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Vendor Agreement

Vendor Agreement – How To Complete The Contract Process?

Follow this listing for more secure and efficient offboarding when third-party vendor relationships are terminated.

Vendor agreement is the practice of withdrawing a vendor’s access to company infrastructure, data, and systems once a contract has ended. Any third-party risk management plan must include a well-thought-out approach for efficiently and safely offboarding vendors. Many businesses fail to completely offboard vendors, giving them access to IT environments and private data, which exposes security and privacy concerns. These post-contract exposures may lead to data breaches, compliance issues, reputational harm, and lawsuits. This is especially true for big businesses with a wide variety of segregated departments. As part of an ad hoc strategy, some organisations turn to use spreadsheets to attempt and keep track of hundreds of vendors across several business divisions. Although this could temporarily work, it usually leads to security flaws that could leave you open to a third-party data breach. This article offers a handy checklist you may use to make sure your vendor agreement process goes smoothly. A quick way to ensure proper offboarding of vendors, physical and digital security, and compliance with safety regulations is to have a vendor contract listing.

What is Vendor Agreement?

When you terminate a contract or other relationship with a third-party vendor, you must also remove them from your accounting and administrative records. However, only carry out vendor agreement when the vendor has satisfied all of its fundamental contractual and residual responsibilities, such as warranties and after-sales support.

By taking the proper steps with offboarding, you may reduce any hazards to your business. This includes making sure the supplier destroys all of your data that is in its possession and that it can no longer access your physical property or IT systems. You should also contact your finance department to discontinue payments to the vendor. Most commonly, businesses focus more on the structure and formality of their third-party management processes at the beginning, including sourcing and contracting, due diligence, risk management, and so forth. They don’t focus on the importance of thoughtful offboarding procedures enough.

Instances Where Vendor Agreement is a Logical Option

  • Breach of the conditions and commitments of the contract.
  • Changes at the supplier’s end, such as their inability to match demand and supply.
  • Receiving poor services or substandard products is a persistent problem.
  • A price increase or a change in commercial terms might not be in your best interest.
  • Poor performance in terms of timely and high-quality delivery of goods and services.
  • The bankruptcy of the supplier, a merger and acquisition, or a significant management change.
  • Alternative sources of service that may be more affordable or trustworthy.

No matter what, you should have a termination clause in your vendor contract that allows you to walk away from unsatisfactory service.

Vendor Agreement Listing

It can be simple to make sure that vendors are properly offboarded and that their access to IT environments and sensitive data is removed if you have a defined vendor agreement listing that is used consistently throughout the entire company.

1. Perform a Final Review of the Contract

Reviewing the contract should be your first move when offboarding a vendor. Verify if the vendor has delivered all the products and services that were required by the contract. Keep track of any modifications to the scope of work or necessary termination processes as the vendor agreement progresses. This makes it possible for you to efficiently go through your notes while you’re being offboarded to make sure the termination process is performed effectively.

2. Settle Any Outstanding Invoices

It can be simple to overlook making any final payments once a vendor has finished working for your company. Check with your finance department to make sure that all outstanding invoices are scheduled for payment after you have reviewed the contract and determined that the vendor has complied with their commitments.

3. Remove Access to IT Infrastructure

Third-party suppliers could continue to have access to IT infrastructure after the terms of the contract have expired if there is no defined offboarding workflow. There are two risks associated with this. First, there may be third-party compliance risks if the vendor has access to systems that contain sensitive data. Second, your company can be harmed if the vendor experiences a data breach or insider threat while still having access to your systems. Keep meticulous track of the systems that each vendor contract has access to. A centralised database for vendor risk management can make this procedure a lot simpler. Check each IT system thoroughly after the contract has ended to be sure that access has been completely removed. Document that all systems have been checked and that all access has been removed.

4. Revoke Access to Physical Buildings and Infrastructure

Many organisations place a lot of emphasis on IT systems and remote access, but it’s equally important to restrict access to physical buildings and systems. A starting number of data breaches are caused by insider threats, and by failing to withdraw physical access, you expose yourself to risk. Make sure that the procedure for controlling physical vendor access is crystal clear by working with your physical security staff.

5. Review Data Privacy & Information Security 

You are probably subject to a number of data privacy and information security compliance standards, depending on the nature of your organisation. CCPA, GDPR, CMMC, PCI DSS, and other regulations may be among them. Reviewing compliance standards and making sure vendor contract procedures adhere to legal obligations are crucial when offboarding vendors. Many businesses believe that data removal happens automatically after a contract is finished. Even after a vendor has been terminated, this irresponsible behavior might result in data breaches and legal repercussions. When a vendor has completed their contractual obligations, take the time to formally check that they have deleted any sensitive data they came into contact with.

6. Update Your Vendor Management Database

The last thing you should do is update your vendor management system with the results of all termination procedures. This gives you a single point of contact in case any queries about termination procedures and vendor access arise. Ensure that you have a record of all correspondence, agreements, and other communications between your company and the vendor so that you can readily address any future queries or problems.


Even risk management teams with plenty of people can become overworked by manually handling vendor agreement across a large organisation. While efforts like centralising vendor data and ensuring consistent offboarding procedures throughout the firm can be helpful, the majority of large organisations benefit from receiving professional legal assistance from Vakilsearch. Our legal professionals can help your company in understanding its post-contract exposure and implementing risk-reduction strategies. This makes it possible for you to confidently manage the entire vendor lifecycle and guarantee that you are using your internal risk management department to its fullest potential.

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