Start the Clean-Up
As a busy Accounts Payable professional, setting up and maintaining something which could truly be considered a comprehensive master supplier file is likely to be one of those things you know should be done and yet....
Often Accounts Payable departments are relatively small compared to the company size and tend to process a large volume of transactions. In this environment it’s easy to overlook processes or to simply not have the time to adhere to them.
However, as with most things, the key is to get started. The daunting task of tackling your Master Supplier File requires determination, skill and time set aside to prioritise process implementation. If it continues to be ignored it will move from something nagging at the back of your mind to something which can cause serious problems for the company – including fraud.
With a lax approach to master supplier files the door is thrown open to the chances of duplicate or erroneous payments. This can have serious consequences, and with the onset of a more rigorous compliance culture, the onus for failure to effectively monitor and maintain files falls firmly on the organisations involved.
Despite the daunting nature of the task where a mismanaged system may have been in place for many years - the implementation of a new process which adheres to best practise recommendations – can be relatively simple as long as some key principles are followed:
Key Steps to a Clean Master Vendor File
- Restrict access to the master supplier file so that only one person (and a back-up) can set up or change supplier records
- Insist on adherence to strict guidelines on how information is input and provide guidelines on how to enter invoice numbers. This can help to eliminate duplicate invoicing
- Build in guidelines for regular culling of inactive vendors. If many inactive vendors are kept indefinitely they can become a breeding ground for fraudulent activity and inadvertent accounting errors. It’s best if they are simply highlighted as inactive rather than deleting them
- Audit changes to the master supplier file – any changes should be attributed to the person who made them with a time and a date
- Validate the vendor’s address and phone number prior to vendor set up
- Remove employees from the master supplier file to prevent any compliance issues as much to protect employees as to prevent fraud. Add them onto a separate system
- Establish a written procedure manual to cover every aspect of master supplier file maintenance. This should be easy to access across the organisation and be jargon-free
This is by no means a exhaustive list, but even if these relatively simple steps are taken you will have embarked on the right road to a compliance friendly system, ultimately saving your organisation money and safe from the anxiety of investigation from external auditors.