Master data

What it means

Master data are the core records reused in everyday transactions that change only rarely. They include customers and suppliers with their addresses, company IDs, VAT numbers and bank accounts, products with codes and prices, employees, cost centres and the company chart of accounts.

Unlike transactional data such as invoices, orders or payments, master data are entered once and then referenced by thousands of transactions. An error in them is therefore not a one-off but is repeated in every invoice, report and payment.

In a company with several systems, such as an ERP, a CRM, an online shop and payroll, the same customer or product is often held differently in different places. Master data management decides which system is the source of truth and how changes flow to the others.

How it works in practice

For customers and suppliers we verify the company ID, VAT number and commercial register details. A wrong VAT number on an invoice can jeopardise the VAT deduction and the exemption on an intra-EU supply, and a wrong address can hamper debt collection.

Suppliers’ bank accounts deserve special attention. Changing an account in master data is a classic target of business email compromise. We recommend that only a designated person can make the change, after verification by phone, and that it is logged.

When moving to a new system, master data quality is the biggest risk in data migration. Before the transfer we recommend cleaning the lists: merging duplicate partners, closing inactive products and filling in missing identifiers.

What to watch out for

The most common mistake is duplicates: the same customer three times under different spellings. The sub-ledger then falls apart, reminders go astray and customer reports make no sense. A rule that new partners are created only by company ID prevents most problems.

The second risk is outdated data, such as a partner’s change of address, name or VAT status that the company never heard about. Regular, ideally automatic, comparison with the registers keeps the data current without manual work.