Vendor Validations Using the Data on Invoices, Banking Forms, Contracts and Vendor Emails - (2024)

Updated: January 25, 2023

Tech Scam: On Friday, December 14, 2018 the Federal Trade Commission published an article “Cybersecurity for small business: Tech support scams”. Scammers are calling and pretending to be from a well-known computer company with confusing tech talk – all to convince the employee that it’s an urgent situation. What they are really trying to do is get remote access to steal sensitive data or trick your employee to signing up for “maintenance” or “warranty” work with a business credit card.

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Validation is an important step. This step verifies that new vendors are real and that changes to existing vendor data is coming from the vendor. In order for this to be done, you need to know what you can validate and where. In my blog post “7 Validations Using the Data from the IRS W-9 Form”, I listed 7 recommended validations for the legal name and tax id and also for the address. Here are my validation recommendations for the Invoice, Banking Form/Bank Letterhead for bank details, Contract or SOW, and vendor email.

Invoice

• Legal Name – The W-9 may not have listed the disregarded entity or DBA, but the invoice will have the DBA. The invoice name needs to match the vendor record

• Remit Address – could be different than W-9 Address. Verify with USPS or Universal Postal Union for Non-US to Non-US mail

• Banking – Usually only International vendors include banking on their invoices, but can be used to

• VAT# - Value Added Tax (VAT) is an International Country-level sales tax that your company’s tax team may need to use to reclaim VAT that is added to invoices paid. Verify against (VAT) Number against VAT Information Exchange System (VIES)

• Remit email address – add to vendor record to send remittance information to reduce inquiries to AP for how to apply payments.

• Contact name/email address – confirmations – check out my blog post on “Send a Notification to Vendors After Updates in the Vendor Master File” for why collecting this information is key to reducing fraud in the vendor master file.

Banking Form/Bank Letterhead

• Banking Routing #/ABA – Verify that this number whether it is for ACH or Wire – since they can be different. Verify with the Federal Reserve.

• Vendor International Business Identifier Code (BIC) or Society for Worldwide Interbank Financial Telecommunication Code (SWIFT) - Otherwise known as BIC and SWIFT codes – Non-US Countries that do not require an IBAN will have a BIC Code or SWIFT code along with a bank account number.

• IBAN – Can verify the format with Google, however, my recommendation is to verify directly with the vendor’s bank. Google searches can return invalid sites. If you have one you trust, continue to use, but have the vendor’s bank as an alternative. The IBAN is required for all bank accounts in the EU countries plus Norway, Switzerland, Liechtenstein and Hungary. The IBAN is made up of a code that identifies the country the account belongs to, the account holder's bank and the account number itself.

• Paid Services:

  • There are also some paid subscription services out there like Accuity that offer validation for Banking Routing#’s/IBAN’s/SWIFT & BIC Codes

  • This last one is a paid service too. To verify the Bank Account Name and Bank Account Number matches for US accounts using Early Warning System. If your bank is participating bank or inquire directly with the Early Warning System. If not, you can use a reseller like Giact.com.

Contract/SOW

• Legal Name and Tax ID

• Contract # and Start/End Date

• Payment Terms

• Remit Address

• Remit Email address

• Contact Name/Email Address

Vendor Email

• Authentication to verify that the information was received from a valid email and not from a phisher

• Validate the domain name

• Contact Name/Email Address

• Items to look for within the email to ensure it is not fraudulent

  • Email domain to Signature

  • Link matches destination noted in email

  • Grammatical errors (becoming less common)

Want more? Listen to the podcast for seven (7) validations using the IRS Form W-9!

What did I miss? Comment below.

Clean-Up Your Vendor Data.

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Other Resources

• Vendor Process Training Center - Includes weekly training on vendor onboarding and maintenance processes such as Authentication so you know you are dealing with your vendor and not a fraudster, Validation of vendor data, and Management of vendor master files. Sign-up for a free account for access to FAQs, a Resource Library, Drop-In Q&A sessions, and more.

• Need help cleaning up duplicate vendors or filling in the gaps in your vendor process? Work With M: Vendor Master File Clean-Up or Vendor Process ReDesign

• Prevent Fraudulent Payments. Get Your Own Copy of the 3 Step Vendor Setup and Maintenance Process eGuide.

• Want a handy Cheat Sheet that includes the links to vendor validation resources? Download the Vendor Validation Reference List and share it with your entire team!

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