With more than 4,800 ATMS, 3,088 branch locations, 24-hour phone support and mobile and online banking services, the US Bank leverages a convenient approach for their customers to manage their money any time. In their respective roles at U.S. Bank, Jessica & Derek makes sure to meet the customers’ business and personal banking needs with competitive products and services backed by industry-leading financial metrics.

Managing Enterprise third party contracts can be daunting. In the case of a large financial institution, the sheer scope of work includes hundreds of third party vendors and thousands more contract documents. We work in an environment where it is vital to stay ahead of the fast pace of business while providing quality support to our Business Lines. From onboarding a new third party that will provide critical services to the organization, to processing a standard renewal of an existing contract, contract management doesn’t have to be overwhelming with the right amount of thought, preparation and communication.

Five Best Practices:

1. Get Involved Early

Connect Business Lines with appropriate resources early. When selecting and onboarding new third parties, have a clear engagement model for your Procurement/ Sourcing group, in order to direct Business Lines to the appropriate resources to help them with RFPs/RFIs, pricing analysis and negotiation when they need it.

For renewals of existing contracts, create an automated or otherwise reliable process whereby the individuals that “own” the contract and third party relationship are automatically notified well in advance of upcoming renewals. This allows for sufficient time to review third party performance, address current performance gaps and learn what the Business Line’s needs are moving forward with regard to budget and services. This further allows for enough time to negotiate updated pricing, modifications to services or products, and perhaps adjustments to SLAs. If these conversations don’t kick off early enough, frantic conversations will ensue in the weeks or days leading up to expiration, leaving the organization disadvantaged when it comes to the relationship, pricing and quality of service.

2. Clearly Define Timelines, Responsibilities and Expectations

Internally, ensure the Business Line understand the contracting process: the timeline involved, and the information your team needs to facilitate a fruitful contract negotiation or renewal. If there are required processes, such as a risk assessment of a third party, compliance or legal review, or formal approvals, be clear with your internal stakeholders and set realistic timing expectations early on. If such open communication doesn’t take place, you risk ending up with frustrated internal partners who can’t understand why the deal isn’t done according to their expected timeline.

Externally, it is important to have candid conversations with the third party sales representatives and/or legal counsel you’re working with to outline your organization’s processes and requirements, to the extent you can share them. Setting realistic expectations regarding timing, dealbreaker terms, and your organization’s approval process sets you up for success, and allows the third party to communicate those expectations up the chain so that their team, on all levels, is informed.

3. Understand Business Needs

Each time a Business Line reaches out for a new contract document or renewal it is a potential opportunity to help them improve their current relationship with a third party. Make time to meet with the appropriate internal stakeholders to ask and answer questions. Don’t assume you know what they need because doing so risks missing important nuances that could have significant impact on the final deal. For instance, if a third party is missing existing SLAs, but the Business Line hasn’t been enforcing credits or penalties, this is an excellent opportunity to discuss the underlying issues and update contractual terms to hold the third party, and the Business Line, accountable for meeting expectations and enforcing remedies when service falls short.

Create a list of topics or questions that your contracting team should always ask as they are engaged to assist with new engagements or renewals, including cost, risk, data exchanged, relationship health, location of services, use of subcontractors, timeline for the work, etc. This approach ensures important information is not missed and enhances the consistency of support the Business Line receives from your contracting group.

4. Leverage Escalation

We’ve all experienced that moment in a negotiation–final agreement is in sight, yet you and the third party are deadlocked on the last few terms. Often, these involve allocation of risk and liability. Getting past this roadblock involves informing the appropriate internal stakeholders and outlining an “escalation path” early on in the negotiation. By doing so, you and the Business Line know which senior level executive will get involved for these tough calls. Sometimes, this means that executive will pick up the phone, call a counterpart at the third party’s organization, and attempt to hash it out. Other times, it means the executive will be involved on internal discussions to make decisions about an acceptable compromise or counterproposal. But the important thing is, the right person is involved, and you identified them early on so as not to waste time later wondering who should escalate. Once you begin to use this approach, it will become easier to identify the right senior executive to get involved. It’s a good idea to create an escalation matrix for your organization detailing who to escalate to, for which type of contracts, and when.

5. Coordinate Approvals and Signature

You’ve made it–the deal is done, and it’s time to sign. But, the Business Line isn’t sure who is authorized to sign, or, worse, the signer is out on an extended vacation and unreachable. To avoid such frustrating scenarios, consider creating a signing authority document for your organization that clearly outlines who is authorized to sign what. Authority may be based upon spend, contract term, risks involved, or a combination of all three. A signing authority document enables you and your team communicate (you guessed it–early) with the Business Line about who will need to sign when a contract is final. If there is only one person authorized to sign a certain type of contract or level of spend, consider creating a formal process where they may name a designee to sign in their absence. Formalizing ahead of time avoids headaches and delay later. Lastly, consider implementing an e-signature process if your organization and contracts will allow for electronic signatures. Many organizations are heading in this direction, and for good reason.