If your organization has supplier relationships, you know too well how complicated managing vendor-related paperwork and processes is. From ensuring a flawless onboarding experience to streamlining payments, keeping all vendor workflows organized — along with their associated data — can be a full-time job. That’s why organizations turn to vendor master data management.
Vendor master data management is a system and set of practices businesses use to optimize processes and data related to vendors and suppliers. It delivers a long list of helpful applications for organizations, but there are also concrete steps to get the most out of such a solution. Below, we describe why vendor master data management is essential for transforming your vendor relationships and how to maximize your use of the technology.
Why Is Vendor Master Data Management Important?
Any organization that has more than one supplier to manage needs a system like vendor master data management in order to efficiently and effectively manage those suppliers. Vendor relationships have many moving parts, including contracts, orders, invoices, and more. These documents need to be organized so that the proper parties have secure access to them and stay easily retrievable and trackable. With a single source of truth for all vendor-related data, you’ll keep vendor processes moving and vendor information up to date.
Vendor master data management also strengthens your relationships with your vendors because it helps to smooth out bumps in onboarding and payment and ensures the security of vendor data. Your vendors will reap timely payments while your invoicing processes will be orderly, and your vendors will enjoy working with you. Vendor relationships are a win-win with powerful software to keep workflows going behind the scenes.
4 Best Practices to Maximize Vendor Master Data Management
Standardize the Way You Enter New Data
When entering information into master vendor files — in an ideal scenario — that information is put into a form that just one person completes. A second person can review and approve it, but the single person and form mitigate the risk of duplicating data and vendors and/or setting up phantom vendors. It also acts as a security measure to reduce the number of humans handling vendor data.
Clean Data at a Certain Cadence and Consolidate It
Before you bring in vendor data, you’ll want to clean and verify it to ensure it’s error-free. Since you’ll be pulling in data from multiple sources and formats, consolidating the data into a clean, single source of truth will set you up for success with vendor management. You should also establish a rhythm in which you clean the entries in your master vendor file, such as quarterly or biannually.
Get Ahead of Tax Needs
You should collect W-9s from all vendors, even if you aren’t sure which ones you’ll be reporting on. If you don’t get a W-9 before you begin work together, at least make sure you have one on file before you issue the first payment to the vendor. Before this payment, you should also run the W-9 data through the IRS TIN Matching program to get a match or correct mismatches.
Set Access Policies for Security
The best practice for keeping vendor data safe is to limit access to vendor files as tightly as possible. Only the essential parties should have access to capabilities like adding new vendors or updating existing data. You’ll also want to establish segregation of duties across the entire chain of workflows associated with vendors — from onboarding to payment — so it’s clear what access rules should apply to which employees.
Drive ROI From Your Vendor Master Data Management Today
Using these best practices, your organization will save time and money on the complicated processes associated with vendor management. If you have questions about the technology or how to optimize your vendor relationships and operations, get in touch with All Star today.