How to Offboard Vendors Successfully

We all know what it’s like at the beginning of a brand-new partnership. Oh, how those rose-colored glasses put a lovely shade of excitement and hope over our fresh unions. Of course, no one wants to go into a relationship planning for its demise, but when it comes to business engagements, it’s simply a best practice.

Should the warm glow of Cupid’s spell begin to wane, and it comes time to bid a vendor (or two) adieu, here are a few tips to keep the process as smooth as possible.

7 Tips to Make Offboarding Vendors a Smooth Transition  

1. Consider the end before you sign the contract.

Before you even consider signing on the dotted line, it’s important to take a good hard look at what it will be like to unwind the deal you’re negotiating with the vendor. Sometimes, seeing the chain-of-pain you’ll have to go through to end the relationship will cause you to rethink choosing the vendor. Additionally, put language in your agreement that will help you lessen the blow of terminating a vendor relationship.

2. Tweak your offense.

The best defense is a strong offense. Let the vendor know you’re very interested in contracting with them for the product or service they bring to the relationship. Then ask them to help you review what termination of their contract might look like. The conversation you have with vendors at this point in the vendor lifecycle will lay all the chips out on the table and give you an opportunity to interact with your stakeholders. Better yet, your stakeholders may also have an a-ha moment when given an opportunity to glimpse what an exit strategy may entail.

3. Punch the numbers.

What’s the actual cost to terminate the contract? Every deal has an “unwind cost,” and core vendors always come part-and-parcel with conversion and deconversion costs. You should have a solid understanding of whether or not there are any internal dependencies that need to be considered. For critical vendors, there should be an exit strategy in place, which should be followed to a “T.”

4. Review the contract terms.

Before notifying that an engagement needs to be terminated outside of the contract period, be sure you’re within your contractual rights to terminate the process and follow any prescribed requirements for doing so.

5. Maintain lines of communication.

Continuing a habit of frequent and open communication with your vendors is going to serve you well for the totality of the vendor relationship. Of course, it never feels good to be broken up with, but trust us, the time you put in to develop healthy conversation with your vendor will pay huge dividends should it come time to part ways. Once you’re ready to set things in motion, communicate not only with your vendor, but also internal stakeholders appropriately about the termination.

6. Update credentials.

A solid access management program will allow you to easily know every person who might have access to a particular vendor application or technology service, but that’s not always the case. Be sure that for any product or service that requires credentials of any kind, that those user accounts are deactivated upon termination of the contract.   

7. Update the vendor database.

Make sure the vendor is removed from all systems or lists used to track and monitor vendors and their associated risk assessments as they should no longer be a part of active vendor reporting.

Don’t despair… when one door closes, another opens, and there are plenty of fish in the vendor sea. But, with that in mind, never underestimate the value of planning. Failing to plan for the inevitable is hoping everything will work out when you know it might not work for a reason you can’t foresee. 

If you decide to not offboard your vendor and renew your contract there are some things you should know. Download the checklist.