module six: client relationship management - cpa australia
TRANSCRIPT
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Mod
ule
Client Relationship Management
6
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International Federation of Accountants529 Fifth AvenueNew York, NY 10017 USA
This Guide to Practice Management for Small- and Medium-sized Practices was prepared by the International Federation of Accountants (IFAC) with support from its Small and Medium Practices Committee. The committee represents the interests of professional accountants operating in small- and medium-sized practices and other professional accountants who provide services to small- and medium-sized entities.
This publication is available on the IFAC website. The approved text is published in the English language.
IFAC serves the public interest and strengthens the accountancy profession by:
·· Supporting the development of high-quality international standards;·· Promoting the adoption and implementation of these standards;·· Building the capacity of professional accountancy organizations; and·· Speaking out on public interest issues.
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. For further information, please email [email protected]
Exposure Drafts, Consultation Papers, and other IFAC publications are published by, and copyright of, IFAC.
IFAC does not accept responsibility for loss caused to any person who acts or refrains from acting in reliance on the material in this publication, whether such loss is caused by negligence or otherwise.
The IFAC logo, âInternational Federation of Accountantsâ and âIFACâ are registered trademarks and service marks of IFAC in the US and other countries.
Copyright © 2018 by the International Federation of Accountants (IFAC). All rights reserved. Written permission from IFAC is required to reproduce, store or transmit, or to make other similar uses of, this document, save for where the document is being used for individual, non-commercial use only. Contact [email protected]
ISBN: 978-1-60815-350-3
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CONTENTS
6.1 Introduction ....................................................................................................................... 309
6.2 Knowing Your Client ......................................................................................................... 309
6.2.1 Client Questionnaire ............................................................................................... 310
6.3 Reviewing Your Client Base ............................................................................................. 312
6.3.1â ClientâClassificationâ................................................................................................. 312
6.3.2â BenefitsâofâClientâClassificationâ............................................................................... 313
6.4 Measuring and Exceeding Client Expectations ............................................................. 314
6.4.1 What do Clients Want? ........................................................................................... 315
6.4.2â MeasuringâClientâExpectationsâ ............................................................................... 315
6.4.3â ExceedingâClientâExpectationsâ ............................................................................... 316
6.4.4 Internal Versus External Strategies ......................................................................... 320
6.5 Benchmarking Service Levels ......................................................................................... 322
6.5.1â Benchmarksâ ............................................................................................................ 322
6.6 Embracing Opportunities for Enhanced Relationships ................................................ 325
6.6.1 Using Gap Analysis ................................................................................................. 325
6.6.2â Summary:âMaximizingâOpportunitiesâ ...................................................................... 327
6.7 Developing Strategies to Provide a Full Range of Quality Services ............................ 327
6.7.1â IdentifyingâtheâServicesâRequiredâinâtheâMarketplaceâ ............................................. 328
6.8 Strategies for Providing a Full Range of Quality Services: Mergers, Networking, Referrals ....................................................................................................... 330
6.8.1â CommonâConcernsâwithâReferralsâorâIntroductionsâ ................................................ 330
6.8.2 Mergers ................................................................................................................... 331
6.8.3â Cherry-Pickingâ ........................................................................................................ 332
6.8.4â Alliancesâ .................................................................................................................. 332
6.8.5â Referralsâ ................................................................................................................. 332
6.9 Invoicing and Collection .................................................................................................. 334
6.9.1 Credit Control .......................................................................................................... 334
6.9.2â CollectionâTechniquesâ ............................................................................................. 334
6.9.3â SomeâFundamentalâRulesâ ...................................................................................... 334
6.9.4 Why Clients Donât Pay ............................................................................................ 335
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6.10â ConflictâResolutionâandâArbitrationâServicesâ .............................................................. 336
6.10.1â FiveâSignsâofâRisingâConflictâ ................................................................................ 336
6.10.2â DealingâwithâConflictâ ............................................................................................ 337
6.11 Ceasing a Client Relationship ........................................................................................ 339
6.12 Conclusion ...................................................................................................................... 340
6.13â FurtherâReadingâandâIFACâResourcesâ .......................................................................... 340
Appendix 6.1 Case studies .......................................................................................................... 341
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6.1 Introduction
Theârelationshipâaccountantsâhaveâwithâtheirâclientsâisâfundamentalâtoâtheâvalueâofâtheâaccountancyâfirm.âIncreasedâcompetitionâdemandsâthatâaccountantsâshoreâupâtheirâclientârelationshipsâsoâthatâclientsâareâlessâvulnerableâtoâpersuasionâfromâcompetitors.
