What is an outcome of maintaining an accurate vendor master file?

Maintaining an accurate vendor master file is crucial for effective financial management and helps minimize payment errors. When the vendor master file is kept up-to-date and accurately reflects all necessary information about the suppliers, it allows for proper verification of vendor details during the payment process. This attention to accuracy ensures that invoices are matched with the correct vendors, payment terms are clear, and discrepancies are minimized.

The correct answer, therefore, highlights the efficiency and accuracy that come from well-managed vendor information, which fosters a streamlined accounts payable process. This can lead to improved cash flow management and enhanced vendor relationships, as vendors are paid on time and for the correct amounts.

In contrast, other alternatives do not align with the benefits of maintaining an accurate vendor master file. For instance, increased inventory shrinkage suggests a problem with inventory management rather than vendor data accuracy. A decrease in supplier compliance would imply difficulties in following contractual agreements or expectations, which is more likely attributed to issues in supplier management rather than the accuracy of vendor records. Lastly, higher costs of goods sold typically relate to factors such as pricing strategy, procurement efficiency, or market conditions, and are not directly influenced by an accurate vendor master file. Thus, the focus is clearly on how accuracy in vendor records can prevent significant mistakes