Collector - July 2020 - 10

BESTPRACTICES

Compare and Contrast
Want to boost your profit margins? It might be time to
take another look at your vendor contracts.
By Anne Rosso May

I

t's an all-too-common scenario: Your
client reorganizes or is bought out and
calls you to announce it will be paying
you a lower fee from now on.
Or what about this: Your payment
processing vendor suffers a data breach, and
you discover it was not adequately protecting
consumer information.
Or how about this less common but
unfortunately all-too-real situation: A global
pandemic strikes and state governments
restrict or completely ban collection calls,
and your income tanks.
In all these cases, your company is at
risk-financially, legally, or both. One thing
you can do to protect yourself from this type
of fallout is to regularly audit and review
your vendors to ensure you're getting the
most bang for your buck.

SET AN AUDIT SCHEDULE
You should be auditing your vendors
on a regular basis. What does "regular"
mean? That depends both on the type
of vendor as well as the type of audit.
Risk and compliance assessments can
come with regulatory scrutiny, and
your audits should incorporate those
high-and sometimes standardized
-expectations. Generally, said Joe
Adams, executive vice president,
Hampton Pryor Group, you should
conduct vendor risk audits annually.
"I follow the FFIEC [Federal Financial
Institutions Examination Council] rule
about risk assessments: For high-risk
vendors, like letter vendors, definitely
do an on-site audit yearly; for mediumrisk vendors like dialer companies, do an
on-site every two years (if feasible); and
for low-risk vendors like landscapers or
occasional plumbers, you don't need to do
an on-site at all."

10

Service audits, during which you review
the vendor's pricing and compare it to
similar products on the market, are more
informal than risk assessments, but should
still be done annually.
Day Knight & Associates was motivated
to start conducting annual price and service
reviews when a vendor announced a price
increase a few years back. "That prompted
us to take a closer look at all of our vendors,"
said Kevin Baich, vice president of Day
Knight & Associates. "We decided that this
is something we should be proactive about
instead of reactive."

YOU'D BETTER SHOP AROUND
As clients increasingly expect agencies
to do more for less, it's only natural to
turn around and say the same to your
vendors. You want to make sure you are
getting a fair price and that the services
the vendor offers still align with your
business strategy.
Last year, Nationwide Credit Corp.
reviewed all its vendors-more than a
dozen-and attempted to negotiate prices.
If the vendors declined to negotiate,
Nationwide put out an RFP to comparison
shop. In several instances, the company
found vendors with better pricing, similar
services and good references, so they
switched.
Phil Rosenthal, IFCCE, MCE, president of
Nationwide Credit Corp., said he even tasked
the staff member who orders supplies for the
company to shop around to see if they could
get the same products for better prices.
The result? When the vendor reviews were
complete, Nationwide wound up saving close
to $8,000 dollars a month.
Rosenthal said the trick is not to sign
multi-year agreements with vendors if you
want the option to shop around.

"If at any time we feel we can make a change
that will improve the product we get or info we
get, at a better price than we're paying now, we
make the change," Rosenthal said.
Even if you do all this and realize your
vendor is the best out there, you'll have peace
of mind in knowing that you've chosen wisely.

PRICE IS IMPORTANT, BUT IT'S
NOT THE MOST IMPORTANT
A common mistake many companies
make is getting hung up on a vendor's
price without weighing it against
other, equally important, factors. What
should you look for in your vendor
reviews beyond price? Adams suggests
you also consider things like customer
service, compliance and data security
certifications, employee training and
financial stability.
"More and more we're seeing through
the CFPB that price shouldn't be the major
consideration," Adams said. "Just because
someone will come in at the lowest price,
that doesn't mean they will give you the
most secure service. I know why it's an
important consideration, but I don't think
price should carry an extraordinary weight
in your overall assessment."

ACAINTERNATIONAL.ORG


http://www.ACAINTERNATIONAL.ORG

Collector - July 2020

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