2. Sherry DePew, VP Product Management, LAVANTE<br />(former AP Director, BOISE CASCADE)<br />Janna Locke, Business Development Director, LAVANTE<br />With special guest:<br />Sandy Champion, AP Manager, TRANSIT MIX<br />Workshop Presenters <br />
  3. 3. Your Vendor Master File: A Strategic Resource <br />Key Goals of Vendor File Management<br />Common Vendor File Issues<br />A Proactive Vendor Management Program<br />Industry Best Practices<br />AGENDA<br />
  4. 4. <ul><li>Vendor file is a key corporate resource
  5. 5. Ownership belongs in Accounts Payable
  6. 6. Many disbursements are made to payees that typically do not have involvement with purchasing</li></ul>Tax Payments<br />Garnishments<br />Employee Reimbursements<br />Donations<br />Customer Refunds <br />VENDOR MASTER FILE: A Strategic Resource<br />
  7. 7. <ul><li>Federal, state, international laws and regulations make it important to keep your vendor file accurate
  8. 8. Eliminating duplicate payments, strategic price negotiations and accurate financial reporting are impossible without a clean vendor master file
  9. 9. An accurate Vendor Master File strengthens your vendor relationships by reducing mistakes and vendor correspondence</li></ul>VENDOR MASTER FILE:A Strategic Resource <br />
  10. 10. <ul><li>Make accurate and timely vendor payments
  11. 11. Support correct preparation of IRS-1099s
  12. 12. Provide accurate reporting of expenditures, including tracking diversity spend
  13. 13. Comply with laws and regulations, especially meet compliance reporting requirements
  14. 14. Identify and reduce fraudulent vendors
  15. 15. Reduce duplicate payments
  16. 16. Know your vendors (esp. parents/subsidiaries; WMBs)
  17. 17. Communicate effectively with your vendor population</li></ul>VENDOR FILE MANAGEMENT:Key Goals<br />
  18. 18. Comply with Laws & Regulations<br /><ul><li>Independent Contractor and 1099-MISC
  19. 19. Non-Resident Alien and 1042S
  20. 20. Gramm Leach Bliley Privacy Act
  21. 21. Health Insurance Portability & Accountability Act (HIPAA)
  22. 22. Office of Foreign Assets Control (OFAC)
  23. 23. Foreign Terrorist Organizations (FTO)
  24. 24. Bureau of Industry and Security Lists
  25. 25. Patriot Act
  26. 26. Sarbanes Oxley
  27. 27. Other - Industry, Country, State specific</li></li></ul><li><ul><li>Using your ERP system to check for duplicates based on Vendor ID, Invoice #/Invoice Date and like combinations will prevent the obvious.
  28. 28. The majority of duplicate payments today are caused by related suppliers and purchasing card transactions.
  29. 29. Stats show that 7% of the vendor population change their name, affiliation or standing on an annual basis.
  30. 30. If duplicate vendors are eliminated, over 75% of duplicate payments can also be eliminated.</li></ul>Reduce Duplicate Payments<br />
  31. 31. <ul><li>Marriott
  32. 32. JW Hotels
  33. 33. Renaissance
  34. 34. Courtyard
  35. 35. Residence Inn
  36. 36. Fairfield Inn
  37. 37. TownePlace Suites
  38. 38. SpringHill Suites
  39. 39. Ritz-Carlton
  40. 40. ExecuStay
  41. 41. Executive Apartments</li></ul>KNOW YOUR VENDORS:How are these related?<br />
  42. 42. RESULT: Increased Efficiency and Decreased Costs<br /><ul><li>Purchase Smarter</li></ul>Know your full spend with the supplier and it’s family to negotiate better pricing and take advantage of volume discounts and rebates.<br /><ul><li>Process Smarter</li></ul>Reduce the vendors in your pull down list to show only vendors for today’s orders/payments.<br /><ul><li>Pay Smarter</li></ul>Get the payment to the right place the first time and eliminate stale dating, phone calls, past due invoices and statement research.<br />
  43. 43. <ul><li>Missing or Invalid Tax IDs
  44. 44. Missing or Incorrect 1099 Categories
  45. 45. Names Inconsistent with Tax IDs
  46. 46. Missing or incorrect contact info
  47. 47. Lack of controls around vendor set up
  48. 48. Vendors tied to inventory items with low turn rates
  49. 49. 35%-65% of “active” vendors are one-time vendors
  50. 50. Limited resources to manage the vendor master file</li></ul>Common Vendor File Issues<br />
  51. 51. A Proactive Vendor Management ProgramStep 1: Assess<br /><ul><li>Survey Current Situation
  52. 52. Identify and collect ALL relevant documentation
  53. 53. Identify ALL vendor files and data sources including those used for e-procurement, e-payment and p-cards
  54. 54. Review and verify your actual Vendor Setup and Maintenance Processes and Controls against documentation</li></li></ul><li>A Proactive Vendor Management ProgramStep 1: Assess<br /><ul><li>Other Vendors You May Want to Look At
  55. 55. Federal Government Departments and Agencies
  56. 56. States
  57. 57. Local Governments
  58. 58. Postal Service
  59. 59. Garnishments
  60. 60. Petty Cash
  61. 61. Foreign</li></li></ul><li>A Proactive Vendor Management ProgramStep 2: Clean Up<br /><ul><li>Review possible duplicate vendors and decide:
  62. 62. Impact of rules on other files/tables
  63. 63. Which to keep
  64. 64. Which to drop
  65. 65. Which to merge
  66. 66. Identify parents and subsidiaries across the vendor file then link them together.
  67. 67. Establish a standardized processes for naming and numbering all vendors.
  68. 68. Limit who can add or update vendors. Make sure these employees do not also process invoices and purchase orders.</li></li></ul><li>A Proactive Vendor Management ProgramStep 3: Re-Assess<br /><ul><li>Verify New Adds and Changes against Guidelines and Standards
  69. 69. Review and revise procedures, guidelines and documentation, as required
  70. 70. Train and/or re-train staff, as required
  71. 71. Utilize next generation tools to prevent duplicates
  72. 72. Approach Vendor File Management as a process, not a project, to insure long-term success
  73. 73. How do companies manage this without adding people?</li></li></ul><li><ul><li>IRS TIN Number and Name Consistency
  74. 74. Verify Name and TIN against IRS database
  75. 75. OFAC and FTO Checks
  76. 76. Check vendors against OFAC / FTO list and other lists
  77. 77. Utilize 3rd Party Databases
  78. 78. Add D&B Numbers
  79. 79. Add SIC or NAICS codes
  80. 80. Add Credit Information
  81. 81. Obtain W-9 or Substitute
  82. 82. Obtain Minority Owned Business, Women Owned Business status, etc.</li></ul>A Proactive Vendor Management ProgramStep 4: Enhance<br />
  83. 83. <ul><li>Verify vendors against internal database and cross-check to published lists
  84. 84. Restrict adding and updating
  85. 85. Review all adds and changes
  86. 86. Secure a W-9 or substitute
  87. 87. Purge and cleanse annually
  88. 88. Use standard rules for names and numbers
  89. 89. Use USPS and UPU rules for addresses
  90. 90. Capture phone, fax number and email
  91. 91. Involve purchasing for any new vendor who will be issued a purchase order</li></ul>VENDOR MASTER FILE:Best Practices<br />
  92. 92. THANK YOU!<br />If you would like to see a live demo of Lavante’s<br />On-Demand Vendor File Management<br />On-Demand Strategic Profit Recovery<br /> and Vendor Self-Service Portal<br />Visit the Lavante Booth or contact:<br /><br />Contact Information<br />