Vendor Master


In accounts payable automation or vendor management systems, a vendor master is a database that contains information about the vendors that supply a business or organization. The vendor master is comprised of the individual vendor records that tracks all contact information and records all procurement activity associated with the vendor. A vendor—also known as a supplier or seller—is an enterprise that contributes goods or services in any supply chain.

Vendor master records contain important data on your vendors, including name and contact information, currency used in orders from the vendor, and terms of payment. Thus, the vendor master is maintained by both the Accounting and Purchasing departments; for accounts payable, vendors are creditors and also tracks relevant control information in the general ledger, and for purchasing it records all procurement activity related to the vendor.

In general, the vendor master is made up of three main areas:

  • General data – address, telephone numbers, and accounts used to communicate with the vendor; typically recorded in the individual vendor record and verified during the initial onboarding of the vendor.
  • Company code data – information about payment transaction, control accounts, payment terms, and other information that would be considered internal information about the vendor.
  • Purchasing data – information recorded about the business or organization’s purchasing activities with the vendor, like contact person or terms of delivery; it can also record purchasing data such as request for quotations, purchase requisitions, purchase orders (POs), and invoices associated with the individual vendor.

In a procure-to-pay system, the vendor master is the database that tracks all the current relationships and contracts that are supplier the business or organization. The vendor master should be treated as the most current database of all vendors that are approved for purchasing and payment. Conversely, it can also be a record of vendors that have issues or holds and cannot have payment released.

Best Practices

Maintaining a clean vendor master is critical to your procurement process, as well as ensuring timely payment to your vendors. There are three basic principles around vendor master management:

  1. Keep things in order – quickly standardize, scrub, unduplicate, validate, enrich, classify, assess risk, and approve both your individual vendor records and vendor master database regularly.
  2. Guard your front door – ensure that each new vendor record or change is “right at entry” by validating every field captured from newly onboarded suppliers.
  3. Guard your back door – continually clean/scrub and monitor vendor changes, regulatory issues, and fraud risks.

To ensure a proper vendor master database, ongoing cleanup and maintenance is needed. When doing so, there are some best practices to follow, including:

  • Remove vendor duplication; understand what is a duplicate and what is not before removing duplicates
  • Archive inactive vendors regularly
  • Obtain any missing data as soon as possible; better yet, don’t allow payment until missing data is submitted
  • Include department representatives (i.e. from Accounting and Purchasing) to ensure the proper cleansing of records
  • Automate the process or consider setting up a vendor portal to ease communication between suppliers and your business

Regular maintenance of your vendor master can help alleviate the daunting task of clearing outdated vendor records all at once. By making it an ongoing task—perhaps scheduled monthly or quarterly—will go a long way to ensuring a clean vendor master database.

Data Points

Source: Master Data in the Procurement Process (SAP)

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