Eachâwordâinâtheâtermââclient-relationshipâmanagementââisâimportant.
·· âClientââimpliesâanâongoing,âprofessionalârelationship.âThisâmeansâthatâonceâanâinitialârelationshipâisâestablished,âbothâtheâfirmâandâtheâclientâintendâtoâcontinueâtoâdealâwithâeachâother.
·· âRelationshipââimpliesâthatâtheâassociationâbetweenâclientâandâfirmâisâmoreâthanâaâsimpleâtransaction,âorâaâone-timeâpurchaseâofâaâservice.âItâisâoftenâtheâcaseâthatâtheâclientâsharesâprivateâorâconfidentialâinformationâwithâtheâfirm,âandâhenceâaâlevelâofâtrustâisâestablished.âBothâtheâclientâandâtheâfirmâcomeâtoâknowâeachâotherâandâgainâanâunderstandingâofâhowâtheâotherâworks.
·· âManagementââimpliesâthatâtheârelationshipâdoesnâtâjustâhappen,âitâneedsâtoâbeâmanaged.âThisâmeansâthatâthereâisâanâactiveâinvolvement,âmoreâthanâjustâtheâfirmârespondingâtoâclientârequests.
Establishingâaâdeeperâclientârelationshipâmakesâgoodâcommercialâsense.âItâhasâbeenâestablishedâoverâaânumberâofâsurveysâthatâitâcostsâfarâlessâtoâretainâaâclientâthanâitâdoesâtoâacquireâaânewâone.âThisâshouldâbeâofâparticularâinterestâtoâaccountants,âwhoâareâoftenâveryâconcernedâwithâmattersârelatingâtoâcostâandâcostâmanagement.
Noâmatterâhowâdeep,âorânot,âyourârelationshipâisâwithâyourâclient,âitâisâimportantânotâtoâoverlookâtheâbenefitsâofâaâproperâengagementâletter,âwhereâitâisânotâalreadyâmandatedâbyârelevantâstandards,âinâwhichââwhoâisâdoingâwhatâandâwhenââisâfullyâdocumented.âAâproperâengagementâletterâwillâhelpâyouâduringâtheârelationshipâandâalso,âifânecessary,âwhenâendingâit.
6.2 Knowing Your Client
âKnowingâyourâclientââcertainlyâmeansâunderstandingâtheirâbusinessâaffairs.âItâsâalsoâaboutâunderstandingâwhatâmotivatesâthem,âwhatâtheirâfearsâare,âandâwhyâtheyâdoâwhatâtheyâdo.
Itâsâvaluableâtoâunderstandâwhatâsâimportantâtoâyourâclientsâtheirâvaluesâandâtheirâcoreâcharacteristics.âItâalsoâreallyâhelpsâifâyouâunderstandâtheâvisionâtheyâhaveâforâtheirâbusiness.âKeepâinâmindâyourâclientsâhaveâlivesâseparateâfromâtheirâbusiness:âaâbusinessâcanâbeâaâpersonâsâescape,âtheirâmeansâofâmakingâaâliving,âorâtheirâmodeâofâexpression,âbutâisânotânecessarilyâwhoâtheyâare.
Theâserviceâyouâprovideâwillâbeâwellâregarded,âandâvalued.âWhenâyouâachieveâthisâlevelâofârelationship,âpriceâbecomesâlessâofâanâissue.âTheâclientâbecomesâlessâconcernedâaboutâtheâlowestâpriceâbecauseâtheyâareâgettingâsoundâadviceâfromâtheirâtrustedâadviser.â(Theyâwillâstillâwantâgoodâvalue,âthough!)
Gettingâtoâknowâyourâclient:
·· Buildsâaâcloserârelationship;
·· Strengthensâyourâpositionâasâtheirââtrustedâbusinessâadviserâ;
·· Meansâthatâpriceâbecomesâlessâofâanâissue;
·· Increasesâclientâloyalty,âwhichâmeansâclientsâwillâbeâlessâinterestedâinâapproachesâfromâcompetitors;
·· Increasesâclientâretention,âandâthereforeâprofitabilityâandâvalueâofâtheâfirm;
·· Increasesâstaffâsatisfaction,âasâtheyâalsoâbuildârelationshipsâwithâclients;
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·· Increasesâefficiencies:âyourâfirmâandâitsâclientsâknowâeachâotherâsâsystemsâandâmethodsâandâhowâtoâworkâtogether;âand
·· Tendsâtoâbeâmoreâprofessionallyâsatisfying.
