O'Reilly logo

Accounting Best Practices, Fifth Edition by Steven M. Bragg Englewood, Colorado

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

3–52. Adopt a Supplier Naming Procedure

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:

  • First, strip out all spaces and punctuation marks from the supplier name.
  • Next, eliminate all symbols from the supplier name, such as “&,” “@,” and apostrophes.
  • Next, use the letters in the stripped-down supplier name, starting on the left, and proceed to the right for a predetermined number of spaces. Then add a multidigit code at the end of this truncated name, starting at (for example) “001” and ascending by one digit for each additional name that begins with the same letters.

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.

Cost: Installation time:

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required