The integrity of vendor and customer master data is a persistent and nagging problem for many companies that causes errors and inefficiencies that increase costs and reduce cash flow. Operational errors, disputes, and chargebacks resulting from master data that isn’t clean or complete can drain your company’s profits and cash flow. Your company may be a victim of unreliable and incomplete master data, and you may not even realize the problems it results in .
State of Accounting Master Data
Apexanalytix provides some illuminating information on master data integrity.
- 66% of companies don’t have a procedure for maintaining master data.
- Over 90% of financial executives don’t trust their vendor data.
- 30% or more of vendor data is incorrect or incomplete. Of 3,519 vendor records analyzed, 86 were duplicates, 122 were inactive, 68 had invalid tax IDs, 576 had invalid banking information, 1,518 street addresses were incorrect, 2,062 telephone numbers were missing, and 1,049 email addresses were added.
- Even more concerning, customer data has the same issues.
Reasons for Incomplete and Inaccurate Master Data
The main reasons for these results include:
- Problems collecting and validating data
- Companies don’t know if data can be trusted. Vendor Taxpayer Identification Numbers or TINs for example, if they are incorrect, you may be fined for using them. The only way to check them is to refer to the IRS database.
- It can take an hour per master file to check data and fill in missing information. If you have thousands of vendors and customers, this could be an insurmountable task.
In addition to the cost of the errors, fines and other inefficiencies, they can reduce cash flow significantly. According to APQC, companies with clean and complete accounting master data take 56 days to complete their transaction cycle and collect accounts receivable, compared to a 71 day transaction cycle for companies that don’t.
Maintaining vendor and customer data does not need to be an impossible task. With a connected accounting solution for your AR and AP teams to coordinate work with customers and vendors you can ensure master data integrity.
Lockstep, a leader in cloud-based connected accounting solutions, can help you boost productivity and optimize cash flow with:
- Digital Onboarding – Collect master data directly from your customers and vendors
- Accounting Inbox – Make it easy to divvy up work and track progress
- Smart Automation – Automate menial task with accounting integration
- Online Accounts – Give customers and vendors online access to their accounts
Lockstep is an experienced software partner that can help you increase efficiency and accelerate cash flow .
If you would like to learn more about how you can benefit from connected accounting solutions, please contact Lockstep at www.lockstephq.com.