AGENDA Sherry DePew

1. AGENDA Sherry DePew • Your Vendor Master File - A Strategic Resource • Key Goals • Vendor File Issues • A Vendor Management Program • Best Practices • Questions and Answers

2. Your Vendor Master File - A Strategic Resource • Vendor file is a key corporate resource • Ownership belongs in AP (87%) • Many disbursements are made to payees that typically do not have involvement with purchasing • tax payments, garnishments, employee reimbursements, donations and customer refunds are some examples • Limit who can add or update vendors • People who can add or update vendors must not be allowed to process transactions such as invoices and purchase orders

3. Your Vendor Master File - A Strategic Resource (cont’d) • Federal, state, international laws and regulations make it important to keep your vendor file accurate • Eliminating duplicate payments, strategic price negotiations and accurate financial reporting are impossible without a clean vendor master file • Jon Casher (IOMA vendor file management expert) says that any vendor file with over 1000 suppliers will require the aid of an outside expert to effectively manage

4. Key Goals - Vendor Master File • Make accurate and timely vendor payments • Reduce duplicate payments • Comply with laws and regulations • Catch / reduce fraud • Know where you spend money • Know your vendors • Save money • Company wide tracking requirements • Diversity • Business Continuity • Treasury • Procurement (Contracts)

5. Know Your VendorsHow are these related? • Marriott • JW Hotels • Renaissance • Courtyard • Residence Inn • Fairfield Inn • TownePlace Suites • SpringHill Suites • Ritz-Carlton • ExecuStay • Executive Apartments

6. Comply with Laws & RegulationsSome Laws and Regulations • Independent Contractor and 1099-MISC • Non-Resident Alien and 1042S • Gramm Leach Bliley Privacy Act • Health Insurance Portability and Accountability Act (HIPAA) • Office of Foreign Assets Control (OFAC) • Foreign Terrorist Organizations (FTO) • Bureau of Industry and Security Lists • Patriot Act • Sarbanes Oxley • Other - Industry, Country, State specific

7. Cause and Effect • Third party recovery efforts show the majority of duplicate payments today are caused by vendor set up problems and related suppliers • Records show that 7% of the vendor population changed their name or corporate structure each year prior to July 2008 • Experts predict that by the end of 2009 the rate will increase to 11 to 15%. • If duplicate vendors are identified and merged in the vendor database over 75% of duplicate payments can be eliminated

8. Return on Investment • Purchase Smarter • Know your full spend with the supplier and it’s family to negotiate better pricing • Process Smarter • Reduce the vendors in your pull down list to eliminate confusion and errors at the requisition, purchase order, and voucher level • Pay Smarter • Get the payment to right place the first time and eliminate stale dating, phone calls, past due invoices and statement research.

9. Vendor File IssuesSome Vendor File Problems • Missing or Invalid Tax Ids. • Missing or Incorrect 1099 Categories • Names Inconsistent with Tax Ids. • Vendors tied to inventory items with very low turn rates. • 35% - 65% of “active” vendors are one-time vendors • Resource requirements result in a reactive approach to updates • Electronic payments/purchase orders eliminate the dependency on good vendor data

10. A Vendor Management ProgramAssess • Survey Current Situation • Identify and collect ALL relevant documentation • Identify ALL vendor files and data sources including those used for e-procurement, e-payment and p-cards • Review and verify your actual Vendor Setup and Maintenance Processes and Controls against documentation • Centralize the collection, storage and updating of all vendor related requirements in an environment accessible to invested users

11. A Vendor Management Program Cleanup (cont’d) • Other Vendors You May Want to Look At • Federal Government Departments and Agencies • States • Local Governments • Postal Service • Garnishments • Petty Cash • Foreign • One Time

12. A Vendor Management ProgramCleanup (cont’d) • Review Possible Duplicates and Decide • Impact of rules on other files/tables • Which to keep • Which to drop • Which to merge

13. A Vendor Management ProgramRe-Assess • Verify New Adds and Changes against Guidelines and Standards • Review and revise procedures, guidelines and documentation, as required • Train and/or Re-train, as required • Utilize the next generation tools to prevent duplicates • Remember to be successful this will have to be a process, not a project • How do companies manage this without adding people?

14. A Vendor Management Program Enhance • IRS TIN - Name Consistency • Verify Name and TIN against IRS data • OFAC and FTO Checks • Check vendors against OFAC / FTO list and other lists • Utilize 3rd Party Databases • Add D&B Numbers • Add SIC or NAICS codes • Add Credit Information • Obtain W-9 or Substitute • Obtain Minority Owned Business, Women Owned Business status, etc.

15. Vendor Master FileEnhance (Continued) • Verify vendors against internal database and check to published lists • Restrict adding and updating • Review all adds and changes • Secure a W-9 or substitute • Purge and cleanup every year • Use standard rules for names • Use USPS and UPU rules for addresses • Capture phone & fax number • Involve purchasing for any new vendor who will be issued a purchase order

16. Vendor Master FileEnhance (Continued) • Lexus Nexus • Bank Account Validation • Diversity • Business Continuity • Scheduled & Ad Hoc Blanket Updates • Vendor Self Service AuditSolutions 2008