Cleaning your Vendor Master File before 2020 year-end is critical

Why clean your vendor master file now?

The 2020 year-end is going to be significantly different for AP teams that are now required to file not only the usual 1099-MISC forms but also 1099-NECs which cover “non-employee compensation.”

Daily online news resource CFO & Controller Alert suggests cleaning your vendor master files to avoid costly mistakes from duplicate, outdated, or inaccurate records as well as non-compliant and fraudulent activity.

You’re not alone.

According to CFO & Controller Alert, “[now] is prime time” for an organization to clean its vendor master file. The resource conducted a recent online poll that found 67 percent of Accounts Payable pros said their vendor master file “could use a little cleaning” with 19 percent admitting their file is “a total mess.”

Seven steps for a vendor master file cleanup that can save your organization up to five percent of annual revenue*:

  1. Remove vendor duplication. Did you know that almost 30% of all double payments are the result of duplicate vendors and vendor coding issues? Duplicate vendor entries lead to double payments which cost your company time and money. Obviously, preventing a double payment costs less than trying to recover one once it’s been made. Additionally, audit recoveries increase with more efficient identification of questionable vendors.
  2. Not everything is a duplicate entry.  Generally speaking, vendors are unique. Unfortunately, this rule sometimes breaks down.  Complications include multiple payment sites listed under one vendor or more than one vendor number for each shipping location. To cope with this, many accounting systems allow coding of parent and subsidiary relationships between vendors.
  3. Archive inactive vendors.   When you haven’t used a vendor in some time, remove them from your active vendor list.  By archiving the vendor, their information remains accessible for reinstatement. Furthermore, with inactive vendors gone, your list becomes leaner and records are easier to access. Straightaway, reduced processing time leads to improved employee productivity.
  4. Obtain any missing data. While this is easier said than done, ensure the completeness and accuracy of all vendor records.
  5. Transform your vendor file into a strategic resource. When performing master file maintenance, include other functional areas, such as purchasing or contracts management. Their different viewpoints on vendor management may have value. Codifying vendor information from their areas could turn your vendor master file into a more strategic resource for many departments. 
  6. Automate the process. Some cleanup activities lend themselves well to automation. Automation can monitor your file by encoding company policies into a continuous monitoring solution, but you need to set the parameters.
  7. Vendor portal. Moving forward, consider implementing a vendor self-service portal where individual vendors can update pertinent information and find answers to relevant questions.

*The Association of Certified Fraud Examiners estimates that the average company loses 5% of its annual revenues to fraud.

I want my free Vendor Master File Summary!

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What are the benefits of doing a supplier / vendor master file analysis?

By having your master file of vendors or suppliers analyzed and performing the necessary file maintenance, you and your colleagues who maintain the file of all vendors/suppliers or use it in AP operations will achieve these benefits:

  • Pay the Right Vendor: Identifying all duplicate vendors, along with standardizing and updating addresses.  This allows your AP department to remove improper duplicates and ensure payments are flowing to the correct vendors.
  • AP Efficiency: Cleansing and updating your vendor master file makes your Accounts Payable operations more efficient. With a clean, de-duplicated list of vendors, both your AP staff and your automated financial processes can isolate the correct vendor without question. By clearing up duplicate vendor confusion, not only are payments made to the right vendors, but you reduce AP exception handling and shorten cycle time.
  • By consistently paying the appropriate vendor, you never have to pull back an incorrect payment from the wrong vendor and reissue payment to the right vendor. Additionally, this ensures you always receive your prompt pay discounts and you eliminate all bank processing fees associated with errant payments.
  • Fraud prevention: The AICPA recommends that your company perform a vendor master file analysis at least annually, or even quarterly for more control. This can lead to identification and correction of common vendor master file problems that can lead to fraud.

Are there requirements for the contents of our company’s master file of vendors or suppliers that we supply you, i.e. a standard file layout?

Yes, the requirements are easy to meet.

  • Files submitted must be in CSV format.
  • Include all vendor entries in your vendor master file, i.e. your entire vendor population.
  • The best analysis results are produced when these required and recommended fields are provided:
    • Vendor / Supplier ID, vendor or supplier numbers
    • Name of Vendor / Supplier
    • Minimum requirement is either Physical Address or Mailing Address. Including both physical and mailing addresses increases the probability of identifying suspected duplicate vendors and may identify more addresses in need of correction
    • Recommended: Tax ID Number (EIN or SSN)
  • Optional fields may be included, i.e. employee name or department / unit assigned to specific vendor.  These fields may enable easier file maintenance. They will be returned to you in the results reports, but will not be examined as part of the analysis procedures.
  • Exclude any financial data such as balances or individual transactions.
  • Before you get started, your Point of Contact will provide you a customer guide and file specification that explains the file layout and all steps to get the job done.

What's a Secure Link and how does it work?

A Secure Link provides access to BerkOne’s Vendor Master File Analysis Portal. The link is unique and generated specifically for you. A Secure Link enables file transfers between our customers and BerkOne through HTTPS, the industry standard in web traffic security and encryption. We add additional security by making our links valid for single-use within five days.

There are two kinds of links for Vendor Master File Analysis: Secure Upload Links to send files to BerkOne and Secure Download Links to retrieve the Full Detail Results Package.

How do we know this is secure and that BerkOne will not use the information for other purposes?

BerkOne is committed to high standards for information security. In fact, third-party auditors examine our security controls and issue their report of our compliance with SSAE 16 SOC 2 annually. Additionally, the terms of service which you will acknowledge before you upload your files prohibits BerkOne from using your information for any purpose other than the vendor master file analysis.

My company has multiple accounts payable systems and we are combining into one. Can you analyze the contents of multiple files and make identify suspected duplicate vendors across files?

Yes. You can provide multiple files and we’ll do our analysis across them. When you upload the files to the portal, we ask you to indicate which file is “primary”. Your Suspected Matches report in your Analysis Package will flag the records from your primary file. This may be especially helpful to your staff in deciding which records to retain / update, de-duplicate or archive.

How much does the service cost?

The Vendor Master File Analysis service is affordable for any size organization. 

  • There is no charge for submitting your files and receiving the Results Summary. 
  • If, after reviewing your Results Summary, you decide not to proceed,  the Summary is yours to keep. 
  • To receive your Full Detail Analysis Package, your fee is volume based, i.e. a small fee per submitted vendor record. 
  • If you submit all your records in one file, there are no additional charges. However, if multiple files are provided, each additional file is billed a handling fee. 

Your Point of Contact will provide you with definitive pricing based on the specifics of your vendor master file records, i.e. volume and number of files.

What does the Full Detail Analysis Package tell me?

The Full Detail Analysis Package provides results for the vendor file(s) you submitted in five separate reports:

  • Suspected Vendor Matches
  • Vendors with No Suspected Matches
  • Physical Address Change Recommendations
  • Mailing Address Change Recommendations
  • Address Change Summary

Each suspected duplicate vendor is identified for your company to evaluate and potentially de-duplicate or archive.

Each vendor address – both company and mailing – that may require an update is identified.

How long does an analysis take?

BerkOne will make your summary results available to you within 5-7 business days. Once you pay for the detailed results, we send you a notification with a secure link to download your Full Detail Analysis Package.

How do you handle addresses from outside the United States, i.e. non-US or foreign addresses?

We encourage submission of non-US addresses. Regardless of location / country, the Vendor Master File Analysis program uses address information to determine suspected duplicate vendors. However, we cannot standardize addresses or identify changes of addresses on non-US addresses. Those functions rely on datasets that include only US-based addresses.

Call, email or fill out the form below to talk with one of our specialists.

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