How to Build a Vendor Contract Register

Vendors are often not given much thought. After all, the service they provide is not core to your business plan but rather enables you to pursue your company objectives. We believe that occasional attention should be paid to vendors for two reasons:

(1) Just as your customer contracts are the target asset of potential buyers, vendor contracts are the liability they are taking on. It behooves you to do some upfront work to keep vendor contracts ready for inspection when the time comes. Be sure to include detailed notes on account status and communication.

(2) Upon sale, you will need to affirm that none of your contracts is in dispute or in technical non-compliance. A buyer will also want to make sure a vendor is not giving you un-contracted benefits that could expire during the transaction.

(3) Depending on the expense category, vendor expenses directly affect your Gross Margin or your EBITDA. Either way, they affect your bottom line. Just as in our personal lives, expenses need to be kept in line. Potential buyers and investors look at your GM and EBITDA to judge your profitability. As a company, you need to have money in the bank to pursue the sales, R&D and growth strategies that help you achieve your goals.

The impact: A vendor contract register is a helpful tool to track your vendors, expenses, and contract terms. You are tracking renewals and notice terms so that you are fully prepared for bills and can send in timely termination notices if needed.

The goal: Build a Vendor Contract Register in an easily accessible template.

Steps

1. Assemble all the current vendor contracts to which your company is party. Past vendor contracts would be helpful as well.
2. Enter relevant information into template provided.
3. Codification: Save this document to its own folder. In this folder also save all past and current executed contracts. Continue adding to this document and saving contracts as they are executed.