How to optimize supplier management for accurate supplier data

A lapse in supplier management can have serious consequences. Improper supplier data management can lead to unpaid invoices, strained relationships with key partners, and even legal action.

Understanding supplier data management

Good quality supplier data can help inform a wide range of operations across your business. Effective supplier data management will lead to more insightful decision-making, increased operational efficiency, and mitigation of procurement risk.

Many companies that use suppliers to provide products or services begin by setting each supplier up in a system of software platforms (depending on the business requirements and existing tech stack). Companies can then store and maintain contacts' records and product information, facilitate operations, monitor the supplier's performance, handle payments, and more.

Businesses can also access essential data across various systems, including supplier attributes such as contact details, tax information, credit terms, payment preferences, purchase history, lead times, contracts, and performance information and scoring.

The problem arises, however, when these different systems have poor connections. A disconnected view can lead companies to switch between platforms constantly, miss key information, and even create duplications or conflicts.

To get a good supplier management process with a comprehensive overview of data, your company must use tools that properly connect. You should expect seamless, real-time data via integrations between platforms such as your ERP, PIM, invoice and expense management software, and more.

What software can you use to manage supplier data?

Depending on their size and industry, companies rely on different types of software platforms to manage supplier data, including:

1. ERP (Enterprise Resource Planning) Systems: ERP systems, such as Microsoft Dynamics 365 Business Central, Microsoft Dynamics 365 Finance, and Netsuite, are often used to manage supplier data. These systems usually have a dedicated module for supplier management that allows for the centralization, organization, and analysis of supplier data.

2. Accounting software: Accounting software such as Datev, Xero, or QuickBooks manage supplier data to support functions related to accounts payable, expense tracking, financial reporting, and tax regulatory compliance.

3. PIM (Product Information Management) Systems: PIM systems such as Informatica, Salsify, and Pimcore help manage supplier data related to product specifications, availability, pricing, and more.

What is supplier master data, and why does it matter?

Supplier master data refers to the comprehensive, centralized, and synchronized collection of specific information about a business's suppliers.

This data provides a "single source of truth" and supports several business processes like procurement, accounts payable, and inventory management.

Keeping supplier data in sync between different platforms is critical for businesses. It will ensure that all parts of your organization have access to the most accurate, up-to-date information. Accurate supplier data is not just nice to have either; the consequences of inconsistencies in supplier master data can have a domino effect.

The impact of data inaccuracies in vendor invoice management

Inconsistencies can affect invoice management and lead to unhappy suppliers. For example, failure to update payment terms or new contractual obligations may lead to late or incorrect payments, which erode trust.

These inconsistencies can kickstart a host of negative consequences. Late payments strain relationships, which, in turn, can affect product quality or create delays, and with those, customer dissatisfaction and churn.

There may also be expensive compliance issues. In regulated industries, you must maintain accurate records of your transactions and relationships with suppliers. Failure to do so can result in hefty fines and damage to reputation.

How to overcome challenges in maintaining supplier master data

The challenges to maintaining master data fall under three main areas:

1. Data governance across systems
2. Real-time integration and flow of data
3. And finally, security

Data governance across systems
Governance is best achieved with a single team or individual in charge. It can help avoid the "tug-of-war" effect where multiple departments or individuals may try to update or alter the data according to their perspectives. The designated team would have clear guidelines and procedures for maintaining and updating the data to ensure its accuracy and consistency.

Real-time integration and flow of data
At Payhawk, our spend management solution helps customers handle supplier sign-off. Employees can't create new suppliers; instead, system admins in the accounting team must approve and create any new supplier, allowing them to make all the necessary governance checks and balances. This sign-off procedure benefits companies that need competing quotes before signing a new supplier.

This sign-off process also means that all customers can onboard suppliers in a compliant way. Suppliers will be paid via the Payhawk platform (rather than via personal cards etc.), meaning that all of the payment data and documentation flows directly through the solution and seamlessly into the ERP (making reconciliation and analysis fast and stress-free).

Real-time integrations allow data to flow seamlessly between different systems in the stack. This streamlines operations and helps your team focus on strategic matters instead of data entry. At Payhawk, we provide ready-made API integrations to leading ERP, accounting and tax, business travel, and custom API integrations to any software required.

Security
We achieve robust security through a combination of cyber-security checks and procedures when designing the tech stack. We also provide you with spotless employee governance, so you can ensure only the right people edit suppliers' data at the right time.

At Payhawk, we also let you log any changes to your supplier data. For example, if one of your team changes the bank details of a supplier (by accident or not), any of your admins can retrieve this info for investigation and remedial action.

How to ensure a single source of truth for better supplier invoice management

For larger organizations with more complex requirements, the "single source of truth" for supplier master data would typically be an Enterprise Resource Planning (ERP) system.

As Heroes CFO Giancarlo Bruni explains in the guide, how to select the right ERP x expense management integration for your scaleup, the single source of truth is vital.

"As a CFO, I want to know how much money and profit we have in real-time and what levers I need to pull. We also need to know about our stock, including when it's arriving, how much is in transit, and if we need more. I can see all of this via my ERP, plus I can see spending in real-time thanks to the direct integration with my expense management software."

The ERP serves as the central dataset because it's designed to integrate various business functions such as procurement, accounting, inventory management, and others. This enables a consistent, synchronized, and updated view of supplier information across the entire organization.

For example, when a supplier's address or payment terms are updated, the change is made in the ERP. That updated information becomes immediately available to all integrated systems, ensuring data accuracy.

We have integrations with all major ERP systems to fetch and maintain this supplier master data to ensure that the suppliers are kept up-to-date and match the ERP master data one-to-one. This significantly reduces data discrepancies and enhances the efficiency of supplier management.

Payhawk matches data via external IDs coming from any other integrated software. This unique identifier guarantees a 100% match in any external system where the data is being synced, including your ERP, PIM, accounting software, and more. The advantage? You enjoy total confidence in the accuracy of your supplier data, irrespective of the platform you're working on.

Imagine a situation where your supplier data is spread across both your company's ERP and your finance department's tax software. Our handling of the external IDs coming from each system for each supplier means you can ensure that the supplier data is consistent and up-to-date in both systems — no more data inconsistencies.

We're flexible too. Customers can choose which suppliers to track and even group suppliers such as "taxi companies" or "food deliveries" to keep records more organized.

By using Payhawk for supplier data and invoice management, we ensure your expenses are always tied to the correct supplier or supplier group in the master data.

On the other hand, smaller organizations without an ERP and with fewer complex supplier requirements may use Payhawk as their single source of truth.

Our integrations, subscriptions, and accounts payable features intersect to create an effective solution for supplier management that reduces time and errors through machine learning automated features such as the automated recognition of recurring expenses as subscriptions, or spotting duplicate suppliers or subscriptions.

Next steps

As your company grows, our all-in-one spend management software can bring together supplier and invoice management, expense management, and corporate cards to help you take full control over your business spend. Book a call today.