Risk Management

5 Red Flags to Watch for in Vendor Contracts

Common clauses that create renewal risk, surprise price increases, and loss of negotiation leverage — and how to mitigate them.

1/20/2025
5 min read
5 Red Flags to Watch for in Vendor Contracts

The most expensive contract risk is the one you don’t notice until it renews. Watch for these clauses early.

1) Auto-renew with long notice periods

60–90 day notice is common. If it’s hidden or non-negotiable, it increases renewal risk.

2) Price increase language without caps

Look for annual uplifts and pricing tied to indices. Push for caps where possible.

3) Silent renewals with invoicing after renewal

Some vendors invoice after renewal begins. You lose leverage when you find out late.

Conclusion

Flag these early, track notice windows, and route alerts to owners so decisions aren’t made under pressure.