Vendor conflict disclosure letter

Your renewal file lacks the payment record

A recommendation says to replace the firewall, renew the licences or move up a tier. Your file shows the price. It rarely shows referral fees, resale margin, volume rebates, partner-tier benefits or sales incentives.

Ask in writing, so you can weigh the advice before you approve it. An unanswered question stays open in the decision record.

Send the same letter to your current provider, every firm quoting the work, every independent adviser, and SBK.

How to send it

• In writing. Email it or print it on letterhead, and file the reply with the contract. If the provider wants a call, take it, then ask for the answers in writing.
• To a principal. Address the owner, managing partner or president. The account manager can confirm receipt.
• Early. Send it 60 to 90 days before renewal, at the start of the budget cycle or as a relationship begins. The week before a deadline leaves you no options.
• With a deadline. Ask for answers within 10 to 15 business days, and leave unanswered items open.
• To everyone. The incumbent, each bidder, each adviser and SBK all get the same letter. Compare the answers side by side.
• Naming the decision. Put the renewal, quote or budget in the subject line.
• Kept on file. File the reply with the contract and approval. Send it again each year, since fees, tiers and ownership change.

The letter

Copy it, replace each bracketed field and set the exact deadline.

[Your organisation’s letterhead]

[Date]

[Name]
[Title]
[Provider firm name]
[Address]

Request for disclosure of vendor compensation and commercial relationships

Dear [Name],

We are reviewing the commercial arrangements behind the technology advice and products we receive. We apply this review to every firm that advises us or sells to us, old and new. It is not a comment on your work.

We rely on your firm’s recommendations for purchasing and architecture decisions. To weigh them, we need to know what commercial interests are attached. We ask for disclosure, not for changes to how you operate.

Please answer each of the eleven items below in writing by [date, 10 to 15 business days away]. Where an item does not apply, please say so rather than leave it blank.

A range or percentage is enough for a variable amount. If a figure is confidential, please say so, name the counterparty and describe the arrangement in general terms.

A. Direct compensation

1. Does your firm receive referral fees, finder’s fees, commissions or other payments from a vendor, distributor, carrier or service provider? We mean payments tied to products or services recommended to us or bought by us. Please name each vendor and the basis of payment.

2. Does your firm receive rebates, back-end incentives, volume bonuses, growth accelerators, or market development or co-op funds? We mean from any vendor whose products we use or were recommended. Please name the vendors and how the amount is set.

3. Does your firm hold a partner, reseller or certification tier with any vendor whose products we use or were recommended? We mean a tier that depends on sales volume, revenue or customer count. Please name each vendor, the tier and its criteria.

B. Resale and margin

4. For each product, licence, subscription or hardware item we buy through you, which role do you play? Are you a reseller, an agent or a pass-through? Please list each item and its category.

5. Where you act as reseller or agent, what is the difference between what you pay and what we pay you? A percentage margin or a range is enough.

C. Credits, funds and personal incentives

6. Does your firm receive implementation credits, deployment or migration funds, proof-of-concept funding, training vouchers, free licences or similar? We mean from any vendor, for work done for us. Please name the vendor and what was received.

7. Do the people who advise us receive commissions, sales incentives, spiffs or performance pay tied to what they recommend? This covers salespeople, account managers, engineers and technicians. Please describe the structure.

D. Ownership and affiliation

8. Do your firm, its owners, officers, directors or affiliates hold an interest in any vendor recommended to us? We mean ownership, equity, a convertible instrument or a board seat in a vendor, distributor or service provider.

9. Is your firm owned in whole or part by a private equity firm, holding company or parent? If so, does that owner hold an interest in any vendor, MSP or software company we use or were recommended? Please name the parent and the interest.

E. Switching cost and exit

10. If we ended this relationship, which of these would we own outright? Which would be lost, need repurchase or need your help to transfer?

• Software licences and subscriptions.
• Admin ownership of our cloud tenants.
• Domain registrations.
• Monitoring and management agents.
• Backup data and backup infrastructure.
• Documentation and network diagrams.
• Credential and password records.
• Ticket history.
• Custom scripts and automation.

11. For each product or service bought through you, please state the term and renewal date. Please also state the notice needed to stop auto-renewal and any early exit charge. Please also state what transition help you would give on termination, and whether it is billable.

We appreciate a direct answer. If an item is unclear, please tell us what you took it to ask and answer that.

Sincerely,

[Name]
[Title]
[Organisation]
[Phone]
[Email]

The scorecard

Score each item on its own as you read, before you form a view.

#	Item	Fully disclosed	Acknowledged, no specifics	Declined	No response	Notes
1	Referral fees and commissions
2	Rebates and incentive funds
3	Partner tier and volume criteria
4	Reseller, agent or pass-through
5	Margin on resold items
6	Vendor credits and funding
7	Personal incentives
8	Ownership in vendors
9	Parent or investor overlap
10	What we own on exit
11	Terms, renewal and exit cost

Then answer three questions.

Question	Answer
In the last 12 months, how many recommendations involved a product earning this firm margin, a fee or tier credit?
Has this firm ever advised us to keep what we have, spend less or buy nothing? Name one case.
If never, when would that be the right advice, and would we ever hear it?

The second question is the real test. A firm that earns more when you buy more will advise buying more, and the advice may still be right. Look for whether “do nothing” is ever in its vocabulary.

Reading the answers

Complete answers

Complete answers are itemised, with real percentages or ranges, named vendors and a clear yes or no for each arrangement. They come in writing without a second request. A firm that volunteers something you did not ask about sends the strongest signal of all.

A firm that discloses a 22% hardware margin and a gold tier with a named vendor is not ruled out. It has told you the truth and given you a way to judge its next hardware advice. That beats a firm claiming no conflicts.

Vague answers

Lines such as “we are vendor agnostic” or “we always put the client first” describe intent. You asked about structure, so ask once more.

Answering some items fully and skipping others tells you something. Note which were skipped, since it is rarely random.

Refusal and evasion

Record these beside the approval decision.

• Refusing to write, but offering a call.
• Calling every item confidential, including items 10 and 11, which concern your own contract.
• Pointing to the signed contract instead of answering.
• A price cut, credit or concession arriving with the reply, which changes the subject and usually works.
• A sudden push to close a pending renewal or purchase.
• “After eight years, I am surprised you would ask.” The length of a relationship is not a disclosure.
• Silence, which answers all eleven items at once.

Using what is disclosed

An undisclosed conflict is the problem. A disclosed one is a fact you can use.

• Weigh advice accordingly. A recommendation to replace a system counts for more from someone who earns nothing on it.
• Get a second opinion on big items. Do it above your own spending threshold, and wherever the advice is also the highest-margin path.
• Ask for the alternative. “What would you advise if you earned nothing on this?” is fair once a firm has disclosed what it earns. A different answer is valuable.

Send SBK the same letter

SBK pays no one a referral fee for sending a client. It shows no vendor partner badge, since it holds none.

Send us the letter anyway, and hold us to our written answers. Any firm that asks you to run this test should sit it too.

File the answers with the decision

This letter is a template for a business governance request. It is general guidance, not legal advice. It creates no legal duty for a provider to answer, and it alleges nothing about any firm.

Involve counsel before acting on a reply through an amendment, a termination or a dispute. Adapt the wording, and delete or add items for your industry. An edited letter serves you better than an untouched one.

SBK will read completed answers before a renewal or purchase if you want an independent view. Call (718) 407-4169.