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Your Vendor File Grew Up, But Your Process Still Uses Training Wheels

Q: What is TIN matching and why does it matter for 1099 compliance?

TIN matching is the process of confirming that a vendor’s taxpayer identification number and legal name combination matches IRS records before issuing payments or 1099s. The IRS provides TIN matching through its e-Services platform for exactly this purpose. When TINs are wrong or names don’t match, 1099s filed with that information generate B-Notices from the IRS, triggering backup withholding obligations and potential penalties. Running TIN matching at vendor onboarding, rather than as a Q4 exercise, catches mismatches before they become payment history and prevents the compliance problems they create.

Q: When should you collect a new W-9 from a vendor?

A new W-9 should be collected when a vendor is first added to your system, when a vendor’s legal name, entity structure, or TIN changes, when an existing W-9 certification has expired or become stale (generally after a defined recertification period), and when the IRS issues a B-Notice for that vendor requiring TIN correction. For active vendors above the relevant 1099 payment threshold, a periodic recertification cadence — annually for high-volume vendors — is good practice. Waiting until a mismatch surfaces means the stale data has already affected payment history.

Q: What happens if you file a 1099 with incorrect vendor information?

Filing a 1099 with incorrect information — wrong TIN, mismatched name, incorrect payment amount — triggers a series of IRS responses depending on the nature of the error. TIN mismatches generate B-Notices requiring notification to the payee and correction. If the mismatch isn’t resolved, backup withholding must be applied to future payments. Penalty exposure for incorrect information returns applies on a per-form basis and increases with the severity of the error and how late the correction is made. Systemic errors across a large vendor base can produce significant aggregate penalty exposure, making vendor data authentication at onboarding the most cost-effective compliance investment available to AP teams.

Ashley Poynter

Senior Manager, Content Strategy, PaymentWorks

Most finance teams know their vendor master is messy. Few can say how messy, what it costs, or how exposed it leaves them. The Hackett Group set out to answer that.

The 2026 Vendor Onboarding and Master Data Management Study, produced with PaymentWorks, surveyed procurement and finance leaders at mostly $1B+ organizations. The results are clear: vendor scale has outpaced the process built to manage it.

Vendor Volume Is Now an Enterprise Problem

58% of organizations manage more than 5,000 active vendors. Nearly half process 5,000 or more vendor data changes every year. Among companies above $50B in revenue, 93% manage 10,000+ vendors.

At that volume, vendor onboarding grows beyond an admin task into a continuous process that touches payments, compliance, and fraud controls every day.

The Work Is Still Mostly Manual

66% of organizations say onboarding is mostly manual or only partially automated. For banking updates, only 16% have fully automated verification. Everyone else relies on people to review, validate and key in the most sensitive data in the vendor file.

That effort adds up. Hackett found 39% of onboarding transactions take more than 30 minutes of human time. For a $5B company, vendor data work can mean roughly 25 FTEs and up to $1.5M a year.

Fraud Exposure Is Real, and Most Teams Feel It

94% of respondents are concerned about vendor payment fraud and impersonation. 43% experienced an actual or attempted fraud event in the past 18 months. Fewer than half rely primarily on automated methods to validate vendor banking information.

Controls exist. Confidence? Well, that's another story.

Most Teams Can’t See the Cost

55% of organizations do not track vendor onboarding and maintenance costs, or aren't sure. Those that do report an average of $182 per vendor maintenance event. Without that number, building the business case for change is hard.

Leaders Already Know What Good Looks Like

Here is the encouraging part. 89% rate clean, well-governed vendor data as a high-value capability. Not one respondent called it low value. 79% say letting vendors share their information once, securely, is high value.

Yet only 32% use a dedicated vendor onboarding and master data platform, the approach Hackett identifies as best practice. Half still run on ERP-centric, manual or fragmented methods.

What’s in the Full Report

The full study goes deeper on:

The value drivers leaders cite for investing in vendor master data
How vendor volume scales by company revenue band
Where governance models break down (53% are only partially centralized or decentralized)
Which data quality issues hit payments first
Labor benchmarks per $1B in revenue, internal vs. outsourced

Get the Benchmark - Download the 2026 Hackett Vendor Onboarding and Master Data Management Study

See how your vendor onboarding, data quality and fraud controls compare to your peers.

Get Ready for Vendor Management Appreciation Day

Vendor Management Appreciation Day (VMAD) returns this year—and we’d love to have you join the celebration. There’s never a wrong time to recognize one of the most essential yet often overlooked functions in every organization: vendor management.

We’re already preparing for this year's festivities, and we want the entire community to be part of it. VMAD was created to bring vendor management professionals together, spotlight the innovation happening in the field, and give this important work the recognition it deserves.

As a reminder, throughout the year, we’re rolling out monthly gifts and resources to help elevate your vendor management practice. We’re also planning a series of events designed to spark connection, learning, and celebration across the profession.

So, while you wait for the big day, explore what’s new—and grab some free vendor management goodies.