When you open a business, it’s a safe bet that it’s not going to work without the help of vendors, clients and customers. That’s why it’s crucial that you create a vendor file to contain lists of the suppliers to your business, invoices, orders and purchases.
Over time, you may find that your master vendor file may suffer from errors. This means that future processes may become more difficult to run. That’s why you need to get started with vendor file analysis.
Let’s find out more about what it is all about!
What is Vendor File Analysis?
Ultimately, when you open a business, it’s crucial that you have a vendor file created to keep an eye on the different invoices and to keep track of different suppliers. It can also help you keep any automatic payments systems, such as from Xelix, in check whilst you work with your vendors and receive their invoices.
With that said, vendor file analysis is where you take a look at the data and analyse it to understand how your company is doing. All vendor files contain information about the vendors themselves and how they frequently interact with your business.
You should check that all of the vendor’s information is accounted for, including their tax identification numbers (TINs) and tax information. Your vendor file may also be aided by looking into payment information and invoices.
Vendor file analysis is also where you look for mistakes that may invalidate your information. Without the right data, your company may start to struggle and be unable to keep up with its financial commitments.
What Should I be Looking for During a Vendor File Analysis?
It’s important that you look for mistakes within your vendor file that may indicate that you are having issues with your business’s invoices or supplier system. It’s important to keep your vendor file updated with the latest information about your business. This includes any new forms of payment you may undertake, including electronic payments and paper cheques. You should ultimately be looking out for:
- Problems with your data quality
- Overlapping data
- The lack of data governance policies that are effective for your business
How Does Vendor File Analysis Work?
Honestly, vendor file analysis should be undertaken in several stages. To make things a little simpler, we have listed how you should get started with vendor file analysis in your own company below:
- Sort out your own records of your business and its vendors
- “Clean” out your files and ensure that you have knowledge of your vendors’ data, how to validate addresses and tax and an understanding of any fraudulent vendors
- Create a self-service portal to access and secure your vendor file. That way you can evaluate your data.
- Add an automated protection/security tool to your vendor file
- Update your vendor file regularly
Are You Ready to Get Started?
If you want to grow your business, you need to ensure that you undertake vendor file analysis on a regular basis. That way you can keep a stable relationship with your vendors.
So, with all of this in mind, all that is left to do is get started, using your new-found knowledge to optimise your business processes.
Cover photo credit: Ketut Subiyanto / Pexels