As just noted in the last best practice, the supplier master file can become clogged with multiple records for the same supplier, which can lead to duplicate payments. To reduce the amount of master file review and consolidation, always use a standard supplier naming convention to reduce the incidence of duplicate supplier names.
The supplier naming procedure requires the payables staff to follow precisely the same approach every time it must convert a supplier name into a supplier identification number in the supplier master file. Here are some possible ways to compress a supplier name into an identification code:
For example, a company truncates after 12 letters and then adds a three-number code to the end. If a supplier’s name is Abercrombie & Arbuthnot, then its supplier code will now be ABERCROMBIEA001. If the company does business with another supplier named Abercrombie & Arrow, then its supplier code will be ABERCROMBIEA002.