Please see TAPN's article on this subject (Vendor Naming Convention). A vendor code naming convention is dependent on several factors including your accounting system's capability regarding alpha and numeric character combinations and the number of characters it can accept. In setting up the naming convention you should consider the following:
- Do you want the vendor code to be easily identifiable to the vendor's name so that your data entry specialists don't spend much time doing vendor look-ups? In this case you might try to make it easy for the person coding the invoice to easily identify the vendor code from information on the invoice (3 alpha characters and zip code) without having to look it up in the data base. It could also help them when they key in a limited number of initial characters to pull up the full vendor code quickly.
- Are you focused on data entry productivity and therefore, is it the speed at which they enter the information that really counts? In this case keep the number of characters to a minimum and probably keep it focused on numeric keys so that the data entry specialist doesn't have to move between alpha key pad and the numeric key pad.
- Do you need to consider industry standards typically used by other companies in your market such as SIC codes or D&B numbers?
- Do you have a significant number of invoices that do not have invoice reference numbers? This can affect how many characters you want to establish in the naming convention because you will also need a naming convention for your AP Team to 'create' the vendor invoice number.
Below are some examples of the vendor code naming conventions:
- The first three letters of the vendor's name and the last seven digits of their tax ID.
- The vendor's tax ID.
- The selected alpha letters of the vendor's name and the zip code or SIC code.
- The vendor's telephone number (sometimes alpha characters are added at the end or beginning of it)
The shorter the number of key strokes- along with a naming convention that makes it easy to identify the vendor code- will go along way to helping with data entry productivity. Also, consider how large your vendor base is today and how large you feel it will be in the near future; you want to avoid too few characters in the vendor code that could lead to duplicate IDs.