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Contract Management

7 Next Steps to Handle Your Naughty Vendors

Dec 5, 2018 by Branan Cooper

Do you have vendors that you’d categorize as naughty around this time of year? Don’t worry, we’ll cover ways to handle them.

Examples of Poor Vendor Performance

Vendors don’t all start out bad, otherwise you wouldn’t sign with them to begin with. When you first signed with your vendor, everything probably seemed fine. You were able to get the due diligence and it was in order. Then your seemingly nice vendor readily agreed to the terms and pricing set in the contract. But then later they started to do naughty things like:

  • Stopped returning calls or emails promptly
  • Their answers to your questions were incomplete or evasive
  • They stopped doing what they are contractually required, such as reporting
  • They’ve made the news in a not-so-nice way
  • They’ve laid off critical staff and when you inquire about whether that indicates larger problems (financial, organizational, etc.), they are not forthcoming
  • They’ve been cited by a regulatory authority for a violation
  • Their due diligence is stale and they’re not providing readily available information
  • Their complaint volume is rising
  • Other companies are dropping them fast
  • You’re not as pleased with their product/service
  • They’re doing other things you don’t approve

The 7 Next Steps for Naughty Vendors

Take your list of naughty vendors and do the following:

  1. Gather all of the information you can and document it as objectively as possible.
  2. Speak with the person who manages the relationship at your organization if you haven’t already done so and get their support.
  3. Inform senior management and get their direction or approval on what to do.
  4. Make sure to look back at the contract for your options, up to and including termination.
  5. Make sure you have an alternate provider and a solid exit strategy.
  6. Execute the plans and keep your management team informed.
  7. Be sure you have thorough documentation on the entire situation, including the return or destruction of any confidential information.

These steps aren’t fun, but they are necessary to get results and a better outcome than what you’ve been dealing with thus far.

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Branan Cooper

Written by Branan Cooper

Branan Cooper is the Chief Risk Officer at Venminder. Branan has nearly 30 years of experience in the financial services industry with a focus on the management of operational and regulatory processes and controls—most notably in the area of third party risk and operational compliance. Branan leads the Venminder delivery team as the third party risk management subject matter expert in residence. Branan also serves as an industry thought leader. He's a member of InfraGard and the Professional Risk Management Industry Association (PRMIA). And, he was selected in 2018 as an advisor to the Center for Financial Professionals (CEFPro) and board member for the Global Sourcing Resource Network (GSRN).

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