Not long ago, our CEO was meeting with a potential client to learn more about their existing service contracts on their financial equipment. The CFO was stunned to discover that they had been paying for service on a coin machine that was still under warranty from the manufacturer. How could this have happened? You may be surprised to find out just how often a case of duplicate coverage on financial equipment crops up.
Three Causes & Strategies to Avoid Duplicate Coverage
We’ve identified THREE ways a financial institution could find themselves with duplicate coverage on equipment and offer some suggestions on how to prevent it from happening.
Duplicate coverage can happen because of a merger. Often, the acquired financial institution has outdated service contracts that don’t accurately reveal how service is obtained. Vendors may not send new contracts every year, but just renew by sending an invoice year to year. In smaller institutions, personnel are prone to calling a local service provider, regardless of who may be contracted to provide the maintenance. The result? The acquiring financial institution covers equipment under an agreement unaware that there are existing service contracts in place.
To prevent this scenario, we suggest financial institutions:
- Request all contracts from the acquired institution. This is typically where the discovery process ends during an acquisition.
- Interview branch personnel to determine who is contacted for service needs on their equipment items. Usually, the service provider that is called is more reliable than the actual written contracts.
- Document this information on a spreadsheet so it is clear which vendor provides service for each piece of equipment. Or, use the database inside of Equips to house all of your financial equipment information.
A communication breakdown between a local branch and the main location is another way duplicate coverage occurs. Sometimes the main location has a service contract on an item, but the individual branch purchases service from a vendor of their own choosing.
Improving the communication between these entities is the solution. Financials should:
- Document who the ‘owners’ responsible are for equipment purchases and maintenance contracts by class. This can be at the branch level, but it is a simple way to resolve confusion. For example, Betty owns coin/currency, so any purchases–including service–must funnel through Betty.
- Make sure branch personnel are aware of their purchasing authority and spend levels.
Circling back to the client example we started with…duplicate coverage can happen when service from a third party is obtained for an item that is still covered by warranty. This is the result of a communication disconnect from the purchaser to the person requesting service.
We recommend addressing this at the point of purchase. Financial should:
- Make sure that the purchasing authority is thinking down the road to how equipment is ultimately going to be maintained.
- Create a centralized inventory list that details the service provider & start/end dates of warranties.
- Be clear about what is covered under warranty. Often a warranty only covers parts and you will pay high labor rates from the manufacturer. Or, if a third-party is providing service, make sure they are aware of warranty provisions, so they can process warranty requests for covered parts.
- Establish a transition plan for warranty coverage to the ultimate service provider. This could be as simple as setting up calendar reminders for the date the warranty expires, and the new service contract begins.
What to do if You Find Duplicate Coverage
If you do discover duplicate service coverage on a piece of financial equipment, you do have some recourse. Make an appeal to one of the providers and ask to be released from the contract and your investment refunded. While this may not be successful, at a minimum you may get a credit for future coverage and purchases. It is also a test of how strong your business partnership is with that provider and may give you reason to look elsewhere for your service needs. Another option is to look at the cancellation provisions within the overlapping contracts and cancel whichever contract is the least penalizing.
A final word of advice is to make sure you have opted out of any auto-renewals for both service providers. Communicate your intentions to discontinue the auto-renewal for at least one of the providers so you don’t roll over coverage you don’t need.
If you would like to learn how Equips can help you obtain and manage service on all your financial equipment, contact us here or via email at email@example.com.
Additional Budgeting Resources
Budgeting for Financial Equipment Maintenance >
Tips to Increase Accuracy in Budgeting for Equipment Maintenance >
3 Reasons You Need Independent Advice on Maintaining Financial Equipment >
Equips is revolutionizing how Banks and Credit Unions manage, maintain, and protect critical branch equipment. Leveraging a network of 500+ vendors, experts at Equips help Financial Institutions respond to equipment problems quickly in one place: Equips. Active management allows Financial Institutions of all sizes to improve operational efficiency, cut costs, and streamline equipment inventory and vendor management. Our groundbreaking solution provides clients across 45 states with better insight and transparency into their critical equipment and enables employees to do their best work. To learn more visit equips.com.