Thisâmoduleâprovidesâassistanceâtoâthoseâwhoârealizeâtheâbenefitsâofâdeepeningâtheârelationshipâwithâtheirâclientsâandâareâlookingâforâwaysâtoâdoâit.
6.2.1 Client Questionnaire
Theâbestâwayâtoâgetâtoâknowâyourâclient,âandâunderstandâtheâclientâsâvisionâandâlong-termâplans,âisâsimple.âYouâmustâaskâthemâandâbeâgenuinelyâinterestedâinâtheâanswer.âThisâworksâbestâwhenâdoneâinâaâstructuredâway.
Twoâclientâquestionnairesâareâprovided,âoneâwithâaâbusinessâfocusâ(seeâTableâ6.1),âtheâotherâwithâaâfamilyâfocusâ(seeâTableâ6.2).âYouâcanâuseâthisâformat,âorâuseâtheâideasâtoâdesignâyourâownâquestionnaire.
Whenâyouâmeetâyourâclientâandâaskâtheâquestions,âmakeâsureâyouâgiveâthemâtimeâtoâanswerâfully.âTakeâtheâtimeâtoâlisten.âClientsâoftenâlikeâtoâelaborateâonâtheirâanswers,âasâtheyâareâkeenâforâyouâtoâunderstandâthemâandâtheirâplansâbetter.âYouâmayâchooseâtoâuseâaâformalâapproachâ(suchâasâaâquestionnaire)âorâengageâthemâinâconversation,âgatheringâusableâinformationâinâaâlessâformalâmanner.
Table 6.1 Sampleâclientâquestionnaire:âBusiness
Question Reply/Comment
Client:â
Directors:â
Owners:
Ageâofâdirectors/owners
Whatâisâtheâmainâpurposeâofâtheâbusinessâ(describeâproducts,âservices,âandâclientâprofile)
Experienceâinâbusiness
Timeâinâcurrentâbusiness
Expertiseâinâcurrentâbusiness
Whatâisâyourâcurrentâbusinessâplan?
Whatâdoâyouâwantâtoâachieveâinâthisâbusiness?
Haveâyouâundertakenâaâcompetitorâanalysisâand/orâreviewedâindustryâbenchmarks?
Whatâareâyourâgoalsâandâkeyâobjectives?
Whereâdoâyouâseeâyourâbusinessâinâtwo,âfive,âandâtenâyears?
Twoâyears:â
Fiveâyears:â
Tenâyears:
Whereâisâyourâbusinessânowâinârelationâtoâwhereâitâneedsâtoâbe?
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Question Reply/Comment
Whatâareâtheâkeyâstepsâyouâneedâtoâtakeâtoâgetâthere?
Whatâmightâstopâyouâfromâgettingâthere?
Whatâareâtheâmostâimportantâthingsâyouâwantâfromâyourâaccountant?
Whatâareâyourâkeyâfrustrations?
Identifyâkeyâemployees
Noteâtheâlengthâofâtheirâservice
Whatâareâtheirâambitions,âgoals,âandâobjectives?
Howâlongâdoâyouâwantâtoâstayâinvolvedâinâthisâbusiness?
When do you plan to retire?
Whatâelseâdoâyouâlikeâtoâdoâapartâfromâworkingâinâtheâbusinessâ(hobbies,âinterests,âetc.)?
Table 6.2 Sampleâclientâquestionnaire:âFamily
Question Reply/Comment
Client:
FamilyâMembers:
AgeâofâFamilyâMembers
Overviewâofâfamilyâmembersâinâfamilyâbusinessâinterestsâand/orâinvestments
Levelâofâinterestâofâeachâfamilyâmemberâinâfamilyâbusinessâinterestsâand/orâinvestments
Whatâisâfamilyâbusinessâorâinvestmentâplan?
Whatâdoesâtheâfamilyâwantâtoâachieveâfromâtheirâinvestments?
Whatâareâtheâfamilyâgoalsâandâkeyâobjectives?
Whereâdoâyouâseeâtheâfamilyâinvestmentsâinâtwo,âfive,âandâtenâyears?
