As the old verse goes, “make new friends, but keep the old. One is silver while the other is gold”. It is well recognized that this applies to the business domain as good as it applies to the personal domain. And, Financial Accounting Outsourcing (FAO) industry is no exception. Perhaps, it is more relevant in such domains which are highly competitive and where the life time value of one single client can potentially have significant influence on the value created by the organization.
The continued changes that alter the business landscape time and again throws up new opportunities and poses new challenges alike. These have an impact on Client Relationship Management as well. Gone are the days when sending out greetings on festival days and important occasions, along with a customary annual dinner, were good enough to manage Client Relationships. Today, its more of a partnership between the service provider and the client. And, therefore, the expectations as well as the approach and methods are very different.
In this article, we try to comprehend the Client Relationship Management challenges faced by FAO companies and some of the best practices adopted by them to address these challenges.
Challenges in FAO Client Relationship Management
- Geo-location and Time zone: The outsourcing of Financial Accounting activities to countries which are located in faraway corners of the world throws up this issue invariably. FAO companies will do well to factor it into the contracts, sensitize/train their employees accordingly and even adjust the working hours wherever there are no other options left.
- Language: Even though English is mostly used as the common business language across the globe, accents, slangs etc. throw up their own share of challenges. FAO companies need to take such factors into account while hiring and give necessary training whenever needed.
- Culture: Culture is a sensitive matter especially in certain countries. What is appropriate and acceptable in a certain country may be deemed totally inappropriate and unacceptable in another. So, the FAO partner organization need to take cognizance of this as they sign up new clients and sensitize/prepare their teams accordingly.
- Technology: Technology is ever changing. By design, outsourcing leverages technology and then there are applications which are specific to Financial Accounting. So, an FAO partner must be always alert about technology changes and ensure that they adopt the best possible technology and platform/tools for competitive delivery of services to their clients.
- Industry practices: Even though the fundamentals of Financial Accounting are the same across geographic regions and countries, there can be regional/country specific variations in the form of Generally Accepted Accounting Practices (GAAP). To mitigate this, most countries are now moving towards International Financial reporting Standards (IFRS). However, some countries are yet to adopt them while some of them follow older levels of IFRS which again results in variations. The FAO delivery team must be trained and well-versed with such matters so that the delivery meets the client requirement and the local accounting standards.
- Taxation: Taxation throws up yet another challenge for FAO companies, particularly when it comes to supporting international clients. Each country has its own tax system. The FAO delivery team must be trained and be abreast of the current tax laws in the client’s country, in order to ensure proper service delivery.
- Compliance: Each country has its own compliance laws too. Therefore, the FAO teams need to know them well in order to ensure proper compliance and take care of the client’s interests. Any lacuna in compliance can result in significant losses – financial and otherwise – to the client, which will severely affect the relationship.
- Inflexible clients: Sometimes the clients turn out to be highly inflexible and uncompromising. This pauses a serious challenge to the FAO partner as some degree of flexibility is required even in business relationships for them to work. Such clients need to be handles tactfully by the best suited manager in the team who can ensure that the relationship does not suffer.
- Unprofessional/incapable vendor management teams: Such situations must be taken up by the FAO company senior management directly with the client’s senior management before the delivery suffers and the relationship suffers.
- Control freaks: This is another difficult challenge that props sometimes. It takes time and patience to manage such clients. In most cases, such clients need to be shown better ways of doing things and the value that can be thus achieved to win them over.
- The silent ones: Clients who does not communicate pauses another major challenge. Such clients are among the most difficult to deal with. They need to be handled by able managers with excellent CRM skills who can make them open up and communicate.
- Lack of team spirit: Clients who consider FAO partners as external entities and outsiders, are difficult to deal with. It takes excellent inter-personal skills to win them over and get the collaborative spirit going.
Best Practices to Manage Client Relationships:
- Align your team with your client’s requirements and goals: Your team should clearly understand your client organization’s culture, business requirements and business aspirations. This is essential for efficient coordination between your team and the client organization team, which will ensures proper delivery of services and adherence to the Service Level Agreements (SLAs).
- Respect your client’ time: Time being the most valuable asset in the world, no one wants to waste it/spend it less optimally. FAO teams will do well to keep this in mind while interacting with client teams. A professional approach in keeping schedules and timelines has a significant impact on the client relationship.
- Be proactive in asking for your client’s requirements, queries and suggestions: A relationship should always be a two-way process. Your client team may have some doubts about the day-to-day activities or may have some suggestions on how to improve your business processes or may need some assistance (know-hows) from your side. Be proactive in asking your client about such things so that the business partnership can run smoothly without any ambiguity. Very often, you may need to analyze and communicate your client’s needs before they even realize it themselves. An FAO partner often understands its operating requirements only while executing its contract or services. This can cause delays in business operations and that can lead to souring of business relationships. So be proactive and analyze and communicate your client’s operating requirements beforehand.
- Get Face to Face: When things go wrong once in a while, which they will in any business activity, the best bet is to meet the client in person/have a tele-call rather than send an email. The personal touch will help in reducing the temper and rebuild the relationship.
- Have appropriate technology tools and software: Clients are anxious to see the progress in the service delivery and access reports from time to time. Sometimes, lack of adoption of suitable technology tools and software can lead to inadequacies in this area and thereby souring of business relationships. By using the required technology and tools, the client most often understands clearly what has been delivered and if its meeting the expectations and therefore there are no delays and misunderstandings.
- Under Promise and Over deliver: This is one sure shot method to win over your clients and have excellent relationship with them. Clients simply love such service providers as it helps them do better than they had expected.
- Avoid being Petty: FAO contracts are typically for long term. Therefore, its more like a true partnership. Clients do not expect their FAO partners to be petty in such an arrangement. Its better to avoid the tendency to be petty and make some short term gains at the cost of long term loss.
- Be open with your client and point out their mistakes clearly without hesitation: Often, enterprises, due to the fear of losing their clients, don’t point out their inefficiencies or mistakes. This tactic may be beneficial temporarily but will eventually cause massive loses in the long run. Some of it may even put the enterprise in legal and/or financial trouble later on. So, be frank with your clients to ensure that they provide the necessary inputs and follow the Standard Operating Procedures (SOPs) that were mutually agreed upon.
- Build Credibility Over Time: FAO partnerships, like any partnership, takes time to build trust and credibility. Be prepared to invest in building credibility through sound approaches as enlisted above.
- Be Transparent and Human: Clients like partners who admit their mistakes, which are bound to happen once in a while, and take appropriate corrective measures. It is better to be transparent and human rather than try to cover up and make up, as eventually the client will get to know and the relationship will suffer.
Good FAO arrangements have evolved as true partnerships these days. Therefore, the Client Relationship Management need to be looked at as partner management activity rather than an old style business relationship management activity. The best practices discussed in this article are likely to help FAO companies in this regard. However, the list is not final. There is scope for innovation and ingenuity in CRM too, as it is the case in any other activity.