Incomplete and inaccurate vendor and customer master data is a low profile, endemic problem for many companies that results in errors and inefficiencies that increase costs and reduce cash flow. Shipping and billing errors, disputes, unauthorized deductions, and chargebacks resulting from vendor and customer data that isn’t clean or complete can sap your company’s bottom line and cash flow. Your company may be a victim of unreliable and/or incomplete master data, and you may not even be aware of the problems it is causing.
State of Vendor Data
A study by Apexanalytix provides some surprising insights into the state of vendor data.
- 2 out of 3 companies don’t have a process for maintaining vendor data.
- 94% of financial executives don’t trust their vendor data.
- Error rates in vendor data are 30% or more. 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.
- Perhaps even more concerning, it’s not just vendor data. Customer data has the same issues.
Reasons for Incomplete and Inaccurate Data
The primary reasons for these surprising results include:
- Difficulty in collecting and validating data
- Companies don’t know if data can be trusted. Take vendor Taxpayer Identification Numbers (TINs) for example, if they are incorrect, you may be fined for using them. The only way to validate them is to check the IRS database.
- It can take 1 hour or more per vendor or customer to validate data and fill in missing information. If you have hundreds or thousands of vendors and customers you can imagine the impossible task it could be.
What It Costs Financially
You may be surprised at how much incorrect and incomplete vendor and customer data is costing your firm. 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 master data take 56 days to complete their Cash Conversion Cycle (CCC), compared to a 71 day CCC for companies that do not maintain their master data. Think of what the benefit of accelerating your cash flow by 15 days could mean to your company.
Maintaining vendor and customer data does not need to be an impossible task. With automated credit and collection solutions you can use Profile Management, Onboarding Sequences, Automated Customer Communications, and a Self-Service Customer Portal to make sure your master data is clean and complete.
Lockstep Collect, a leader in cloud-based credit and collection platforms, can help you collect cash in 4 ways:
- Cloud-based solutions
- Automated customer communications
- Customer self-service
- Collections Activity Management
Lockstep Collect is an experienced software partner that can help you maximize your collections and cash flow in the new normal.
If you would like to learn more about how you can benefit from automated credit and collection solutions, please contact Lockstep Collect at www.lockstep.io.