"Start at the divorce and work your way backwards." At our firm, that is what we always advise our employer-clients when they consider entering into a contract with a new vendor. In business, terminating a relationship can have serious ramifications, especially if close attention isn't paid to contractual obligations or a vendor decides to be less than professional.
A good contract is like a well-designed prenup prior to a million-dollar celebrity marriage that turns into a quickie divorce less than three months later. Often, the vendor will have a standard contract stating termination procedures and fees.
When inheriting a client, however, we have found missing, inaccurate or nonexecuted contracts that can create additional client liability. So, reviewing current vendor contracts is one of the first steps in our due diligence with a new client. We have found that even some of the group reps have never actually read their own company's certificate or policy.
It's never easy to terminate a vendor but by using the detailed checklist here, you can help set expectations, provide a roadmap for terminating various types of vendors and point out potential "gotchas" that can wreak havoc on the process.
Vendors can create barriers to the change by providing roadblocks such as large termination fees or reporting fees. We've found, though, that those vendors who understand that providing a professional termination experience leave the door open for another opportunity to win the employer's business at a later date.
Contributing Editor Laurie S. Miller is president of Miller, Buettner & Parrot, Inc., an employee benefits consulting firm in Rockford, Ill. The firm consults with more than 50 public entities and also has a large corporate practice. She can be reached at