Twoâyears:â
Fiveâyears:â
Tenâyears:
Whenâdoâfamilyâmembersâplanâtoâretire?
Whatâelseâdoâyouâlikeâtoâdoâapartâfromâworkingâinâtheâbusinessâ(hobbies,âinterests,âetc.)?
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6.3 Reviewing Your Client Base
Oneâofâtheâkeyâelementsâinâclientârelationshipâmanagementâisâcontinualâfocusâonâtheâclient.âEvenâthoughâaccountingâfirmsâdealâwithânumbers,âlaws,âandâregulations,âitâisâtheârelationshipâtheâclientâhasâwithâtheâfirmâthatâwillâbringâthemâbackâtoâyou,âyearâafterâyear.âThisâisâwhereârealâvalueâisâaddedâtoâyourâfirm.
Theârealityâforâmostâfirmsâisâthatâtheârelationshipâtheyâhaveâwithâtheirâclientsâvaries.âFirmsâmayâprovideâtheâ sameâ professionalâ services,â suchâ asâ anâ auditâ orâ taxâ return,â toâmanyâ clients,â butâ theâ relationshipâdiffersâfromâclientâtoâclient.âThisâisâbecauseâitâisâpeopleâwhoârunâeachâbusiness,âandâpeopleâareâdifferentâwhereverâyouâgo.
Itâisâimportantâtoâunderstandâhowâyourâclientsâinteractâwithâyourâfirmâandâjustâwhatâtheâclientârelationshipâisâbasedâon.âOneâeffectiveâwayâtoâdoâthisâisâtoâclassifyâyourâclients.âThisâallowsâyouâtoâseeâwhichâclientsâhaveâaâstrongârelationshipâwithâyourâfirm,âandâwhichâdoânot.âItâalsoâallowsâyouâseeâwhereâresourcesâshouldâbeâallocatedâandâifâthereâareâanyâareasârequiringâspecialâattention.
6.3.1 Client Classification
Thereâareâmanyâwaysâtoâclassifyâclients.âQuestionsâyouâcouldâaskâinclude:
·· Howâmuchâtimeâdoesâtheâclientâspendâwithâourâfirm?
·· Whatâisâourâreturnâonâinvestmentâwithâthisâclient?
·· Whatâcontributionâmarginâdoâtheyâmake?
·· Whatâhourlyâcontributionâmarginâdoâtheyâmake?
·· Clientâcontributionâasâ%âofâtotal?
·· Howâmanyâofâourâservicesâdoâtheyâcurrentlyâutilize?
·· Doâtheyâpayâourâbillsâonâtime?
·· Doâtheyâdisputeâorâargueâoverâfees?
·· Doâweâmakeâgoodârecoveryâonâtheirâfees?
·· Doâtheyârespectâourâadvice?
·· Canâweâaddâvalueâtoâtheirâbusiness?
·· Doâweâenjoyâworkingâwithâthem?
Firmsâthatâgoâtoâtheâeffortâtoârankâtheirâclientsâoftenâdoâsoâonâtheâbasisâofâtheâfeesâtheâclientsâpay.âThisâisâoneâimportantâindicator;âhowever,ârememberâtoâalsoâuseâsomeâânon-monetaryââcriteria,âasâyouâdealâwithâclientsâonâmanyâlevels.
Tablesâ6.3âshowsâanâexampleâofâhowâclientâbasesâmightâbeâclassifiedâaccordingâtoâdifferentâcriteria.
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Table 6.3 Clientâbaseâclassificationâcriteria
