5 tips for a clean (and fraud-free!) vendor master file

Accounts payable and procurement departments are primary targets for bad actors
Lisa Doherty
Lisa Doherty

As procurement analyst at Texas State University for the last two years, I am keenly aware of how daunting and downright difficult it is to manage the complex payee management process and the risks associated with ensuring that payments—in my case hundreds of thousands—are going to the right vendor and not a fraudulent actor.

This is especially concerning when the FBI reports that organizations lost $28 million to email fraud from 2016-2020. According to the AFP’s annual Payments Fraud and Control Survey, 74% of companies reported they were the target of an attempted or successful payment fraud scam last year.

Not to mention, more than 60% of the time, accounts payable and procurement departments are the primary targets for bad actors. No wonder I can’t sleep at night!

As a one-woman shop, I have realized that the key to mitigating some of this risk (and getting a better night’s sleep) is implementing a better vendor management process and procedures. This includes leveraging technology designed to automate a manual and error-prone process.

With these strategies, I can better manage the vast and rapid intake of new vendors while simultaneously managing our existing 30,000 vendor relationships.

I’ve outlined my top five daily tips that are essential to staying on top of the constant influx of information while managing internal expectations efficiently. This systematic and efficient process will ensure a more accurate vendor master file, which I see as critical to mitigating the risk of payment fraud.

1. Daily check-up

I keep a library of 20 responses that apply to various scenarios where vendors might be slow to submit their information, and I start my day by reaching out to those vendors who need to return their bank account information validated.

I send an email with the pre-written explanation outlining that they are not going to get paid if they don’t verify their banking. I rely on PaymentWorks to expedite and automate the vendor onboarding process and use the mobile app to track their responses.

With an automated collection and verification of payee identity credentials, we also have the means to track that appropriate workflows and approvals are secured before a vendor record is created or updated in our ERP system (SAP). By relying on both my own due diligence and the PaymentWorks business identity platform, I am confident that the information in my vendor master file is valid and accurate which is key to ensuring that payments are being made to the right vendors every time.

2. Prod the pipeline

Texas is one of many states to pass a Prompt Pay Act that requires paying specific types of vendors 30 days after services are completed. So, I must be proactive when vendors are not.

Using that same list of pre-written explanations, I methodically go through my pipeline of vendors who are stuck in some stage of the onboarding process. I select the email that suits the situation (incorrect Tax ID or DBA Name, for example), and fire off the email. Generally speaking, within the first 30 minutes of my day I’ve reached out to 100 vendors. And my coffee is still piping hot!

I have a habit of also sending out personal emails in addition to relying on automated ones to pique the attention of slow-moving vendors. This constant communication is incredibly effective in meeting my goals for speedy onboardings.

3. Keep everyone in the loop

Anyone who has ever worked in vendor management will tell you that half of their time is spent answering the question ‘Where is my vendor?’ in the onboarding process. In my outreach to vendors, I cc the person at Texas State who is doing business with them, so my internal customers are aware every day where their vendor is in the process and can help in pushing the vendor along when needed.

4. Train the masses

When you have thousands of people inviting vendors to do business, as Texas State does, it’s no small task to keep them all up-to-date on what needs to be done. First, consolidate the onboarding process at a central point. In this case, it’s me.

To further help, I created training materials aimed at ensuring that all our internal stakeholders understand what the university needs, how they can help, and to whom they should direct questions when needed. I also created a list of who at the university can create a PO. Those are my people, the ones who need to understand what needs to be done, and why.

5. The perfect vendor master file is a marathon, not a sprint

With 30,000 vendors in our system of record SAP, there is a lot to do in creating a pristine vendor master file. With all of my proactive outreach and knowing the information has been vetted through the PaymentWorks platform, I feel confident that the information received is correct and true.

With each existing vendor change, I use the same process as if they are a new vendor, thereby creating a new clean record as well. This ensures that those who haven’t changed information in years, are accurate.

I set time aside each week to proactively outreach to existing vendors, prompting them to submit their credentials (tax, remit address, payment type, contact information, HUB status, etc.) and then I add them to my checklist to start the next day. B

y focusing on small groups of high-priority vendors at a time, I am able to move through my 30,000 vendors and block vendors who do not respond. Once the non-responders are marked as inactive, I am one vendor closer to the perfect vendor master.

While managing thousands of vendors is daunting, there are simple daily actions you can take to ensure the accuracy and reliability of vendor information and to safeguard against fraudulent behavior. By implementing this routine, I finally have peace of mind and can get a good night’s sleep. I hope this will help you too!

Lisa Doherty is the procurement analyst at Texas State University who specializes in vendor maintenance.

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