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HOW NEGOTIATING WITH VENDORS CAN BE EASIER THAN YOU THINK

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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 youru00a0u003ca href=u0022https://www.jmfa.com/contract-negotiations/u0022u003evendor contract negotiationsu003c/au003e. Not only will you likely find additional funds,u00a0you canu00a0improve the quality of the service you receive u2014 and you can do so without changing vendors.nnu003cstrongu003eu003cemu003eRe-negotiating benefits both large and small institutionsu003c/emu003eu003c/strongu003ennWhether 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. Whatu2019s more, simply changing the verbiage in a contract can ensure that youu2019ll receive the services you need today, as well as what you anticipate needing down the road.nnWhen done correctly, re-negotiating a contract can be a u201cwin-winu201d 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 vendoru2019s attention during negotiations can lead to solutions for unsatisfactory treatment that canu00a0mendu00a0conflicts in the relationship with your institution.nnDepending 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 automaticallyu2014approximately 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, itu2019s also a case of better late than never when it comes to uncovering hidden savings.nnu003cstrongu003eu003cemu003eWhat you donu2019t know could cost youu003c/emu003eu003c/strongu003ennOver 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 u2026 especially if you have never asked for a review of contract pricing and terms.nnAn 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,u00a0and agreements. For contracts such as debit card processing u2014u00a0u003cstrongu003ewhich can include between 50 to 60 line itemsu003c/strongu003eu00a0u2014 this can require a substantial time commitment from your staff, taking them away from important strategic initiatives or service issues.nnWith the results from such a comprehensive review, youu2019ll be able to make an informed decision to not only secure betteru00a0pricing,u00a0but 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.u00a0 And, if necessary, they can even help identify other potential service providers that might be a better fit for your needs.nnu003ca href=u0022https://www.jmfa.com/About-JMFA/Case-Studies/The-Bank-of-Marion-Contract-Negotiationsu0022u003eu0026gt;u0026gt;u0026gt; READ MORE about The Bank of Marionu2019s success storyu003c/au003ennu003cstrongu003eu003cemu003eCheck your contracts when making service changesu003c/emu003eu003c/strongu003ennIncreasing consumer demand for faster, more convenient services u2014 along with new standards on credit and debit card technology u2014 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 u2014 especially if you are working under service contract terms that were established years ago.nnIf youu2019re 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.nnu003cstrongu003eu003cemu003eMake a point to review contracts following a merger or acquisitionu003c/emu003eu003c/strongu003ennIn 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.nnUltimately, 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.nnA 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.u00a0 And having the support of an objective third-party negotiator can help you get the best results from this situation.nnDepending on the transaction volume and other factors, the savings from reviewing vendor contracts could reach hundreds of thousands, if not millions, of dollars.nnu003cstrongu003eu003cemu003eFocus time and resources to your best advantageu003c/emu003eu003c/strongu003ennLetu2019s face it, monitoring and managing service contracts can be confusing. Thatu2019s especially true ifu00a0staffu00a0is without the strong expertise to measure current costs against what options are available in the marketplace or the skillful knowledge to negotiate better terms.nnIf your service agreements are coming up for renewal in the next 18-24 months, thereu2019s no better time to enlist the help of a professional contract reviewer to identify potential savings and better service offerings for your account holders.nnu003cstrongu003eu003cemu003eSatisfaction should be guaranteedu003c/emu003eu003c/strongu003ennWhether you have existing contracts that havenu2019t been reviewed for years or youu2019re 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.nnu0026nbsp;nu003cdivu003ennu0026nbsp;nnu003c/divu003enu003cemu003eTo learn more about uncovering savings opportunities by renegotiating your service contracts contact Kelly Flynn atu00a0u003ca class=u0022ApplyClassu0022 href=u0022mailto:Kelly.Flynn@JMFA.com?subject=Online%20Inquiry%20-%20JMFA%20Contract%20Optimizeru0022u003eKelly.Flynn@JMFA.comu003c/au003eu00a0or call 800-809-2307.u003c/emu003ennu003cemu003eu00a0u003c/emu003ennu0026nbsp;nnu003cstrongu003eABOUT THE AUTHORu003c/strongu003ennu003ca href=u0022https://www.jmfa.com/Services/Contract-Negotiations/Kelly-Flynnu0022u003eKelly Flynnu003c/au003eu00a0is a national sales director for John M. Floyd u0026amp; 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.nnu0026nbsp;nnu003cstrongu003eABOUT JOHN M. FLOYD u0026amp; ASSOCIATES (JMFA)u003c/strongu003enFor 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 itu2019s recovering lost revenue, uncovering savings opportunities, serving your account holders better or delivering a 100% compliant overdraft programu2014JMFA has the right solutions to help you not only meetu00a0but exceed your goals. We are proud to be a preferred provider among many industry groups. To learn more pleaseu00a0u003ca href=u0022https://www.jmfa.com/About-JMFA/Contact-Us-Todayu0022 target=u0022_blanku0022 rel=u0022noopeneru0022u003econtact your local representativeu003c/au003eu00a0or call us at (800) 809-2307.

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