A+ A B C D âUp and Comerâ
Spends $20,000âorâmoreâperâyear
Utilizesâfiveâorâmoreâofâourâservices
Monthly paymentâarrangement
Respectsâourâadvice
Values our services
Weâenjoyâdealing withâthem
Spends $10,000â$20,000âper year
Utilizesâfourâtoâfiveâofâourâservices
Monthlyâpaymentâarrangement
Respectsâourâadvice
Values our services
Weâenjoyâdealingâwithâthem
Spendsâ$5,000â$10,000âperâyear
Utilizesâthreeâtoâfourâofâourâservices
Monthly paymentâarrangement
Respectsâourâadvice
Values our services
Weâenjoyâdealingâwithâthem
Spends $2,000â$5,000âper year
Utilizesâtwoâtoâthreeâofâourâservices
Monthly paymentâarrangement
Respectsâourâadvice
Values our services
Weâenjoyâdealingâwithâthem
Spends $2,000âorâlessâper year
Utilizesâonlyâoneâtoâtwoâofâourâservices
Noâmonthlyâpaymentâarrangements
Minimalâscopeâforâadvice,âbutâdoesâappreciateâourâservices
Weâenjoyâdealingâwithâthem
Enthusiasticâclientâofâfirm
Potentialâtoâutilizeâthreeâorâmoreâofâourâservices
Willâdoâmonthlyâpaymentâarrangementâwhenâready
Respectsâourâadvice
Values our services
Weâenjoyâdealingâwithâthem
Table 6.4 Clientâclassificationâexercise
Action Completed/Comment
1. Determineâtheâcriteriaâonâwhichâyouâwillâclassifyâyourâclients.
2. Ifâthisâincludesâfinancialâinformation,âensureâthatâthisâinformationâisâavailable.
3. Determineâtheâcodingâsystemâyouâwillâuseâ(forâexample,âA+,âA,âB,âC,âetc.).
4. Accessâaâlistingâofâallâclientsâofâtheâfirm.â(Thisâworksâbestâinâelectronicâformat.)
5. Allocateâaâclassificationâcodeâagainstâeachâclient.
6. Sortâclientâlistâaccordingâtoâcode.
7. Reviewâlistâforâanomalies.
8. Makeâlistâavailableâtoâallâemployeesâforâreviewâandâcomment.
9. Determineâappropriateâstrategiesâtoâmaximizeâuseâandâvalueâofâthisâinformation.
6.3.2 Benefits of Client Classification
Aânumberâofâbenefitsâmayâbeâgainedâfromâtheâprocessâofâclientâclassification.
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6.3.2aâ Demographics
Classificationâallowsâtheâfirmâtoâdiscern:
·· Whichâclientsâareâutilizingâwhichâservices;
·· Theâpopularityâofâcertainâservices;
·· Theâresourcesâandâtrainingârequiredâtoâsupportâtheseâservices;
·· Theâopportunitiesâtoâup-sellâandâcross-sellâadditionalâservices;âand
·· Thoseâclientsâwhoâutilizeâmostâservicesâinâtheâfirm.
Itâisâimportantâtoâshareâthisâinformationâwithâallâtheâemployeesâinâtheâfirmâsoâthatâtheyâknowâwhereâclientsâsitâinâtheâfirmârankings.âThisâwillâhelpâthemâdeliverâtheâappropriateâlevelâofâclientâcareâandâsupport.âItâwillâalsoâkeepâthemâalertâtoâtheâopportunityâtoâup-sellâandâcross-sellâadditionalâservicesâtoâthoseâclientsâwhoâutilizeâaâlowerânumberâofâservices.
6.3.2bâ Pricing
Clientâclassificationâmayâalsoâallowâtheâfirmâtoâconsiderâspecialâpricingâarrangements.âTheseâmayâapplyâinâdifferentâcircumstances.
Preferentialâpricingâmayâbeâconsideredâforâclientsâwhoâutilizeâaâlargeânumberâofâservices.âThisâmayâenhanceâtheâclientârelationshipâandâshowâloyaltyâandâappreciationâtoâtheâclientâforâtheirâsupportâofâtheâfirm,âbyâprovidingâlowerâpricesâinâsomeâareas.
Preferentialâpricingâmayâalsoâbeâconsideredâforâclientsâasâanâincentiveâorâinducementâtoâincreaseâtheânumberâofâservicesâtheyâutilize.âForâexample,âaâfirmâcouldâofferâ10%âoffâfeesâonâtheâadditionalâserviceâinâtheâfirstâyearâofâuse.
Inâadditionâtoâpreferentialâpricing,âtheâfirmâcouldâalsoâconsiderâdifferentâpricingâstructuresâthatâmayâapplyâtoâdifferentâserviceâlevels,âorâtoâdifferentâtypesâofâwork,âorâtoâservicesâprovided.âValueâandâotherâpricingâmodelsâareâdiscussedâinâModule 3.
6.3.2câ Valuation
Itâmayâbeâpossibleâtoâattributeâaâvalueâtoâtheâclientsâwithinâeachâcategoryâofâclassification.âWhileâthisâmayânotâbeâanâexactâorâpreciseâmeasure,âitâmayâatâleastâgiveâanâindicativeâvalueâofâtheâclientâbase.âItâwillâalsoâallowâtheâfirmâtoâassessâtheâreturnâonâinvestmentâthatâisâbeingârealizedâfromâtheâclientâbase.
