Zero-Knowledge Proof Protocols for Confidential Vendor Verification in Financial ERP Systems

Abstract

Abstract---Vendor verification is a critical component of financial Enterprise Resource Planning (ERP) systems, particularly in scenarios involving supplier onboarding, invoice processing, and account validation. Traditional verification processes require vendors to disclose sensitive data such as banking details, certificates, and identity proofs, thereby increasing risks associated with data leakage, internal misuse, and compliance violations. This paper proposes a privacy-preserving vendor verification framework based on Zero-Knowledge Proofs (ZKP), enabling vendors to cryptographically prove ownership of account credentials and documentation without revealing the underlying information. The presented protocol integrates decentralized identity primitives, non-interactive ZK proofs, and ERP data-validation logic to establish secure, tamper-resistant verification workflows. A modular integration strategy for SAP Financial Accounting (FI) is described, demonstrating seamless compatibility with vendor master creation, change management (XK01/XK02), and banking verification tasks. The framework ensures authenticity, integrity, and GDPR-aligned confidentiality while reducing operational overhead associated with manual document checks. Experimental results show that the ZKP-enhanced workflow improves validation accuracy, reduces disclosure risk, and strengthens trust among multi-tier suppliers. This approach provides a scalable, compliant, and cryptographically verifiable method for secure vendor authentication within financial ERP environments.