QA: How to end a Vendor Relationship?

Question: My vendor isn’t performing, how do I get out of this in a professional manner?

Sent in by Courtney, Tulsa, OK

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When a vendor is not performing to your expectations, it can lead to a pretty stressful situation. Not only are they disappointing you but if you’re the person representing their work or the project to your organization, it can make you look pretty bad as well.

That being said, always be professional. So if you’re frustrated and need to vent, do so outside of your professional environment. One trick I use is Venting to a Blank Email. Create a new email message, make sure there is NO EMAIL IN THE SENDER FIELD and let out all your anger and frustration. THEN, delete that email and let’s start with the email that you need to write.

1. Stop the work – Once you have decided that there is absolutely no way that this vendor can meet your needs, your top priority is to get them to stop logging hours and stop work.

Based on your situation you have a few options for language here:

  1.  “Thank you for your work thus far. At this point, I need you to stop all work on this project until we can reassess our vision and how to best execute it.”
  2. “While I appreciate you trying to incorporate our feedback thus far, it’s in everyone’s best interest to stop work on the project at this point.”
  3. “After reviewing the progress and delivery of the project, we need to pause and reassess our priorities and the deliverables we’re looking for.”
  4. “While you are skilled in your craft, it seems that we are still misaligned or misunderstood in our deliverables and we need to stop the project at this point. Please do not log any more hours.”

Use the language you feel comfortable with. Keep the professional and polite in order to get the best possible outcome to a tense situation. But most importantly, get your point across that they are not to accrue any more hours.

2. Calculate the funds – What has been paid? What still needs to be paid? Typically a vendor is paid one of two ways – 1. By Project with a deposit at the beginning, for various milestones and at the end, 2. Contractor Hours where the vendor logs hours of work and invoices once the work is complete.

Once you’ve stopped the work you need to calculate the time, effort and value of the work completed up to this point. Be fair in your assessment so you don’t end up in court down the line.

  1. If you still owe them money for their work – Agree to pay them upon release of the assets.
  2. If they owe you a refund – Write up the value associated with their work thus far and the agreed upon original terms. Explain how much value the assets they’ve created add to your business (it’s ok to say they are completely unusable, if they are.) And come to an agreed upon number.

3. Get possession and rights to the assets and work completed or in progress – You’ve paid for this vendor’s time and skills, you own the rights to the work they created for you even if it’s not completed. Even if you think there is no value to what’s been created at this point, collect everything created. This might make a great discussion tool for better specifying your needs when working with your next vendor on the same project or you may be able to pull some scraps of usefulness out of it. Make sure this is all in a written email string especially when dealing with copyright concerns.

IMPORTANT – Once you’ve asked them to stop working and you’ve calculated the final amount you owe them, do not send the money until they send you the assets. You want to make sure that you received the work you expected to receive for the final agreed upon amount to be paid.

If they owe you a refund, they will probably send the refund and assets at the same time.

4. Be gracious – Vendor/Client relationships don’t work out for a number of reasons: Poor communication, misaligned priorities, confused goals etc. Don’t assume that your bad experience with the vendor is universal across all that vendor’s clients. You two may have just been unable to get on the same page, which means that this end can be very amicable and respectful.

It’s also important to end the agreement in a civil manner because you are building your reputation as a client. Especially if you’re in a niche industry, your vendors talk about their worst clients just as much as you discuss terrible vendors with your peers. End things civilly and walk away from what hopefully is a rare occurrence in your professional life.