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A Treasurer’s Guide to RFPs

  • By Mark Webster
  • Published: 2/8/2016

teamRequests for Proposal (RFPs) are something that almost every treasury department has to deal with at some point. Whether you’re soliciting new banking services or a treasury management system, RFPs are an important part of vendor relationship management and a tool that should be in every treasury professional’s toolbox. Unfortunately, they’re not something that you do every day or even every year. As a result, it’s easy to overlook something or just not have the available free time to put in the effort needed for an effective RFP process.

RFPs are not rocket science, but they do need time and attention if they’re going to be effective. A poorly prepared or managed RFP process can result in poor service and vendor problems for years to come. But a well-tuned RFP, emphasizing your specific needs and issues, can produce a purchasing decision that satisfies everybody.

Beginning the RFP process

Some people assume that they can use “canned” or standardized RFPs to shortcut the time and effort needed. While standard RFPs can be a great starting point, they are almost always too generic and don’t focus on the specific questions that are important to you. The other major problem with pre-packaged RFPs is that they usually include a long laundry list of questions. Bear in mind that you’re not only asking your vendors to spend time answering all those questions; you’re going to have to spend time and effort reviewing all of the answers. Specific questions that address your issues are much better for both of you. If the answer won’t really make a difference in the selection process, don’t ask the question to begin with.

The actual RFP process has four major steps:

  • Determining your needs and requirements
  • Writing the actual RFP
  • Selecting vendors and managing the RFP process and
  • Evaluating the responses and choosing a final vendor.

Determining your specific needs and requirements is the most important step in creating a successful RFP. You need to develop a clear understanding of what you need and why you need it—not only what you want today, but also what you will need tomorrow.
You also need to develop a project plan with specific deadlines and completion dates that everyone agrees to. As part of this process, determine the resources you will need to complete the project and identify the internal resources that you will have available to help. If you’re going to need outside resources, now is the time to arrange for them.

The second step is the actual drafting of the RFP. Again, shorter is better. Your vendors are going to have to respond to all of the questions you ask and more importantly, you’re going to have to review all of those responses. Only ask questions that will actually impact your final decision.

Narrowing down the vendors

Now that you’ve written the RFP, you need to decide which vendors you are going to ask to respond. As with questions, the fewer the better. If you know ahead of time that a particular vendor isn’t going to get the business, don’t ask them to spend the time and effort to respond. Talking to peers can help identify who can realistically meet your service requirements. If possible, give your vendors advance warning that you’re going to be issuing an RFP. Then send it out electronically and request verification that it has been received. Don’t short cut the response time if you want good proposals.

The final step in the process is evaluating the actual responses. Select an evaluation team from the various stakeholders and have them review and rate each of the responses individually. Then get together and create a final evaluation as a group. This process can be simplified by providing a standardized scoring template that focuses on your key issues. The goal is to identify two or three finalists that you will ask in to present to the team.

With vendor meetings, a best practice is to provide a specific script ahead of time to assure they answer your questions and don’t just provide a generalized marketing pitch. This is especially important if there are any technical demonstrations as part of the final review. Ask the vendors to discuss their implementation process and resources, and if possible, bring their implementation lead to the meeting. Watching how the respondent’s team manages their time and answers your questions can be quite revealing. It’s not uncommon for the vendor that had the best written RFP to lose out in actual face to face meetings.

Your evaluation team should rate each vendor immediately after their presentation. There is a tendency to wait until you have seen all of the vendors, but this can favor the final presenter as memories can fade during subsequent presentation. If there are any follow-up items, make sure you have firm deadlines for the responses. Use the evaluation results to rank the vendors and identify your finalist.

Once you have finished all of the vendor presentations, you can typically select a specific one and begin negotiating contracts. Remember that RFP scoring is only a tool and you need to select a vendor that you’re comfortable with. Hopefully you’ll be working with them for many years.

Mark K. Webster, CPA, CCM, is a partner with Treasury Alliance Group.

A longer version of this article will appear in an upcoming edition of AFP Exchange.

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