Four Letters. Infinite Potential.
How Negotiating with Vendors Can be Easier than You Think

How Negotiating with Vendors Can be Easier than You Think

By Kelly Flynn, National Director 

Many community banks and credit unions 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.

What you don’t know could cost you

Over the past few years, there has been a substantial decrease in technology costs. However, your service provider is under no obligation to pass along those savings to you … especially if you have never asked for a review of contract pricing and terms.

An expert in contract review can determine if there are savings and possible incentive opportunities available with your current vendor. This includes reviewing every line item of your service agreements and providing feedback on pricing, service, support, and conditions related to proposals, contracts, and agreements. For contracts such as debit card processing — which can include between 50 to 60 line items — this can require a substantial time commitment from your staff, taking them away from important strategic initiatives or service issues.

With the results from such a comprehensive review, you’ll be able to make an informed decision to not only secure better pricing, but also to lock in more favorable terms that fit your budgetary needs. If your current vendor presents less than ideal costs or terms, a professional negotiator can often help you obtain a better deal.  And, if necessary, they can even help identify other potential service providers that might be a better fit for your needs.

>>> READ MORE about The Bank of Marion’s success story

Check your contracts when making service changes

Increasing consumer demand for faster, more convenient services — along with new standards on credit and debit card technology — have created a more urgent need for community banks and credit unions to upgrade product offerings and reduce the risk of fraud on electronic transactions. Unfortunately, staying on top of the latest technology can involve substantial costs — especially if you are working under service contract terms that were established years ago.

If you’re planning to make changes to your existing service delivery offerings, it is also the perfect opportunity to make sure your current contracts for core processing, Internet banking, and debit/credit card branding provide the most favorable terms at the lowest possible costs.

Make a point to review contracts following a merger or acquisition

In the event of a merger, contract negotiations present an important opportunity for obtaining improved efficiencies and streamlined service. The issues related to mergers are complex, and in some instances, far-reaching. Whenever two organizations combine, the service redundancy factor is not only overwhelming but expensive. The acquiring institution now has two core processors, two ATM and card processors, two credit reporting processors, and on and on. And, early termination of vendor contracts usually results in costly penalties.

Ultimately, senior management must decide which of the multiple platforms to select and absorb the costs associated with terminating a vendor. Oftentimes, however, leaders are consumed by the tremendous amount of details associated with the merger and remain unaware of the potential savings available by renegotiating existing contracts. In some cases, they simply ignore this seemingly cumbersome issue.

A better solution? Creating a competitive environment to determine which vendor is willing to absorb any termination costs to retain the business. Establishing a competitive field will help to either eliminate the penalties or negotiate to have the winning vendor pay for them.  And having the support of an objective third-party negotiator can help you get the best results from this situation.

Depending on the transaction volume and other factors, the savings from reviewing vendor contracts could reach hundreds of thousands, if not millions, of dollars.

Focus time and resources to your best advantage

Let’s face it, monitoring and managing service contracts can be confusing. That’s especially true if staff is without the strong expertise to measure current costs against what options are available in the marketplace or the skillful knowledge to negotiate better terms.

If your service agreements are coming up for renewal in the next 18-24 months, there’s no better time to enlist the help of a professional contract reviewer to identify potential savings and better service offerings for your account holders.

Satisfaction should be guaranteed

Whether you have existing contracts that haven’t been reviewed for years or you’re simply looking for a way to get the most value on your service contracts, you should seek outside help from a partner that offers a guarantee on their fee structure. By doing so, if their help does not result in lower costs, you should not be charged a fee. That way, the only way your bank or credit union can lose is by neglecting to take advantage of this cost-saving opportunity.


To learn more about uncovering savings opportunities by renegotiating your service contracts contact Kelly Flynn at Kelly.Flynn@JMFA.com or call 800-809-2307.




Kelly Flynn is a national sales director for John M. Floyd & Associates (JMFA). She has more than 15 years of experience working with community credit unions and banks of all sizes. Kelly is focused on helping her clients achieve their strategic goals by optimizing the value of their third-party vendor contracts or agreements.


For the past 38 years, JMFA has been considered one of the most trusted names in the industry helping community banks and credit unions improve their performance and profitability. Whether it’s recovering lost revenue, uncovering savings opportunities, serving your account holders better or delivering a 100% compliant overdraft program—JMFA has the right solutions to help you not only meet but exceed your goals. We are proud to be a preferred provider among many industry groups. To learn more please contact your local representative or call us at (800) 809-2307.


12 months 2020 2020 vision 40 years Academy account holder account holder retention account holder strategies account holder strategies; growth strategies; account holders accountability Achieve achievements Advancements Advice Agreement analysis Analytics announcement Assistance ATMs Attendees attracting talent Automation B2B Balance Bank Bank of Pacific Banking banking services banks banks and credit unions batching Benefit best practices board governance board member board of directors Bob Layendecker bottom line branch equipment branch profitability branding Bryan Hanks budget bundling business business culture business environment business practices business processes business strategies career advice Career Goal case studies Case Study CEO onboarding CFPB Challenges change Charles Shanley Cher Cheryl Lawson Choose Chris Karstens Classroom clients Cloud Cohron commitment Communication communications Competitive Complaint Compliance compliance examinations compliance risks compliant Conferences Consistency Consistent consultant Consultation consulting Consumer Consumer FInancial Protection Bureau consumer protection Consumer-focused Consumers Contingency Contingency Pricing contingency-based fees Contract Contract Analysis Contract Negotiation contract negotiations Contract Optimizer Contract Renegotiations contract review contract staffing Contracts Convenience core processor contracts Cornerstone Credit Union League corporate culture corporate governance Courtesy Pay CPE credits Credit Card credit card contracts credit cards Credit Union credit unions Crissandra Fry CSS culture customer service cyber security Damian Darin Byrd Data database Deal debit card contracts Debt Decisions Development Dick Miller digital directors Disclosed discounts Discussion Donna Sumrall Dynamic economy Education efficiency studies election Email Emergencies Emergency employee employee retention employees EMV migration Engagement evaluation Evolve executive search Expectations Expense expense management expense reduction expense studies expenses Experience Expert expert negotiations Experts Facilitators FastTrack Federal Reserve Board Feedback fees Financial Financial Institution financial institutions financial services financial stability Financial Worry FinTech Fixed limits Floyd's Forum Free Analysis full disclosure Fully fully disclosed overdraft program Gen Z Generating Income generating leads generation Generation Z Gift Goals governance government Grow Gym Halloween Hammond Happiness hiring HKW Holiday Holidays HR HR Consulting HR policies Hubur