This blog is an excerpt on CFO and Finance Leaders' insights from Glean AI’s E-Book. The 8 Ways Businesses Overspend. Download the free E-Book today! →
Whether you're a small startup or a large corporation, managing vendor agreements can be a challenging task. With multiple vendors and complex agreements, keeping track of negotiation windows and monitoring invoices can quickly become an arduous task. Here are some tips to help you stay on top of your vendor agreements.
According to Dave Wieseneck, VP of Finance for Demostack, missed negotiation windows are one of the biggest problems when it comes to vendor agreements. Wieseneck explains, "If your contract auto-renews, you miss that opportunity 90 days before your agreement expires." This is a crucial time to push back and ask for alterations that will make your deal more favorable. By staying on top of your negotiation windows, you may be able to renew early and secure a discount. This is also an opportunity to assess whether or not you even need the vendor anymore.
Howard Katzenberg, founder, and CEO of spend intelligence solution Glean AI and former CFO advises that unexpected volume increases can lead to charges that shouldn't be there. Katzenberg explains, "When I was CFO of an online lending company, we learned through a manual audit that we were pulling three credit reports per applicant with a specific credit bureau. This went undetected for months because approvers in our AP process quickly scanned the 28-page monthly invoices from the credit agency and didn't have any context on prior bill amounts or our application volumes." This type of mistake can be costly and also happens when API connections break or when there are inadvertent consequences to "tech flashing red for you."
To minimize these issues, it's essential to scrutinize and monitor invoices regularly. However, with dozens of pages to review, manually going line by line is not always an effective method. As Ozan Kaya, President of CarLotz, explains, "You would typically only notice if it was an exorbitant amount of money." The solution is to use spend intelligence software that can automatically detect discrepancies in invoices, monitor vendor agreements, and track spending.
Staying on top of your vendor agreements is crucial to avoid unexpected charges and to ensure that you're getting the most favorable deal possible. By keeping track of negotiation windows, monitoring invoices, and using spend intelligence software, you can simplify the process and avoid costly mistakes. As Dave Wieseneck reminds us, "The situation in your company is going to be different when you come up for renewal than when you purchased your initial plan." So, be proactive and stay on top of your vendor agreements to ensure that you're always getting the best deal possible.