OneâmethodâofâvaluationâisâcalledâtheâLifetimeâValueâofâtheâClient.âThisâinvolvesâestimatingâhowâmuchâtheâclientâwillâspendâwithâyourâfirmâduringâtheâlifetimeâofâtheâmutualârelationship.âAlsoâmakeâanâestimateâofâhowâmanyâotherâclientsâtheyâareâlikelyâtoâreferâtoâyourâfirm,âandâwhatâtheâvalueâofâthoseâclientsâwillâbeâtoâtheâfirm.âThisâwillâthenâprovideâtheâfirmâwithâaâguideâasâtoâtheâlevelâofâinvestmentâtheyâshouldâmakeâwithâvariousâclients.
Asâ youâ canâ see,â thereâ areâmanyâwaysâ theâ informationâ gainedâ fromâ theâ classificationâ ofâ clientsâ canâ beâused.âTheânextâstepâisâtoâdetermineâtheâappropriateâstrategiesâtheâfirmâshouldâuseâtoâmakeâtheâmostâofâtheâopportunitiesâthisâinformationâpresents.
6.4 Measuring and Exceeding Client Expectations
Theâstartingâpointâforâmeasuringâandâexceedingâclientâexpectationsâisâtoâunderstandâwhatâthoseâexpectationsâareâinâtheâfirstâplace.
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6.4.1 What do Clients Want?
Theâkeyâtoâgrowingâaâsuccessfulâfirmâhasâmuchâtoâdoâwithâkeepingâaâfirmârelevantâtoâtheâchangingâneedsâofâtheâclientele.âHence,âunderstandingâtheâchallengesâyourâclientsâareâfacingâisâimportantâifâyouâwantâtoâbeâseenâasâaâbusinessâpartnerâandâprovideâtailoredâservicesâwhichâareâvaluedâbyâtheâclient.âRecentâIFACâSMPâGlobalâSurveysâhaveâidentifiedâthatâwhenâaskedâaboutâtheâchallengesâfacingâtheirâSMEâclients,â75%âorâmoreâofârespondentsâratedâsevenâofâtheâeightâchallengesâasâaâmoderateâorâgreaterâchallenge.âTopâchallengesâfacingâSMEâclientsâincludedâeconomicâuncertainty,ârisingâcosts,âcompetition,âandâdifficultiesâaccessingâfinance.
Table 6.5 Whatâclientsâwant
Result Quotation
1. Accessibility âBeâavailableâforâme,âwhenever,âwherever.â
2. Initiative âComeâupâwithâideasâthatâwillâhelpâmeâandâmyâbusiness.â
3. Timeliness âBeâinâtheâpresent,âstayâcurrentâwithâme,ânotâfocusedâonâtheâpast.â
4. Comprehensibleâadvice âRelateâtoâmeâinâwaysâIâcanâunderstand.â
5. Clientâchoiceâandâcontrol âGiveâmeâoptions,âletâmeâchoose.â
6. Improvedârelationship âItâsâmoreâthanâjustâaâtransaction.â
7. Highâlevelâofâexpertise âPractitionerâhasâspecialistâknowledge.â
Takeâaâfewâmomentsâtoâreviewâthisâlistâandâconsiderâitsâimplications.âYouâcanâseeâthatâtheâmainâemphasisâisâtoâbeâavailableâtoâtheâclientâandâinvolvedâinâaârelevantâwayâwithâtheirâbusiness.
Manyâaccountantsâfocusâonâtheâspecificsâofâtheâserviceâtheyâdeliver.âWhileâthisâisâimportant,âyouâneedâtoâalsoâlookâbeyondâtheâactualâtransactionâatâwhatâtheâclientâisâactuallyâlookingâfor.
Consider,â forâ example,â theâpreparationâofâ aâ taxâ return.âTheâaccountantâassumesâ thisâ isâwhatâ theâ clientâwants.âButâtheâclientâisâmoreâconcernedâaboutâensuringâthatâtheirâtaxâobligationsâareâbeingâmet.âTheâtaxâreturnâisâsimplyâtheâmechanismâforâgettingâthisâdone.
Thisâhighlightsâtheâimportanceâofâunderstandingâwhatâclientsâreallyâwantâfromâtheirâaccountant.âFirmsâthenâhaveâtheâopportunityâtoâdevelopâsoâthatâtheyâcanâdeliverâaâserviceâofârealâvalueâtoâtheirâclients.
