It's a task that comes around every year like clockwork, but somehow manages to surprise us every time: reviewing your third-party vendor contracts. However, this task doesn't have to be a stressful one. Having a solid process in place for reviewing each vendor contract eliminates some of the rush and chaos that could otherwise dominate the job. Here are four tips for constructing a vendor contract review process at your institution:
- Mark your calendar. Keep track of all the contract expiration dates. Be sure to include notification time periods in case you want to switch vendors.
- Size up the competition. Compare your current provider with two other competitors to determine if they're still the best fit for your bank. Remember, it isn't just about price. Product offerings, service level and reputation in the marketplace can all play a role.
- Negotiate… Once you've selected a single preferred vendor, look for ways to negotiate to make the new contract more in your favor. Consider things like contract term, cost structure, minimum target levels if there are minimum expectations, and the addition of new product lines at reduced prices.
- …But bend a little. Be fair. You don't want a third-party vendor relationship to end badly because you played hardball. The key is knowing where you can bend and where you need to stick to your guns.
I hope the next time you sit down to review vendor contracts, this list makes it feel a little less daunting.
Bartoshevich is senior vice president, director of retail at Park Bank, Milwaukee and a member of the 2016-2017 WBA Retail Section Board.