AGENDASherry DePew

AGENDA Sherry DePew Your Vendor Master File - A Strategic

Resource Key Goals Vendor File Issues A Vendor Management Program Best Practices Questions and Answers

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

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

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)

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

Comply with Laws & RegulationsSome 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

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

Return on Investment Purchase 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 File IssuesSome 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

A Vendor Management ProgramAssess 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

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

A Vendor Management ProgramCleanup (cont’d) Review Possible Duplicates and Decide

Impact of rules on other files/tables Which to keep Which to drop Which to merge

A Vendor Management ProgramRe-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?

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.

Vendor Master FileEnhance (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

Vendor Master FileEnhance (Continued) Lexus Nexus Bank Account Validation Diversity Business Continuity Scheduled & Ad Hoc Blanket Updates Vendor Self Service

AuditSolutions 2008 Slide 16

AGENDASherry DePew

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