A best practice nearly half of A/P departments don't employ
Despite the fact that inactive vendors can leave the door wide open for duplication and fraud, almost half (40%) of A/P departments don’t purge the master vendor file — ever.
That’s according to IOMA’s Master Vendor File Maintenance, Audit, and Control Best Practices report.
When it comes to A/P departments that do employ this best practice, the report found that:
- 34% of A/P departments purge the master vendor file annually, and
- 12% of A/P departments purge the master vendor file every other year.
The recommended minimum period of inactivity for purging vendors is 15 months; however, the most common time in actual practice is two years of inactivity.
Here is a basic breakdown on how to purge inactive vendors from the master vendor file:
- Run a report. Pick a designated period of time — say 14 or 15 months — and run a report of all vendors that haven’t had any activity for that time frame.
- Make the changes. After running the report, it’s time to alter the status and/or location of the inactive vendors. Depending on your company’s policy, this can be done either by archiving and removing them from your live master vendor file or by changing the vendor’s status to inactive/marking them in some distinctive way.
Note: After you decide which vendors should be purged, let your purchasing department look over the list before taking action — they may have an explanation for why certain vendors is inactive.
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