Relationships aren’t easy. You have to build trust with your partner, feel confident they will honor their commitments, be able to communicate effectively, and hold each other accountable for building a successful life together.
The same is true for building a winning relationship between your financial institution and its vendors. You need to be able to trust your business partners to adhere to compliance regulations and keep your and your members’ data safe. You want to know you can rely on them to prioritize your specific concerns and goals. You want to feel confident that they have your back and comfortable with the level of communication needed to work through any issues together.
When you’re vetting potential vendors for your financial institution, make sure to watch out for these relationship red flags!
Red Flag # 1: You Have Communication Issues
Healthy communication is a cornerstone of any successful relationship. A recent study found the level of satisfaction with communication in the beginning of a relationship is more likely to result in an amicable partnership down the road. If your partner isn’t open to having conversations about your relationship from the beginning, consider this a red flag!
When it comes to vendor partnerships, communication is key! You want to work with providers who are accessible and highly communicative. This includes having a reliable point of contact to provide feedback on products, request support, and troubleshoot any problems. Their senior leadership should also be accessible to resolve any major issues.
Establish clear lines of communication and make it clear those lines are always open. This helps address any confusion or challenges before they turn into problems.
Red Flag #2: They Don’t Hold Themselves Accountable
A potential partner can sing their own praises all day long, but do their actions suggest personal accountability? If you’re in the early stages of a relationship and notice behavior like always cancelling plans last-minute or not following through with what they say they’re going to do—that’s a red flag!
Likewise, your vendors need systems in place that uphold their accountability. For example, an outsourced collections provider is only as valuable as the reporting they provide. After all, if they aren’t providing robust data to demonstrate how many calls they’re making, cure rates, queue averages, payment activity, etc., how can you completely understand how well your portfolio is performing?
When you’re vetting your vendors for red flags, make sure to look for partners who can provide customized reporting—or at the very least, give you enough information in their reports to give you a full 360-degree view of their performance.
Other accountability methods may include informal conversations to touch base, as well as structured, scheduled assessments such as:
- Regular meetings
- Site visits (if possible)
- Business reviews
Red Flag #3: You Have Conflicting Expectations for the Relationship
Not everyone is looking for the same thing in a relationship, which is why it’s a good idea to start any potential new partnership by setting clear expectations for what you both want. That way, you can determine upfront whether you have lasting potential or if you need to reevaluate your relationship dynamic.
The beginning of a good relationship with a vendor starts with getting everyone in your company on the same page so there is a unified front on expectations and deliverables:
- Assign roles and clearly communicate responsibilities. This may involve establishing a go-to person from your credit union or creating a team that is dedicated to monitoring the vendor’s actions to confirm adherence to compliance issues.
- Ensure your employees are trained to comply with the requirements of your vendor management program.
- Make sure your vendor management system does not exist in a vacuum but interacts with multiple areas of the business (including legal) and is regularly reviewed and updated.
Red Flag #4: You Don’t Feel Supported
Support goes a long way in a relationship. According to psychologist Dr. Danielle Forshee, Psy.D, “Having psychological and emotional support in a relationship creates cohesion between two people. It exemplifies the level of attachment, love, and care, as well as stability and predictability of the partner. When support is not present, or when support is not consistently present, it renders the relationship vulnerable to being unsuccessful.”
Your relationship with your vendors should be built on support and commitment to treating each other as strategic, valued partners. You want to work with a vendor who pays close attention to your goals and puts in the work to help you achieve them. A healthy vendor relationship should involve a deep support system to help troubleshoot, review opportunities for improvement, and even be your champion when your credit union is doing well.
Between ghosting, catfishing, and other modern dating perils—avoiding red flags can be tough. But finding the perfect vendor relationship doesn’t have to be quite so difficult!
The SWBC Total Solution for risk management, payments, and income generation solves many vendor management challenges, including having just one company to contact and provide feedback on products, request support, or speak directly with our senior leadership. Your vendor management team will thank you for selecting one partner to provide essential products and services and reduce the burden of tracking multiple vendors. To learn more about the SWBC Total Solution, visit our website.