What is Vendor Ledger?

Definition

Vendor Ledger is a detailed accounting record that tracks all transactions, invoices, payments, and balances related to a specific vendor. It provides transparency and control over vendor-related financial activity, supporting accurate reporting and effective accounts payable management.

How Vendor Ledger Works

The Vendor Ledger Account captures every transaction with a vendor, from invoice receipt to payment settlement. Organizations often integrate the ledger with ERP Integration (Vendor Management) and API Integration (Vendor Data) to ensure real-time accuracy and streamline reconciliation processes. Segregation of Duties (Vendor Management) is applied to ensure that recording, approval, and payment functions are separated for control and compliance.

Vendor Ledgers also support monitoring of vendor performance and risk through tools like Vendor Performance Improvement Plan, Vendor Financial Health Assessment, and Vendor Risk Mitigation Plan. Adhering to Vendor Governance (Shared Services View), Vendor Record Retention Policy, and preparing for Vendor External Audit Readiness ensures transparency and accountability in all vendor transactions.

Operational and Financial Considerations

Maintaining a complete Vendor Ledger allows organizations to track outstanding balances, validate payments, and identify discrepancies. It also provides the foundation for Vendor Corrective Action Plan initiatives and enhances Shared Services Vendor Management by centralizing vendor data and supporting decision-making for cash flow and supplier strategy.

Summary

A Vendor Ledger is a comprehensive record of all vendor transactions. Leveraging ERP integration, governance policies, and risk management tools ensures accurate reporting, audit readiness, and effective vendor relationship management.