By all accounts, the impact of the Coronavirus has created more of a shift in business operations, economic certainty and consumer behavior than any other challenges faced by the financial services industry since the turn of the century.
Since the beginning of the pandemic, earnings have taken a hit, interest rates have remained low and non-interest income is on the decline. On the other side of the coin, expenses have increased — due in part to the additional costs required to allow employees to work effectively from home and to maintain the proper PPE, cleaning supplies and social distancing materials to keep staff and account holders safe in facilities that have remained open. And while the outlook for how long an economic recovery will take remains uncertain, you can make a positive impact on your bank’s immediate and long-term performance by trimming the costs of the services you use every day.
Proactive contract review can net significant savings
Even during normal circumstances, negotiating service contracts can be time-consuming and intimidating if you don’t have expertise in that area. Now, given the increased demands on your time and added concerns about how to safely provide the services your customers desperately need, it can be easy to let contracts auto-renew, thinking that next time one comes due, you will have more of an opportunity to deal with it appropriately.
But by accepting a vendor’s initial renewal offering, without reviewing the contents and fine print, you could be missing out on substantial savings and improved contract terms. What’s more, possible signing incentives could provide the extra funds you need to help offset the added expenses caused by the pandemic and fund initiatives that will improve your service delivery for years to come.
What you should know about your current vendor contract details
While you may have become comfortable with the services or products you have purchased to maintain your operations and service delivery, how certain are you about whether they offer the most value for your bank? Have you ever wondered how they compare to other providers in the marketplace?
A professional review of your service contracts can uncover the smallest details in the vendor agreements and provide you with critical information on things such as:
- Are you getting the best rates available?
- Are there additional savings opportunities beyond the vendor’s standard pricing package?
- Are you paying for services you don’t use or need, or unknowingly duplicating services?
- How much could you be saving by bundling services?
- Are your vendors innovating their products to provide consistent service in the future?
- Do your providers have your bank’s best interests at heart?
- How much could you save or improve your agreement terms by negotiating the contract instead of simply accepting a vendor’s initial offer?
Expert advice adds insight and leverage to your contract negotiations
Going through your current contracts line item by line item to determine areas where you can negotiate better terms can be overwhelming. And if you aren’t familiar with all of the available options, how do you even know what to ask for or how to state your case for renegotiating contract costs or terms?
When you partner with a contract negotiations expert, you gain the advantage of having someone on your side who has specialized experience and knowledge about what other institutions are paying for specific services, what types of signing bonuses are currently being offered on contract agreements, as well as which providers will likely meet your specific needs and service expectations — both now and in the future.
Just make sure you choose a contract professional who knows what to ask for on your behalf and who has a track record of negotiating five, six and even seven-figure savings for the types of contracts that are being reviewed. This will allow you to take advantage of effective negotiation skills that can significantly reduce your costs without adding to your workload or taking you out of your comfort zone.
Now is a great time to renegotiate
If you have contracts that will expire in the next 18-24 months, now is the time to begin the review process. And while it may seem like trying to negotiate contract terms during a pandemic might not be successful, the truth is vendors are especially focused on maintaining business relationships right now. So, it’s really a great time to let your vendors prove their commitment to keeping you as a satisfied customer.
If you’re not entirely convinced, learn how Washington Savings Bank discovered that you don’t have to be a large account for a vendor to leverage significant savings on service contracts. As a result of its first-ever contract review, the bank was able to uncover a silver lining in the form of cost reductions and a signing bonus that helped to offset the cost of new services for customers. And with the help of professional consultants, it didn’t take any time away from bank business to negotiate complex contract terms with vendors.
By Kelly Flynn, National Director