No business is an island. The better you understand - and more accurately you keep track of - your partners and suppliers, the more readily you can give them what they need, including prompt payment, rapid provision of records and reporting, and efficient ordering. This means you need to have vendor master data of high quality.
When data quality is less than optimal, employees lose time, firms lose money, and relationships suffer. In particular, the accuracy of your vendor master data impacts your ability to maintain correct financial records and control costs, and it determines how well you understand the business ecosystem you inhabit.
Benefits of quality vendor master data
- Vendor master data is a key unlocking relationships within the business ecosystem.
- High quality vendor master data decreases legal and financial risks.
- Improving quality means better supply chain relationships.
Unlocking relationships within the business ecosystem
If your organization's vendor master data is riddled with error, you won't have full visibility into your supply chain—and you'll lack a solid basis upon which to evaluate the performance of your vendors.
In a recent survey, 65% of procurement leaders admitted that they didn't have a clear view of the overall network of vendors, suppliers, and service providers with which their organization does business. Even the most advanced supplier information management (SIM) tools or the most comprehensive enterprise resource planning (ERP) solutions won't give you this visibility if incomplete, outdated, or unnecessary duplicate records are entered into them.
This is risky. Without an accurate overview of supply chain relationships, you won't be able to optimize their value—or avoid those that might do your business harm.
Poor data quality creates legal and financial risks
If vendor master data quality is low, decision-makers may under- or over-estimate how much the company is spending with a given supplier. They'll tend to misunderstand how many departments or business units are purchasing from the same vendor. And they may miscalculate their tax obligations, leading the business to incur fines or penalties.
When it's time for an audit, poor quality data can have lasting consequences. Whether the audit is routine, or your company is subject to additional scrutiny because it's competing for an additional round of venture funding or being acquired, being able to supply correct information on vendors and customers is critical during the due diligence process. In the best-case scenario, mistakes and inaccuracies can introduce roadblocks and delay deals. In the worst, it can lower the valuation of your company.
What's more, poor vendor master data quality can leave your business more vulnerable to fraud. Without accurate vendor VAT validation or banking
information at hand, it's more difficult to identify imposters or vendors who lack the legal qualifications necessary for the job at hand.
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