1. AGENDA Sherry DePew Your Vendor Master File - A Strategic Resource
Key Goals
Vendor File Issues
A Vendor Management Program
Best Practices
Questions and Answers

2. Your Vendor Master File - A Strategic Resource
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
tax payments, garnishments, employee reimbursements, donations and customer refunds are some examples
Limit who can add or update vendors
People who can add or update vendors must not be allowed to process transactions such as invoices and purchase orders

3. Your Vendor Master File - A Strategic Resource (cont’d)
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

4. Key Goals - Vendor Master File
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
Diversity
Business Continuity
Treasury
Procurement (Contracts)

5. Know Your Vendors How are these related?
Marriott
JW Hotels
Renaissance
Courtyard
Residence Inn
Fairfield Inn
TownePlace Suites
SpringHill Suites
Ritz-Carlton
ExecuStay
Executive Apartments

6. Comply with Laws & Regulations Some Laws and Regulations
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

7. Cause and Effect
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
Vendor Leverage is about more than just buying smarter. While that’s a key objective, there are two other things that you in A/P can and should do as part of a Vendor Leverage Program.
If you have better vendor information you can do things a lot more efficiently and effectively. Accounts Payable really has the big picture when it comes to vendors.
Purchase Smarter
Tony Freund gave some excellent ideas for how to go about purchasing smarter by negotiating based on better information. We strongly recommend that you incorporate key information deliverables into contracts - such as copies of their billing and receivables information. You should not have to chase your vendors to find out that you have outstanding credits or to find out how your payments have been applied. Include all of that in contracts.
Process Smarter
Many techniques can reduce manual transaction volume and hopefully error rates as well. EDI, electronic invoices, summary bills and P cards can all enhance but make sure you put in appropriate controls especially during cutover.
Pay Smarter
Pay smarter by using ACH or FEDI. Print checks less often than daily so that more invoices are paid on a single check. Many companies can reduce check volume by 50 percent by printing less often and by even more by using ACH or FEDI. If you’re a bank, get your vendors to open accounts - you’ll look like a hero to the marketing people..

8. Return on Investment Purchase Smarter Process Smarter Pay Smarter
Know your full spend with the supplier and it’s family to negotiate better pricing
Process Smarter
Reduce the vendors in your pull down list to eliminate confusion and errors at the requisition, purchase order, and voucher level
Pay Smarter
Get the payment to right place the first time and eliminate stale dating, phone calls, past due invoices and statement research.
Vendor Leverage is about more than just buying smarter. While that’s a key objective, there are two other things that you in A/P can and should do as part of a Vendor Leverage Program.
If you have better vendor information you can do things a lot more efficiently and effectively. Accounts Payable really has the big picture when it comes to vendors.
Purchase Smarter
Tony Freund gave some excellent ideas for how to go about purchasing smarter by negotiating based on better information. We strongly recommend that you incorporate key information deliverables into contracts - such as copies of their billing and receivables information. You should not have to chase your vendors to find out that you have outstanding credits or to find out how your payments have been applied. Include all of that in contracts.
Process Smarter
Many techniques can reduce manual transaction volume and hopefully error rates as well. EDI, electronic invoices, summary bills and P cards can all enhance but make sure you put in appropriate controls especially during cutover.
Pay Smarter
Pay smarter by using ACH or FEDI. Print checks less often than daily so that more invoices are paid on a single check. Many companies can reduce check volume by 50 percent by printing less often and by even more by using ACH or FEDI. If you’re a bank, get your vendors to open accounts - you’ll look like a hero to the marketing people..

9. Vendor File Issues Some Vendor File Problems
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

10. A Vendor Management Program Assess
Survey Current Situation
Identify and collect ALL relevant documentation
Identify ALL vendor files and data sources including those used for e-procurement, e-payment 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

11. A Vendor Management Program Cleanup (cont’d)
Other Vendors You May Want to Look At
Federal Government Departments and Agencies
States
Local Governments
Postal Service
Garnishments
Petty Cash
Foreign
One Time

12. A Vendor Management Program Cleanup (cont’d)
Review Possible Duplicates and Decide
Impact of rules on other files/tables
Which to keep
Which to drop
Which to merge

13. A Vendor Management Program Re-Assess
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?

14. A Vendor Management Program Enhance
IRS TIN - Name Consistency
Verify Name and TIN against IRS data
OFAC and FTO Checks
Check vendors against OFAC / FTO list and other lists
Utilize 3rd Party Databases
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.

15. Vendor Master File Enhance (Continued)
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

16. Vendor Master File Enhance (Continued)
Lexus Nexus
Bank Account Validation
Diversity
Business Continuity
Scheduled & Ad Hoc Blanket Updates
Vendor Self Service
AuditSolutions 2008