Realâvalueâalsoâneedsâtoâbeâconsideredâvis-Ă -visâwhatâtheâclientsâcanâaffordâandâwishâtoâpay.âFromâaâclient-âmanagementâperspective,âthisâmeansâthereâmayâbeânoâneedâtoâover-serviceâclients.
Theâresultsâofâpollsâandâsurveysâlikeâtheseâwillâassistâaccountantsâinâgainingâaâbetterâunderstandingâofâhowâclientsâwishâtoâbeâservicedâandâtheâvariousâchallengesâtheyâneedâassistanceâwith.
6.4.2 Measuring Client Expectations
Inâorderâtoâmeasureâandâexceedâclientâexpectations,âaânumberâofâstepsâmustâbeâcompleted.
Table 6.6 Stepsâtoâmeasureâandâexceedâclientâexpectations
Step ActionâRequired
1. Knowâwhatâyourâclientâsâexpectationsâare.
2. Quantifyâyourâclientâsâexpectations.
3. Checkâregularlyâtoâseeâwhetherâtheirâexpectationsâareâbeingâmet:âAsk your client.
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Itâisâonlyâbyâunderstandingâwhatâaâclientâexpectsâofâyouâthatâyouâcanâexceedâthoseâexpectations.âTheâclientâsâexpectationsâshouldâbeâidentifiedâinâyourâfirstâmeetingâwithâthemâandâthenâcheckedâonâanâongoingâbasis.âUseâtheâclientâquestionnaireâinâTableâ6.1.
6.4.3 Exceeding Client Expectations
Ifâ youâ canâ exceedâ yourâ clientâsâ expectations,â youâwillâ ensureâ aâ long-termâ relationshipâwithâ themâandâaâconstantâstreamâofâclientâreferrals.
Exceedingâclientâexpectationsâisâallâaboutâgivingâthemâsomethingâunexpected,âsomethingâtheyâdidânotâpredict.âItâhasâbeenâcalledâtheââWow!ââfactor,âandâitâisâworthâconsideringâasâanâeffectiveâwayâtoâenrichâtheâclientârelationship.
Thisârequiresâyouâtoâbeâinnovativeâandâcreative.âYouâmustâthinkâconstantlyâaboutâhowâyouâcanâgoâbeyondâwhatâtheyâexpect.âAsâsoonâasâyouâintroduceâanâinitiative,âyouâwillâneedâtoâbeâthinkingâaboutâtheânextâone.âYouâneedâtoâsetâtheâbarâhigherâeachâtime.âAârelentless,âexcitingâprogression!
Asâmentionedâearlier,âtheâtechnicalâareasâareâaâgiven:âyouâareâexpectedâtoâbeâcompetentâinâthoseâareas.âSo,âitâisâoftenâinâtheânontechnicalâareasâthatâyouâreallyâmakeâanâimpression.
IFACâsâGoodâPracticeâChecklistâforâSmallâBusinessâcanâbeâusedâbyâpractitionersâtoâhelpâthemâdetermineâwhatâtypeâofâassistanceâaâclientâmayâneed.âThisâchecklistâcanâprovideâaâstartingâpointâforâdevelopingâspecificâactionâplansâforâyourâclientsâwhich,âwhenâpresentedâwithâindustryâbenchmarkâdata,âcanâdemonstrateâyourâcommitmentâtoâmaintainingâaâlong-termârelationshipâandâtoâprovideâvalue-addedâservices.
6.4.3a Phone Calls
Oneâexampleâ isâanâunsolicitedâphoneâcall.âAfterâ theâ initialâchat,âsayâsomethingâalongâtheâ linesâof,â âIâ justâthoughtâIâdâgiveâyouâaâcallâtoâseeâhowâyourâbusinessâisâdoing.âHowâareâthingsâgoing?â
Clientsâusuallyâwarmâtoâsuchâaâconversationâveryâquicklyâandâwillâsoonâtalkâaboutâtheâissuesâtheyâareâfacing.âSometimesâthereâmayâbeâwaysâyouâcanâhelp,âotherâtimesânot.âButâyouâcanâbeâassuredâthatâyourâclientâwillâappreciateâtheâcall.âThisâwillâgoâsomeâwayâtowardâbuildingâyourârelationshipâwithâyourâclient.
6.4.3bâ DoesâYourâClientâUnderstandâYou?
