Author Kelly Flynn, National Director, John M. Floyd & Associates
Many community credit unions and banks continue to struggle with how to improve their bottom line without taking dramatic cost-cutting measures. Instead of playing defense by reducing staff or cutting services, start playing offense by finding savings in your vendor contract negotiations. Not only will you likely find additional funds, you can improve the quality of the service you receive — and you can do so without changing vendors.
Re-negotiating benefits both large and small institutions
Whether you have one vendor or dozens, an expert in vendor pricing and services can walk you through the process of determining what level of savings you should expect from re-negotiating your service contracts. What’s more, simply changing the verbiage in a contract can ensure that you’ll receive the services you need today, as well as what you anticipate needing down the road.
When done correctly, re-negotiating a contract can be a “win-win” for you and your vendors; you get better service at a better price and your vendors keep a satisfied customer. However, if there are issues related to poor service or slow response to requests for support, getting the vendor’s attention during negotiations can lead to solutions for unsatisfactory treatment that can mend conflicts in the relationship with your institution.
Depending on the type of service, most contract terms run between three and seven years. The best time to review contracts is before they renew or extend automatically — approximately 18 to 24 months prior to the expiration dates. It is during this timeframe that the most substantial savings can be negotiated. By starting this early, you may even benefit from immediate, retroactive savings. However, it’s also a case of better late than never when it comes to uncovering hidden savings. To learn more, contact LEVERAGE.