Updated · Originally published
Vendor database cleanup can seem pretty boring. Maybe even overwhelming. The best practices below are sure to give you a good kick-start to your project.
I’d love to take credit for the helpful advice in this blog, but it all came from a very near and dear friend of mine, Rhonda Rogers. Rhonda has been in the Accounts Payable world for over 20 years in a variety of roles. She is an invaluable resource for Accounts Payable advice—everything from high level executive strategies to practical every day best practices for your Accounts Payable team.
To ensure that you’ll have smooth sailing for tax season, it’s really important that you go through a vendor database cleanup process. Here are some things to research before you start a business relationship with a vendor:
- Verify the financial stability of the vendor
- Validate the Taxpayer ID Number
- Validate the Vendor’s Name and Address
- Consult the Federal Bureau of Industry and Security’s Excluded Persons and Companies List
When it comes to vendor database setup and maintenance, the following best practices come in handy:
- Obtain a W9 or equivalent form prior to vendor setup and payment.
- Perform TIN (Taxpayer Identification Number) validation and vendor name matching using the IRS TIN matching system which ensures the information obtained from the vendor is correct. For more info check out our .
- Access to the master vendor file should be restricted to only those employees designated to set up, and maintain, the vendor database. These individuals should not have the ability to enter invoices or make payments.
- Purge inactive vendors that have had no activity for 15-18 months.
- Audit changes and additions to the master vendor file.
These tips and tricks will ensure a successful vendor database cleanup project.
Want more accounts payable tips and tricks? Schedule a demo today!
by AvidXchange
What is the Best Practice for inactivating vendors 15-18 months. Any suggestions?
Thank you for your question. The typical best practice for inactivating vendors is if there are no invoices entered and no payments made in a 12 month period. Of course, this can be tailored to fit specific needs, but I would recommend no longer than 15 months.
It is never a good practice to change a name in the supplier master. Once a supplier is set up in the database the only thing that should ever be altered is the address if it changes. Changing a name loses historical payment information that alters the audit trail.
Is it a good practice to change name in supplier master
Currently on Dynamics AX, need to purge inactive vendors, or mark vendors as inactive. Any suggestions?