Consistency Across Vendor Entries
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In order to decrease the chances of duplicate bills, vendors must be entered in a way that allows accounts payable (A/P) staff to determine if they are the same. The properties must be up-to-date, with all business descriptions, contact information and shipping addresses being complete. This should also include a Standard Order Number (SON) in order to link bills via dynamic search criteria.
It’s important to check your vendor file regularly, especially if you’re adding new vendors. Duplicates are common and can lead to confusion, recurring billing errors and late payments.
What are the Signs of a Bad VMF?
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If payments aren’t being processed quickly, it can be a sign that you may be missing something important. Check your supplier master file regularly to monitor process errors and minimise duplicate invoice payments. Check your vendors file regularly to make sure you have up-to-date supplier information and financial data.
The Vendor Master File is your most important reference tool for ensuring that you are paid, on time, every time. It's easy to overlook this critical file and fall behind in your payments, but the cost of doing so can be significant: it could cost you money, and it could affect your customers' perception of your company.
If you want to save time and money it’s very important that you take care of your account application. The Vendor File gives you the ability to hand pick vendors for your accounts so that only the best ones are used on a regular basis. Vendors that have not been used in 18 months should be deactivated, archived and deleted from your system. It is also important to check closely any new vendor entries by verifying the information provided within linked vendors (where applicable) before adding them to active lists in the future.
What Should we be Doing Regularly?
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Frequently updating your supplier master file can reduce the possibility of duplicate payments, or even potential fraud. When you check your master file regularly, you'll make sure vendors are treated consistently and provide added peace of mind.
Check your supplier master file regularly so you don't pay other companies for the same work that's already being done by others.
Managing software vendors will help you to keep track of how often you post checks, how much is always paid, and when payments are returned. Your copy of the Vendor Master File (VMF) will tell you where your payments have gone and what bills it enabled. In the VMF you can see your payment terms with vendors and look for duplicate entries; this log helps you avoid posting duplicate checks or paying incorrect invoices.
How is a VMF Structured?
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A normal Master Vendor File starts at the top with a vendor’s company name, address and phone number. Then below that is a list of their products and services as well as any notes that may be needed. When you have multiple vendors who have similar products or services, you can create a master file for them all using the same format guidelines to speed things up. Keeping your vendors organised can make a big difference on how well you bill, which means fewer duplicate expenses.
Accounts Payable should make regular sweeps of the Master Vendor File:
The vendors that haven’t been used in a certain time period must be marked “inactive” (this is preferable to deletion as they may need to be reactivated in the future.)
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You must regularly run checks for duplicate vendors, not just assuming that any duplication validation checks are keeping the system clean. People find a way to duplicate vendors or suppliers in spite of the automatic system rules. They often modify the name or create an entry for another division of the same vendor or supplier. (These can be the hardest duplicates to spot. Manually checking is the best way and A/P should be instructed on how best to detect duplicates. They will need a list of all subdivisions and their addresses and contact details to successfully detect duplicates. They should also be on the lookout for name variation, including abbreviations like “Inc.” versus “Incorporated, initials like “IBM” and alternate shipping/billing addresses giving away duplicate companies on the file.)
A/P should populate every vacant detail or field for active vendors; also check completed entries follow formatting guidelines so that the same detail will appear in the same place on eac vendor to allow duplication to be spotted more easily.
VMF Best Practices
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Be thorough before adding a new vendor. To avoid duplicates, A/P should conduct multiple searches using variations of the vendor’s name & address, etc. This comes back to the last point, if everything is in the right place then duplication is more difficult.
Link related vendors. If someone’s adding a new vendor entry and there are any parent or subsidiary relationships, merge or link vendors as needed.
Audit any vendor master file exceptions. If you have multiple payment terms with one vendor have a look at what their entry looks like. How has it been entered and is this consistent across all the vendors with similar conditions? Try to address any exception ASAP and document how it was handled so that future vendors are entered with the same consistency.
Trust duplicate detection. If the system is detecting it as a duplicate but it seems unconnected, have another look. What has happened? Has a company been split up and now represents two separate vendors? If so make sure it is added in the notes. They may still have former details from before the split in one or another of the vendor entries.