No Time, No Time, Got No Time
Vendor contract management is something that every financial institution (FI) undertakes as part of the cost of doing business. The average number of contracts a bank or credit union may have varies, but it is not unusual to see the number fall between 100 to 500 contracts. Many of these contracts are with vendors who provide services that directly impact customers and members.
An additional charge of 2 cents per transaction was discovered. Applied to a rapidly growing base of business, this soon amounted to $60,000 per month.
The terms and conditions of the contracts that underpin the relationships banks and credit unions have with these critical suppliers are often very complex, as are the monthly invoices that accompany them. Yet, many FIs treat management of these vital arrangements as something that can be simply added to the list of duties held by an employee that probably already has a full plate.
Too often, those responsible for tracking and auditing the invoices associated with these contracts can do little more than confirm the amount due is consistent with previous months. The sheer number of contracts and the inherent complexity of many of them can make this approach costly to an FI.
The Law of Small Numbers
One example of how costly this can be is when an FI noticed that it was not realizing the savings it expected from a recent vendor contract agreement. An audit determined that there was a line item charge on the invoice that was not accounted for in the contract.
With a bit more digging, it was discovered that an employee at the FI had submitted a work order without understanding the full effect of the request. The result was an additional charge of 2 cents per transaction applied to a rapidly growing base of business that soon amounted to $60,000 per month.
The vendor was not at fault nor was a billing error involved. The FI, in this case, most likely had other priorities vying for attention, limiting the amount of time required to do the necessary due diligence on the vendor’s work order and subsequent invoice. Unfortunately, these billing errors happen all too frequently.
Keeping TABs – Automation Decreases Effort, Increases Accuracy
SRM’s enhanced automated tracking, auditing, and benchmarking (TAB) service automates the tracking and auditing of invoices. It also includes a benchmarking capability that will alert the user to an existing contract whose terms are outside the
An FI using SRM TAB is given access to a secure portal that provides a comprehensive view of the contract(s) being tracked. The service includes a configurable alerting capability with push notification to notify the FI of any discrepancies or exceptions requiring further research.
The TAB service automates a time-intensive manual process, freeing resources to address other priorities. In addition, the constant vigilance afforded by using TAB mitigates the impact of human error, which is associated with any manual process.
The TAB service requires no implementation, training, maintenance, or long-term commitment; as an added bonus, the service is included as part of any project SRM does for its clients. Upon completion of a project, the client can extend the service for a minimal fee. In addition, the service can be used for tracking, auditing, and benchmarking by FIs not currently engaged in a project with SRM.
Contact Us for a Demo
The work we have done to help more than 700 institutions add $2.2 billion dollars of value to their bottom line also identifies that there is an acute need for a solution that allows banks and credit unions to track, audit, and benchmark the contracts they have. Combining our data and experience from over 25 years of financial services gives us the ability to deliver a solution that addresses this need. It is a very powerful combination.