Risky Business with PaymentWorks: E7–Keeping it Clean
The ROI on Vendor Management
Welcome to Episode 7 of Risky Business with PaymentWorks!
Julie-Anne White isn’t going to argue that having a clean vendor master file is more important to a company than generating sales and growing revenue. (Because it isn’t.)
But that doesn’t mean the financial industry veteran thinks companies should penny pinch by failing to devote resources to vendor management. (Because they shouldn’t.)
Read an except of the episode below or listen in full here.
White has spent more than 30 years working in back office management, most recently as vice president of Treasury Shared Services at the environmental services company Clean Harbors. (Disclosure: Julie-Anne White is a former employee of Clean Harbors, a customer of PaymentWorks. This article reflects her opinions and not those of Clean Harbors.)
While at Clean Harbors, White contended with a vendor database that had enough inaccuracies for it to be a concern. White was not surprised, as she knows it is not unusual for a company to neglect their vendor master in favor of spending time and resources in supporting the company’s actual mission. But, she argues, it is a mistake for this crucial work to be relegated to the bottom of a company’s priority pile.
“Vendor management is very important,” she said. “Especially when everything is driven through an ERP system. The data that you keep on your vendors is essential to having secure, accurate transactions.”
White says that a mistake companies frequently make is not having a finite group of trained people who understand the ins and outs of the company’s financial database. Instead of a select number becoming experts in ERP operations, many people across a company are usually responsible for gathering the vendor data inputs, and so no one truly has ownership. And the data suffers as a result.
“If you don’t have correct payment addresses, you’re sending payments to the wrong place. If you don’t have their legal name and EIN number right, you’re issuing 1099s that may not be accurate.” This can lead to loads of wasted time, and, more importantly, wasted money.
White reeled off real examples from several of her previous companies where inaccuracies with vendor information led to checks being issued improperly and never getting cashed by the intended recipient. There are other consequences as well: when White arrived at Clean Harbors, the company was regularly levied B notice fines (well into the six figure range) from the IRS for 1099s not being issued properly. The financial hit was significant, and the inaccuracies increased the chances of payments fraud for the company.
White was convinced that having a partner to help clean up their database was essential to the functions of her department. (Follow up disclosure- that partner was PaymentWorks. 😁)
When White initiated a cleanup of the company database, the ROI was immediate. Fraud was reduced, and receiving fines or penalties for improperly issuing 1099s dropped to zero.
But another element of the ROI was a bit more surprising: a renewed ability to secure favorable insurance.
As part of the annual insurance review, White’s team was asked present their due diligence efforts related to vendor management. They were able to deliver a response outlining their best practices, they’ve done their due diligence, they understand the problem and that’s how they keep their premiums low.
“With risk prevention and being able to show our insurance companies that we had due diligence in place, that really did help [our negotiations],” White said.
Listen to the entire Risky Business interview here.
Julie-Anne White has extensive experience in all financial functions, cash management and shared services functions, investment performance analysis, feasibility studies, process improvement, internal and external client relationship management, and regulatory compliance and risk prevention. She served as the VP Finance Operations and Compliance Manager for State Street’s Corporate Citizenship and Foundation and prior to that as their VP, Client Relationship Management. Most recently she was VP, Treasury Shared Services at Clean Harbors.
We’d love to walk through your process with you and talk about security, compliance, efficiency and sleeping better at night.
200 Berkeley Street, 19th Floor
Boston, MA 02116