Why Vendor Data Is a Daunting Challenge for AP Teams — And How to Fix It

In the finance and procurement sector, Accounts Payable (AP) teams often find themselves balancing conflicting priorities. One essential yet frequently neglected task is maintaining accurate vendor data. While it may seem straightforward, cleaning up vendor data is far from simple. For AP teams, it's an ongoing and time-intensive responsibility that often gets overlooked.

So, what’s the issue?

Vendor data plays a crucial role throughout the AP process, from onboarding to payment. However, it is often plagued with issues such as incorrect names, addresses, outdated banking details, payment terms, duplicate records, wrong tax IDs (TINs), and missing contact information. These inaccuracies require regular updates to avoid payment delays, compliance risks, or even potential fraud. Fixing these issues is challenging due to several factors:

• Fragmentation: Vendor data is scattered across emails, spreadsheets, other ERPs, and phone conversations.
• Inconsistency: Different departments hold partial data relevant to them, but there’s no central source for accurate information.
• Legacy systems: Many outdated systems lack the modern tools needed to streamline the manual, slow process of data cleanup.
• Lack of ownership: With no clear accountability, data maintenance is often neglected.

Improving and maintaining vendor data is crucial, especially with increasing regulatory requirements, but many AP teams struggle to keep up with the task.

Streamlining Vendor Onboarding

The key to clean vendor data lies in an effective onboarding process. A solid first step is to collect and use a W9 when possible. If that’s not feasible, following these Mekorma-recommended best practices will help you see immediate improvements in data quality:

• Centralize data intake using standardized forms that gather essential information like tax IDs, bank details, and contact information.
• Automate validation for tax IDs, names, and addresses.
• Separate responsibilities to ensure no single person handles all vendor data management.
• Conduct regular compliance reviews to ensure your data remains comprehensive and up-to-date. Document the onboarding process and provide training to all stakeholders.

Proper onboarding not only eliminates poor data but also shields you from fraud and audit issues. Regulatory bodies focus on whether you follow the rules, not why your data might be inaccurate. Ensuring data accuracy is your responsibility.

What Can AP Teams Do?

Enhancing vendor data is not an overnight task—it’s an ongoing project that requires team alignment for sustained compliance. It also demands a shift in mindset and tools:

• Assign clear ownership for vendor master data.
• Establish continuous data review processes, rather than relying on one-time cleanups.
• Involve multiple teams (Procurement, AP, IT, etc.) from the start.
• Invest in automation tools to improve data accuracy.

How Mekorma Can Help

At Mekorma, we understand the importance of clean data—and so should you. Our Mekorma Vendor Validation tool helps you identify incomplete or erroneous data before it becomes a problem. It highlights where updates are needed to ensure both legal compliance and data accuracy. Mekorma Vendor Validation focuses on three critical areas:

• Verifying vendor TINs with the IRS for validity.
• Cross-referencing vendor data with the OFAC Sanctions List to avoid doing business with sanctioned entities.
• Validating vendor addresses through Google Address Validation and USPS for US-based vendors.

For more details on getting started with Mekorma Vendor Validation, check out our brochure.

Final Thoughts

Though cleaning up vendor data may seem overwhelming, it also presents a significant opportunity. By implementing better processes and tools, you can take a proactive approach to vendor data management, reducing the need for reactive measures. With time, effort, and alignment, your master data will become more accurate, leading to fewer headaches, fewer disruptions in goods delivery, improved compliance, faster payments, and a smoother experience for your vendors.

Need assistance getting started? Reach out to us today!