Vendor file maintenance is a necessary step to maintaining overall accounts payable health; it can directly prevent the likelihood of duplicate payments and also identify potential fraudulent “ghost” vendors. Without a retroactive de-duplication process, your Master Vendor File can quickly accumulate duplicate and inactive vendors. Automated Auditors has successfully completed many vendor file audits and duplicate payment recovery audits. Some of our clients include The World Bank, NFL, Methode Electronics, and USC Keck Hospital. Our proprietary name and address matching algorithms are powered by SAS® software, a leader in business intelligence and statistical analysis. Our process is unique and customized: it is a product offered as a service, developed around your specific data. After conducting vendor audits for over 20 years, we have learned that even though vendor files are alike in many ways, there are always nuances in data that need to be customized and addressed specifically.
The following table outlines our comprehensive process, which includes identifying duplicate vendors, and cross-checking the Master Vendor File with the Accounts Payable invoice/disbursement file to determine which vendors are the most active and current.
1) Identify duplicates
We search for duplicates multiple ways, including, but not limited to:
- Same/similar vendor name
- Same/similar address
- Same/similar phone numbers, emails, contact names
- Same EIN/SSN/Tax ID
- Any other pieces of data that are available
Our analysts utilize the power of fuzzy matching logic (link to fuzzy matching tab) so that we can identify those hard-to-catch duplicates.
2) Tax ID / TIN / EIN Validation
Our vendor file maintenance process includes Tax ID / TIN / EIN validation services. Our software merges your vendor or supplier file with IRS records via Tax ID, and retrieves the legal name, address, email, phone number, and contact associated with that tax id number. Using fuzzy matching logic, we determine if your vendor file matches the IRS records and provide a ranked score that describes the accuracy of the match. What differentiates us from other Tax ID validation services is we can batch process large files, and we go beyond the match / no match binary decision, which is often based upon very exact and rigid matches. Relying upon our fuzzy matching expertise and access to IRS records, we can determine the validity of the information in your vendor or supplier file.
3) Clean and standardize names and addresses, populate missing fields
As part of our vendor file maintenance services, we clean and standardize the vendor name and address fields. For example, we consolidate words such as “Highway” to “Hwy”, “Boulevard” to “Blvd”, and “Suite” to “Ste”. Standardization streamlines your vendor file and reduces the potential for creating duplicate vendors and duplicate payments. Also, as part of our vendor file and Tax ID validation services, we can populate your vendor or supplier file with information harvested from the IRS Tax ID records. You provide us with your vendor file and Tax IDs, and our software will batch-match with the IRS records to populate name, address, email, phone number, and contact information.
4) Determine which vendor numbers to keep as active
We recommend extracting at least one year of A/P data so that we can aggregate the payables data by vendor number and merge with the vendor master file. Then, we will be able to determine which duplicate record is the most active and most recent vendor, which is helpful in choosing which vendor record to keep as active. We also can identify vendors who just have had no activity in the past year and who may be eligible for de-activation.
5) Identify Potential Ghost Vendors
Automated Auditors identifies potential ghost vendors multiple ways. First, during our duplicate vendor search, we analyze the duplicates to determine if one of the duplicates might be a ghost vendor modeled off of a real vendor, borrowing information from a real vendor so that it bypasses approvals and edits. Second, we cross-check the full Master Vendor File with the Employee/Payroll file to determine any common linkages between the two. Third, we compare the Master Vendor File with the Mail Drop File to identify any vendors that have a mail drop instead of a real physical address, or a P.O. Box, or are missing pertinent information like email and phone number. And fourth, we conduct a “common thread” name match to identify vendors that have a thread of a common name.
The “common thread” name algorithm was developed to identify fraudulent payees, such as seen in the Harriette Walters DC tax fraud scheme. The data below are actual payables data from the Harriette Walters case; you can see the common threads throughout the payee names.
|Date||Voucher No||Check No||Payee||Amount|
|1/31/94||VRRE 7821||323620||WALKER-POPE INC||$52,963.00|
|3/02/94||VRRE 8905||349977||POPE AND ASSOCS INC||$46,880.00|
|4/28/94||VRRE 0015||420795||POPE AND ASSOCIATES, INC||$58,020.90|
|5/03/94||VRRE 0721||399175||WALKER-POPE ASSOCIATES||$48,900.00|
|7/08/94||VRRE 0022||459922||POPE-WALKER AND ASSOCS||$48,321.79|
|9/01/94||VRRE 0011||455310||WALKER-POPE & ASSCOS [sic] INC||$55,850.69|
|11/02/94||VRRE 0019||404690||WALKER-POPE & ASSOCS||$58,820.69|
|11/29/94||VRRE 0023||527540||POPE AND ASSOCIATES, INC||$52,642.33|
Notice the common theme of “Pope”, “Walker”, and “Assoc”? Automated Auditors has developed software to parse each name into words and to identify vendors with common names. We can also weed out noise words such as “Inc” or “Corp” – but in this case, the “Assoc” actually is part of the common thread. Using this combination of fuzzy matching logic and word-parsing, our data mining experts can identify fictitious vendors.
6) Conduct Entity Resolution to Group Vendors into “Families”
Entity resolution is a process which groups pairs of like entities into groupings. It is very useful for Master Data Management and consolidating duplicate vendors into one family. Entity resolution, name standardization, and address standardization greatly increase the accuracy of your vendor file. Not only will this help prevent duplicate payments and erroneous payments, it will increase the accuracy of aggregating paid amounts per vendor and vendor family. Name standardization (aka “Entity Resolution”) may look something like the below example, where there are multiple spellings of Hewlett-Packard, all standardized to one common name:
|Hewlett-Packard, Inc.||Hewlett Packard, Inc.|
|H.P.||Hewlett Packard, Inc.|
|Hewlet-Packerd||Hewlett Packard, Inc.|
|Hewllet Packard||Hewlett Packard, Inc.|
|Hp Corp||Hewlett Packard, Inc.|
|Hewlett Packard Corp||Hewlett Packard, Inc.|
The eye can see that these are all HP vendors, but they all have different vendor numbers. If your company wanted summarize annual spend to HP, how would this be done with the different vendor numbers? (assuming they had different Tax IDs).
Automated Auditors is skilled at entity resolution, which is a combination of fuzzy matching on name and cluster analysis. We first identify like vendor names and then group them together to a common “vendor family”, and then you are able to summarize by that family / keyword / or standardized name. We can, if desired, standardize the name for you so that you can continuously summarize and quantify via vendor name.
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