If you tried to maintain an Excel spreadsheet of every supplier you'd ever done business with, you would probably wind up with a list that has a few mistakes in it.
Things aren't so different at the enterprise level.
Your company is procuring items across many channels and departments so it's natural that an occasional error occurs -- and then poof --a duplicate supplier is added to the vendor master. This becomes especially true when you’re doing business with thousands of vendors over time. Errors, at such volume, are bound to happen.
But those vendor master errors pose risks you might never have considered. I like to joke that duplicates in the vendor master only pose a threat to the organizations that buy things ...
Hilarious, right? I thought so, too.
In all seriousness, here's how those pesky duplicates are exposing your organization to risk:
Limited Spend Visibility
If you spread the purchases from Vendor A across multiple records, it becomes harder for your organization to gain a complete view of spend with that organization. Imagine negotiating pricing with a vendor based on limited data, thinking you’ve spent a couple hundred thousand when you’ve actually spent millions. You weaken your negotiating power with incomplete information.
When there are duplicate records for a vendor, you may issue payment twice to that vendor, creating the same visibility issues as above.
When the vendor master is full of errors, it opens the door to fraud. Let's say an employee accesses the vendor master and creates a duplicate listing with his or her banking information. If organizations don't check for duplicate listings, they could be sending money to this fraudster for months or even years before realizing it.
In March of 2019, a Lithuanian man pleaded guilty to defrauding a couple of companies out of more than $100 million. How did he do it? By taking advantage of the uncertainty created by duplicate listings in the vendor master. He posed as a vendor that the organizations buy hardware from, and successfully breached the vendor master. When he submitted invoices, these companies paid them. It took one hundred million dollars in fraudulent payments to get noticed.
Duplicates lead to errors, which can delay payments. Let's say that your vendor changes its remit to address for payment. Someone on your accounts payable team updates on one vendor record but fails to update on the other duplicate record. There is now at least a 50% chance you are sending checks to your partner's old mailbox.
It’s clear that vendor master duplicates open the door to organizational risk. But with tools from Oversight, your organization can safely close that entryway.
Preventing Vendor Master Risks
During the first days of Oversight implementation, we evaluate your vendor master each night. We apply AI-driven checks comparing potential errors on the list against known addresses, names, emails, phone numbers, vendor numbers, and other data, and present any suspicious findings.
With that information, your team can take action and remove errors from the vendor master. In doing so, your organization improves its data quality and prevents cash leakage, and you go from looking for problems to solving issues at the root cause.