Scary negotiation stories about wasting your member’s money

Oct 23, 2020

The worst part is these bad Horror stories keep coming back year after year 

Everybody likes a good horror film, especially around Halloween. But what if the horror story involved your members’ money? The fun is gone – and the only thing slashed is your institution’s bottom line.

In these troublesome times, the easiest way to significantly improve your credit union’s bottom line is to stop wasting money.

Our team of professional negotiators at Maple Street see frightening mistakes on a regular basis. Credit unions continue to make the same vendor mistakes year after year that waste money – not money spent on improvements – but real waste. The kind that’s no different than taking your members’ money out back and setting it on fire.

At Maple Street, we believe credit unions are wasting millions of dollars of their members’ money that can be easily avoided by implementing a simple, dynamic contract and vendor management system.

That’s right – a vendor management system. Vendor management, sometimes called supply chain management, is used by a number of different industries primarily as a way to reduce expenses. It’s also used to improve better vendor performance and manage risk that is not just compliance risk. By redefining vendor management, you can move it from being an expense to an expense reduction system.

Here are three frightening stories of how credit unions unknowingly waste millions of members’ money: 

Negligence and a costly rollover: A $250 million credit union came to Maple Street after the previous management team let a Fiserv contract renew for five years automatically without any negotiation attempts (a five-year autorenewal is standard in Fiserv contracts). It was pure negligence and there was nothing we could do to force better terms. On request, we evaluated the cost to the credit union of letting that contract roll over and discovered the credit union was going to spend $600,000 more over the next five years then it would have if it simply asked Fiserv for standard pricing when the contract renewed. When we compared the credit union’s price against current competitive pricing, the real number was $1 million lost over five years. 

Do-it-yourself vs. Maple Street pros: A well respected $1.6 billion credit union that is considered very well run, is growing at a good rate and has an outstanding CAMEL rating decided to negotiate its card processing contracts and VISA branding agreement on its own. When the credit union came to us to evaluate contracts for savings opportunities, we found the credit union did save about $1 million over what it was previously paying, measured over five years. However, in our evaluation of the contracts, we compared their results with a result we negotiated for a similarly sized credit union with almost exactly the same volume. This credit union was surprised to learn they left $1.2 million on the table.

No time to do it right: A $125 million credit union put off negotiating its card processing contract until seven months before the contract was set to expire. Because it had a six-month notice requirement and an automatic renewal for five years, the credit union essentially had to negotiate the contract in one month. By at least asking for better pricing, it saved itself almost $100,000 per year. But when we compared the results to the current pricing Maple Street was getting in active negotiations, the credit union left another $250,000 per year on the table. That’s over $20,000 a month wasted. By comparison, we helped a $440 million credit union to renegotiate five vendor contracts and saved the credit union $100,000 per year. The credit union didn’t have to change vendors and didn’t have to buy anything additional, but still dropped $100,000 to the bottom line.

For most credit unions, the concept of a vendor management program that includes active contract and vendor management is unheard of. The regulators have created a mindset that vendor management is a compliance process, ignoring its true value. As a consequence, what happens is contracts often automatically renew without any consideration of the products and services continued usefulness, cost, or price increases. The invoice comes in, it looks about right, and it’s paid. But hey, you passed the exam, right?

At Maple Street we take a different view of vendor management. Our revolutionary Vendor Advantage System® goes beyond the vendor management paper chase with a proven process to: 

  • Deliver a complete vendor management program
  • Incorporate supply chain management principles
  • Manage vendor lifecycles

Maple Street clients that use the Vendor Advantage System® will reduce expenses, improve vendor performance and managed risk. In fact, Maple Street guarantees we will save you more money than you spend, and you will pass your vendor management exam with flying colors.

To date, Maple Street has saved its clients over $110 million, and that number is growing daily.

Stop the horror show brought on by greedy vendors. Give Maple Street a call at 321-257-3930 or email info@maplestreetinc.com if you’re interested in stopping the bleeding on your bottom line.

 

Get laser focused on managing your vendors now!

Request a meeting with a professional vendor management expert today

Empowering credit unions and
community banks to thrive™

Phone : 321-214-1776

Toll-free : 800-513-6839

Fax : 866-457-3460

Email: mssales@maplestreetinc.com