Reviewing Vendor Contracts: Protecting Your Small Business
Staring at a vendor contract and wondering what you're really signing up for? You're not alone. Let's break down vendor contract review in a way that makes sense—no law degree required.
Why Vendor Contracts Matter
Your Business Safety Net
- • Defines what you get and when
- • Protects your cash flow
- • Prevents operational disruptions
- • Sets clear responsibilities
"Imagine counting on a shipment for your holiday collection, but it arrives late—or not at all. Without clear contract terms, you're left holding the bag."
Real-World Example: The Furniture Maker's Story
Meet Our Example Business:
The Business
Small furniture manufacturing company
The Contract
Lumber supply agreement for cedar and oak
Key Clauses to Watch
1. Delivery Terms
What to Check:
✓ Exact delivery dates or timeframes
✓ Penalties for delays
✓ Shipping cost responsibility
Pro Tip:
Add a "time is of the essence" clause to emphasize delivery timing importance
2. Payment Schedules
What to Check:
✓ Payment due dates
✓ Accepted payment methods
✓ Late payment penalties
Pro Tip:
Request net-30 terms for better cash flow management
3. Liability
What to Check:
✓ Indemnification terms
✓ Product/service warranties
✓ Liability limits
Pro Tip:
Push for a 90-day warranty and reasonable liability caps
Protect Your Business Today
Don't let unclear vendor contracts put your business at risk. Get a free risk assessment with OpenAmend and review your contracts with confidence.