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Having Your TEM Negotiate Your Telecom Service Agreements is Just so Hit or Miss

The TEM providers want to move up the food chain like everyone else, and one way they get a foot in the door-and land the long term bill processing contracts that are their bread and butter-is by offering to negotiate terms and conditions for very little (sometimes nothing). But as always in life, you get what you pay for.

After all the hard work involved in negotiating lower rates, it can be tempting to devalue the negotiation of contract terms-delays will cost money (or so the carriers will tell you), and you would rather pet a porcupine than spend time or money butting heads with a carrier lawyer. That puts a premium on quick negotiations and inexpensive help.

But lower rates will only help your bottom line if they actually apply, aren’t offset by other costs, and aren’t accompanied by large and potentially costly risks. Avoiding those is a function of your contract and the documents it incorporates by reference, not what the account team (or your adviser) says. The wrong commitment terms or inappropriate early termination charges, to cite just two examples, can quickly consume the savings you thought you were getting.

In the same vein, the risks that you take when you accept the carrier’s boilerplate (or something close to it) on indemnification, shortfall charges, commitment reductions, rate review, etc., can come back to haunt you. If you want to get what you thought you negotiated and not lie awake worrying about hidden costs or “gotchas”, these issues should be addressed by advisors that have spent decades negotiating the language that addresses these critical issues.

Get great rates out of your carriers. Then get someone who really knows this stuff to help you do the rest.

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