Not reviewing your contracts can cost you money
Ways credit unions and community banks are wasting money
Credit unions and community banks waste millions of dollars every year. The easiest, fastest way to stop wasting your money is your vendor management program.
As a part of this series, Maple Street’s pros explore ways your institution could be wasting money and what you can do to fix the problem.
Wasting money mistake #293: Paying for vendors you don’t need or that can’t perform
Would you set your money on fire? You might as well, if you’re paying vendors for products and services that you’re not using. It may seem improbable that you’re wasting money on vendors you’re not aware of and products or services you don’t use. But, believe it or not, it happens more often than you think.
A while ago we did a vendor plan for a small credit union and in the process, found the credit union was paying several vendors for services it actually didn’t use. Our favorite was the “$6,000 postage meter.”
Here’s what we discovered and the steps we took:
- The credit union was too busy to examine all of its contracts
- As part of our vendor plan, we took time to find most of the credit union’s contracts
- We asked the credit union what service it was getting from each vendor
- We found a Pitney Bowes contract for a postage meter that cost $500 every month!
The contract was old and it was automatically renewing every year. With a little investigation – “putting eyes on the contract” – we found the credit union wasn’t even using the postage meter. In fact, it hadn’t been using it for some time, and didn’t even have it anymore.
How to fix this money-wasting mistake
Things like this happen, but there’s no reason for this waste to continue with a little time and a vendor planning process to take a look at each vendor contract. Take the time to focus on your vendors, getting all your contracts and building a process to review each one regularly, about once a year, to see if you are still using a product, might want to renegotiate, upgrade or change vendors. Time consuming, yes, but a valuable process.
That’s where Maple Street comes in. We can do the important work you don’t have time to do, so you stay current, save money and can focus on exceeding members’ or customers’ expectations.
Similarly, would you expect to pay for service that’s actually costing you business? That makes as much sense as paying for products or services you don’t use. And that’s why your vendor management program should be doing something about it.
For example, if your bill pay system is down, your members or customers don’t blame your processor, they blame you. And that can result in lost confidence and business. As you move to become more digital, you’re becoming more dependent on vendor performance to deliver the level of service you need to keep up with members’ and customers’ expectations. Selecting the right vendor that can actually do the job is the first step in the vendor management process, so evaluating vendors based on the performance you will get, not on the “next, new shiny object” that is offered, is what will make a difference to you.
Vendor management should not only include the process of evaluating and selecting vendors and contracting for service levels and uptime requirements, but should also include building a way to score your vendor’s performance.
For each vendor, just ask three questions:
- Are you still using the product or service?
- Do you plan to keep using the vendor?
- Are you satisfied with the vendor’s performance?
Buying features alone won’t help you. Buying features you don’t need will help you even less. Buying results will. Does your vendor management system include vendor selection, contract negotiation and performance management? Does it identify all your vendors, collect all your contracts and provide a means to measure if the features you bought are currently the features you need and if your vendor’s performance is at the level you want? Without this information you’re flying blind. Instead of managing your vendors, your vendors are managing you. Maple Street’s Vendor Advantage System® does all this and more.
Maple Street’s Vendor Advantage System®
A revolutionary way to manage vendors, Maple Street’s Vendor Advantage System® makes certain you select the right vendors who can perform, with the right contracts, and have built-in means to measure and monitor for improved vendor performance.
The Vendor Advantage System® includes:
- Vendor planning
- Contract management
- Due diligence monitoring services
- Qualifying, selecting and onboarding vendors
- Negotiating best prices and terms
- Measuring vendor performance and scorecarding
No longer will you waste money on rollover contracts for products or services you don’t use or be at the mercy of vendors who can’t keep their services online or quickly fix them when they do go down. The Vendor Advantage System® is proven to reduce expenses, improve vendor performance and manage risk. And, we guarantee it’ll save you more money than you spend.
To date, Maple Street has saved our clients more than $207 million. If you’d like to stop wasting money from unnecessary vendor expenses, give us a call at 800-513-6839 or email firstname.lastname@example.org. Visit www.maplestreetinc.com/learn to learn more.
Get laser focused on managing your vendors now!
Request a meeting with a professional vendor management expert today