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3 Tips and Techniques for Staying Aware of Contract Renewals

Each vendor contract should be reconsidered before a renewal, regardless of whether or not you will be continuing with that vendor in the future. Not having a process in place within your Vendor Management program to keep track of these contracts could mean automatic renewal with ineffective vendors, and a big loss for your business. These three tips can help keep your contracts organized so you and your team will never be surprised by an unexpected contract renewal.

Create a process for vendor renewals

Your organization most likely has hundreds of vendors that you need to keep track of throughout the year. The most important aspect of managing this is ensuring you are assessing whether or not each vendor is still meeting your needs. To do this, you must have an accurate understanding of the risks they pose to your organization, and if the contract is doing its part in mitigating those risks.  

The best way to go through this, is to first have a process put in place to properly and uniformly assess all vendor renewals. This will allow your team to treat every vendor contract the same way. This process should have a convention that states at what time the reconsideration should occur (this might be 90 days before the renewal date, for example). It ought to also have the specific elements that will be considered when determining whether or not to continue using the vendor (adequate performance against SLA, for example). Lastly, you should determine if the risks associated with this vendor relationship have changed in any way since signing the initial contract, and what controls, if any, have been put in place to mitigate any additional risk. This will allow you to decide if they have become a bigger risk than your appetite can reasonably accommodate.  

Centralize your vendor contracts

Of course, in order to reassess your vendors before they renew, you’ll need to know when the renewal date actually is. If you don’t have a handle on where your vendor contracts are located, it will become significantly harder to be aware of the date you should start your reconsideration.

The best way to make sure no vendor contract renewals are slipping through the cracks is to centralize all of your contract documents. This saves you and your team time when finding the date, and will also be helpful when considering whether or not the vendor is meeting expectations.

Construct a contract calendar

Even with your contracts centralized in a single place, it would still take a very long time to regularly sift through each one to find the renewal date. It is almost assured that doing this would mean you and your team would miss a renewal date for one of your vendors eventually.

In order to keep them within a quick glance, it would be helpful to pull renewal dates out of each contract and put them into a separate tracking mechanism (contract management software or at least a spreadsheet), along with the dates that you planned on starting their reassessment. Doing this gives your team enough foresight to build the assessment calendar into the other projects they are working on, to make sure you all have the time to do a thorough job. It also keeps you and your team from missing a renewal due to simply not being aware the date was approaching.

Ultimately, creating a process for renewals is just one aspect of a strong and effective vendor management program. Throughout your vendor relationship, ongoing monitoring should be impacting these end of contract conversations and decisions, and your initial due diligence can ensure that you only sign contracts with vendors who can help support your organization’s growth in the first place. It’s important that every phase of the vendor management lifecycle is well planned and executed.