What is Vendor Ledger Account?

Definition

Vendor Ledger Account is a specific general ledger account used to record all transactions with a particular supplier. It tracks invoices, payments, credit memos, and adjustments, providing a detailed financial record of the organization’s obligations to each vendor.

Key Features

• Vendor Ledger Tracking: Captures all debit and credit entries related to a supplier to maintain accurate accounts payable balances.

• Due To / Due From Account: Integrates with intercompany or related-party accounts to record outstanding liabilities and receivables accurately.

• Vendor Financial Health Assessment: Helps evaluate a vendor’s creditworthiness and payment reliability through ledger activity.

• Audit and Compliance: Maintains records in accordance with a Vendor Record Retention Policy to support Vendor External Audit Readiness.

• Corrective Actions: Identifies discrepancies or delayed payments, triggering a Vendor Corrective Action Plan or a Vendor Performance Improvement Plan if required.

Governance and Controls

Vendor Ledger Accounts operate within Vendor Governance (Shared Services View) and Shared Services Vendor Management frameworks to ensure proper approvals, reconciliation, and monitoring. Segregation of Duties (Vendor Management) prevents conflicts by separating responsibilities for ledger maintenance, payment processing, and reconciliation.

System Integration

Integration with financial systems through ERP Integration (Vendor Management) and API Integration (Vendor Data) ensures real-time updates and reduces manual errors. This enables accurate reporting and improved vendor relationship management.

Summary

A Vendor Ledger Account is a dedicated general ledger account that records all financial transactions with a supplier. Through governance frameworks, internal controls, and ERP integration, it ensures accurate tracking, compliance, and effective vendor management.