Fall has arrived and the holidays will be here before we know it. What this means for many of us is that Q3 is closing and budget priorities for 2019 are being finalized. In the spirit of this special time of year, SRM wants to revisit a few vendor contract management reminders that may be useful to you at this time.
These tips are not only useful during budget season when the hunt for savings that can be used to fund other initiatives is vital. They can also help you add value to your institution throughout the year. In fact, vendor performance management should be a year-round discipline. We know now that finding ways to reduce costs or enhance revenues can be particularly important.
So, here is some advice we have offered throughout the year that may help with some of the challenges you may be facing in Q4:
Any single bank or credit union can easily average 100-500 contracts, and these contracts continue to become more complex. Even adequate review of the invoices associated with these relationships can be daunting for a single employee, who likely has other primary responsibilities. This task cannot be simplified down to approving month-to-month costs for consistency; small errors can become big mistakes over time.
One major hint for you: it’s not just about price. In vendor contract negotiations, the definition of getting the “best” possible deal can vary between institutions. What do you most want from the relationship? Factors beyond price often come into play for differentiated services, as does the bank or credit union’s market position, go-to-market strategy and acquisitive nature.
Most financial institution vendor contracts include a requirement that the client file a “notice of non-renewal,” otherwise the agreement will automatically renew at “expiration” on pre-defined terms. Banks and credit unions fail to file this notice at least one-quarter of the time, but there are four key reasons to avoid becoming part of this group.
What challenges or questions do you still have about your vendor contract management? Let us know – we’d love to help you uncover the answers, and realize costs savings or additional revenue at the same time.