Vendor File Clean-Up and Management

Using Consultants in your Master Vendor File Clean-up

Your AP department probably has most of the tools needed to clean your master vendor file, and many department heads are destined to try to clean the file themselves. However, many AP managers choose to contract with a consulting firm to handle the process, particularly when the clean-up will be conducted for the first time or after a long interval. Consultants bring an objectivity to the process and add a world of experience that brings AP best practices into play. Finally, a good consultant will work with you to make sure procedures are in place to ensure the vendor file remains in good shape.

There are three primary reasons to use consultants for master vendor file clean-up: time, experience and tools.

a. Time

The work of eliminating duplicates, appending missing data and standardizing data formats is time-consuming. For an AP shop working at or close to capacity, the manpower will not be available to complete the clean-up task. As Lauren Broskow, of La Petite Academy said, “I could have made a career of it. That could have been my full-time job. I can’t afford to do that. I decided I’m going to let the guys that really do this do it. I reaped as much as I could without a lot of time spent.”

b. Experience

While master vendor file clean-up may seem like a simple exercise, there are numerous complexities that are not obvious to the casual observer. The inexperienced AP manager who attempts to complete a scrubbing without guidance is liable to end up with a less-than-clean file at best, and a failed project at worst. One IOMA consultant relates the story of one firm that attempted to clean its large master vendor file by examining names in alphabetical order. They realized before they reached the letter “C” that their work plan was flawed, and that they would be unable to complete the clean-up.

c. Tools

As noted in this chapter, some clean-up tasks, such as identifying corporate linkages and appending vendor socio-economic data are almost impossible to do well without access to specialized tools. These include vendor databases and specialized software for sorting and analysis. Some of these products are available for purchase or by subscription, but it is often more economical for the AP department to pay for them on an as-needed basis by contracting with an outside service provider.

In addition, there are government “denied parties” lists that are critical to match against your vendor file, to make sure you are in total compliance (not doing business with a “denied party”). Fines for not policing your vendor file have run into millions of dollars! An experienced consultant can help you negotiate these minefields.