Fight Fraud and Duplicate Payments
Ignore master vendor file best practices — and pay the price.
In the fight against fraud and duplicate payments, the master vendor file — the repository of all the needed information about a particular vendor — is often overlooked. Most accounting professionals know they should pay attention to it, but somehow there is always something more pressing so it gets pushed to the back burner. And, let’s face it, proper master vendor practices can be a royal pain when you are trying to get something done quickly. However, ignoring your master vendor file issues are no longer an option; they’re likely to get you in hot water with your auditors and will definitely get you dinged in a Sarbanes-Oxley audit. Poor vendor file practices represent weak internal controls.
Why make such a big deal about the master vendor file? It’s this simple: the better your master vendor file practices are the less likely you are to experience duplicate payments and fraud. And everyone knows neither of these is acceptable.
We should also point out that if you use the best practices discussed here, cleaning up the master vendor file will be much easier since you won’t have introduced duplicate entries and other errors.
And finally, we have a warning, something you probably instinctively know but have pushed onto the far recesses of your mind. If you’ve never cleaned up your master vendor file, the first time is likely to be a nightmare. On the bright side, once you have gotten it done the first time, subsequent cleansings will be easier.
Master Vendor File Best Practices
The following are best practices as they relate to the master vendor file. As you can see they conform to other generally accepted best practices for your accounting and accounts payable operations.
If these are not adhered to for every single entry into the master vendor file, duplicates will easily slip though.
Use these master vendor file best practices and see your duplicate payments plummet! Its fraud deterrent capabilities are a great side benefit.
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Mary S. Schaeffer is the author of over a dozen business books including The Controller & CFO’s Guide to Accounts Payable (2007 John Wiley & Sons) and the just-published Fraud in Accounts Payable: How to Prevent It. She serves as the editorial director of Accounts Payable Now & Tomorrow, a newsletter for professionals interested in payment issues, writes a free weekly ezine e-AP News and directs the organization’s consulting practice. You can read her thoughts on timely payment issues on the AP Now blog.