The best way to notify a vendor of the intent to discontinue service is to write the vendor a letter. The letter should use company letterhead and delineate the reasons for wishing to end service.
The terms of the termination must also be given. If there is a contract in place with the vendor in question, it is best to provide a quote from the document in a discontinuation of service letter, providing the terms of termination. The letter should state the reasons for discontinuation of services. If the vendor was not at fault in any way, an offer to recommend the company to others is a nice touch. The tone of the letter should be polite and professional throughout.