Have you ever discovered after you have made a decision or executed a contract that there was a different answer to your question? More importantly, have you learned something, that had you known it, you would not have made that decision or executed that contract?
Furthermore, do you sometimes feel, as you assess your vendor relationship, that it is becoming a kind of game based the following premise:
Ask me the right question and I will tell you the right answer!
Well, you are not alone. More often than not, customers are finding out more and more about the contracts they have signed.
And they are not pleased.
And typically, when they find out, it is too late!
Clauses that can kill
Trust is a huge component of the customer-vendor relationship. Yet there are clauses that can be placed in a contract that if not fully understood (or read) can kill a relationship or at least shake the confidence you thought you had.
Discovering these clauses after the fact can create a sense of being taking advantage of, at least, of being misled.
Our three rules of vendor management are clear and can be a very useful tool in preventing ill will between you and your vendor.
Rule # 1: Trust no one, and always read the contract.
Rule # 2: Believe no one, and always read your contact.
Rule # 3: Make them prove it to you!
Follow-up: If you are unable to understand or read the contract retain an experienced attorney and consultant who can work as a team to walk your organization through the mine field of clauses that can kill.
Upfront care’s payoff
When you do this, you will avoid the following nasty surprises:
1. Unrealized extensions. Discovering after you begin planning for a contract renewal that your contract term had been extended three years, when you executed a document for a new product the previous year.
2. I bought what? Being informed by your current core vendor when your institution did not consciously select their product that you must use their product. Why? The vendor included a list of products in the Master Contract, and a exclusivity clause.
3. Whose BIN is it, anyway? Realizing that your institution really does not own your BIN for your debit cards when you thought you did.
All of these, and there are many more, bring a sense of distrust to a relationship and consequently spawn the creation of an exit plan from the vendor responsible for them.
Warning #1: Once you have executed a contract, your institution must live with it! Good or bad! No “do-overs” allowed.
Warning #2: Vendors do not sell decision forgiveness insurance along with their new contract. If you want out you will have to pay to get out.
How to avoid contract troubles
Some basic care and attention will help you avoid such unpleasantness
Reading a contract
Often I have heard from the vendor that the customer signed the contract, and that’s that. It is their responsibility to read and understand the contract terms before they sign it!
Standard operating procedure
More importantly, the customer, should always have their legal counsel review the contract with an experienced consultant, because they would have brought these troublesome clauses to your attention. “It’s not our fault,” the vendor will say, “the bank signed it!”
Well, in this case, the vendor is correct. The financial institution and bank staffer who executed the document is the responsible party. Being informed is the responsibility of the customer not the vendor.
Don’t get buffaloed
On the flip side, how many vendors ask you to hurry up and sign the document so you can be one of the first in line and not have to wait or to qualify for the special discount?
Our suggestion to you is to never trust these tactics. A vendor attempting to compel you to execute the contract … that’s a bad omen.
Furthermore, if an executed document is a requirement for service, then the vendor should provide a sample copy for you to review.
Our approach at The Copper River Group to large and lengthy contracts is to do just that. At least 45 days before a contract needs to be executed, we provide our clients with a sample to begin the review with.
Don’t put yourself in a bind, take the time
All agreements should be reviewed thoroughly and in advance. There should always be plenty of time to:
1. Consider your options.
2. Seek competent legal counsel.
3. To be diligent.
At the end of the day and before you execute any contract that is significant in time, dollars, or commitment, you always want to ensure that you have conducted your homework and taken the time to ask the right questions.