Transaction risk intelligence
Automated supplier statement reconciliation
Supplier risk intelligence
Managed AP recovery audit
Supplier file performance review
Forensic risk analysis
Consulting and bespoke reporting
90% of organisations experience financial leakage due to supplier file errors.
Supplier files are ever-changing, complex creatures, and as your organisation grows, they can quickly get out of control. While a neglected supplier file can be an operational nuisance (recouping duplicate payments, anyone?), it is also a direct financial risk.
With growing pressure from auditors, increasing fraud attempts and shrinking resources in finance teams, it’s more important than ever to develop strong and fast controls around your processes to prevent cost leakage effectively.
Why it happens: Supplier master files are hard to manage
The supplier master file is often neglected. In fact, according to a PPN survey, 37% of finance teams only validate the supplier file data during onboarding, and just 9% check monthly or more often.
Even the most sophisticated finance teams find they simply don’t have the time to review the supplier file consistently. The manual process to validate even the top 20 suppliers is time-consuming. Add hundreds, or even thousands more suppliers, and it becomes a huge undertaking that interferes with everyday work. Therefore, cleansing is often completed on an ad-hoc basis – usually just before an audit!
Dirty supplier data = Expensive mistakes
A poorly managed supplier file creates a weak link in the finance function’s control environment. It will be unwieldy, with duplicated suppliers creeping in from differing naming or numbering conventions, or from being filed in two separate areas. It will feature supplier entries which may have been dormant for over 18 months, and often longer. And it will contain outdated details.
Confusion and process delays:
Time is money, they say. And it couldn’t be truer here as all these issues contribute to confusion and difficulty attributing invoices to POs and transactions. This takes time and effort to correct, causing delays in your process that ultimately cost your organisation.
Duplicate payments:
This leads to payments to the wrong accounts, or to the wrong supplier entirely. Those duplicate payments may not be found until the supplier raises it, which can lead to payment delays for the correct supplier, penalties for late payments and damage to the supplier relationship. The result is that AP staff will need to recover the payment, or they will need to be periodically recovered en masse. This takes time, and importantly, costs money either for an external auditor or for the time your staff take.
Heightened fraud risk:
Invoice and mandate scams cost the UK £42.7 million in 2024 (UK Finance Annual Fraud Report), and the supplier file is one of the places that can leave you at risk. Dormant suppliers can easily be taken advantage of, and a simple change in bank details and supplier contact details can turn a perfectly legitimate supplier into a dangerous one. Duplicate suppliers can also be taken advantage of in this way, causing confusion as to which is the correct one. A fraudster can then submit a doctored, or fully fake invoice as a result.
Strained supplier relationships:
With confusion and duplicate payments causing delays, supplier relationships can suffer. The supplier may charge you for a late payment (which in the UK is typically 12% interest at the time of writing) and recovery costs. However, consistent late payments can result in the supplier putting you on stop or ending your contract, leading to supply chain difficulties that could ultimately affect your efficiency and therefore your organisation.
Audit difficulties:
A confusing supplier file brings headaches when it comes to audit time. Many of us scramble to get it cleaned up in time for auditors to look at it, which means hours, potentially days of work. If it isn’t clean, you pay for it with the auditor’s time as they wade through the same difficulties you would have had. It truly is a no-win scenario.
The solution to cleanse, monitor, and act proactively
To prevent these issues creating unnecessary costs to your organisation, control is paramount. And while manual controls are simply not doable for many finance teams, there is a far easier and faster solution.
Automated continuous supplier file monitoring allows you to find issues at the root of your problems without having to go looking for them. It finds dormant and duplicate suppliers, detects changes to supplier details and flags fraud, supply chain and compliance risks as they arise. Then it shows them to you and your team for review, giving you the oversight you need at the earliest possible time. In short, it makes the master supplier file much easier to manage proactively, turning it from a once-a-year chore to a simple daily task.
Clean data, clear gains
The benefits are clear. There are of course the reduced operational costs, stemming from time savings for staff. Those range from attempting to cleanse the file, recovering duplicate payments, and in going about their daily jobs thanks to correct, uncomplicated data.
With clean data comes less possibility of error from a duplication. This increased payment accuracy means fewer recoveries, saving capital that would have been either unrecoverable or spent paying for recovery audits. It also means fewer interest fees and charges for late payments. In organisations where too many late payments can cause serious compliance issues, this stands out as being a key benefit.
The last-minute audit scramble will no longer include supplier file cleansing, ensuring a smoother process for all, and less difficulty for the staff managing the audit.
There will be fewer disputes from paying the incorrect supplier or to the incorrect details. Which means the AP team can spend less time dealing with suppliers, freeing up more time. As a direct result of paying the right supplier, on time, the supplier relationship is stronger, opening opportunities for cost savings down the line.
With cleaner data and firm controls, compliance will be higher both from an internal viewpoint and an external one. Fraud risk from dormant accounts and outdated data will be reduced, which assist with compliance to fraud regulations.
Finally, due to thorough fraud controls, on-time payments, and compliance to regulations, your organisational reputation remains undamaged from a finance point of view.
Supplier cleansing is best practice, and business-critical
Clean data is a strategic lever to reduce cash leakage. Without this defence, your team are incurring hidden costs, whether they are monetary, operational or reputational.
Therefore it’s essential to keep control of the file and prevent supplier-related risks from occurring. And what’s more, it is vital that this should happen continually to get the best results, or risk going back to leaking working capital.