KeyâPerformanceâIndicatorsâ(KPIs)âareâimportantâforâeveryâbusiness,âandâtheâpractitionerâisâwellâplacedâtoâexplainâtheâfinancialâ indicatorsâtoâtheirâclients.âKPIsâbasedâonâtheâProfitâandâLossâStatementâareâusuallyâofâinterestâtoâtheâclient.âForâexample,âaâdiscussionâofâtheâbreak-evenâsalesâpointâorâtheâsafetyâmarginâwillâtypicallyâattractâinterestâfromâtheâclient.
Anotherâapproachâmightâbeâ toâ translateâ ratioâanalysisâ forâ yourâ client.âExplainingâaâ ratioâbringsâ itâ toâ life.âConsiderâ theâ currentâ ratio:â theâ calculationâ isâ âcurrentâ assets/currentâ liabilities.ââ Traditionallyâ weâ wouldâdescribeâthisâ inâtermsâofââ2:1,ââorââtwoâtimes.ââThisâmightâbeâmeaningfulâ toâtheâaccountantâbutâ itâdoesnâtânecessarilyâmakeâsenseâtoâtheâclient.
Itâisâpossibleâtoâmakeâthatâratioâmoreâmeaningfulâtoâtheâclient.âForâexample,âyouâcouldârephraseâitâinâtermsâsuchâ asâ these:â âForâ everyâ dollarâ ofâ currentâ liability,â youâ haveâ $2.00â ofâ currentâ assetâ toâ payâ forâ it.ââ Or,ââLastâyear,âforâeveryâdollarâofâcurrentâliability,âyouâhadâ$2.20âtoâpayâforâit,âbutâthisâyearâitâsâdownâtoâ$2.00.âSomethingâhasâhappenedâtoâtheâ liquidityâofâ theâbusiness.ââNowâtheâratioâhasâcomeâtoâ life.â Itâbringsânewâmeaningâtoâtheâratioâandâopensâaâwholeânewâareaâofâunderstandingâforâtheâclient.âItâalsoâopensâtheâdoorâtoâmoreâmeaningfulâdiscussionâwithâtheâclientâonâthisâtopic.
Byâ takingâ thisâ approachâ toâ ratios,â yourâ ownâ staffâsâ understandingâ andâ interestâ willâ alsoâ increase.â Yourâemployeesâwillâenjoyâpreparingâtheâratiosâsoâtheyâcanâassessâyourâclientâsâperformance.âYouâmayâwishâtoâ
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giveâaâstaffâmemberâtheâresponsibilityâofâsettingâupâyourâaccountingâsoftwareâtoâproduceâtheâratiosâandâtheâsentencesâthatâgoâwithâthemâautomatically.
Thisâisâaâsimpleâexampleâofâhowâtoâengageâwithâclient,âwhileâatâtheâsameâtimeâimprovingâstaffâmoraleâbyâencouragingâtheirâinvolvement.
6.4.3câ GraphsâandâCharts
âAâpictureâisâworthâaâthousandâwords.ââAccountantsâareâcomfortableâlookingâatânumbersâallâday.âTheyâareâaccustomedâtoâseeingâtheârelationshipâbetweenâfiguresâandâfinancialâsituations.âHowever,âmostâclientsâareânotâlikeâthat.âSo,âitâisâimportantâtoâpresentâinformationâtoâclientsâinâwaysâtheyâcanâunderstand.âGraphsâandâchartsâareâaâgreatâwayâofâdoingâthat.
Mostâ spreadsheetâpackagesâcanâgenerateâgraphsâquickly.âYetâ isâ surprisingâhowâ fewâfirmsâpresentâ theirâclientâsâfinancialâinformationâinâthisâform.âItâisâcertainlyâoneâofâtheâmostâcost-effectiveâmethodsâofâimpressingâyourâclientsâandâgivingâthemâsomethingâofârealâvalue,âsomethingâtheyâcanâeasilyâunderstand.
Figure 6.1 Sampleâsales graph
Considerâotherâtypesâofâinformationâthatâyourâclientsâwouldâappreciateâseeingâinâgraphâformat,âsuchâas:
·· Salesâversusâlastâyearâsâsales;
·· Salesâversusâbudget;
·· Salesâversusâgrossâprofit;â
·· Wagesâversusâsales;âorâ
·· Salesâversusânetâprofit.
Manyâotherâcombinationsâwouldâbeâusefulâtoâgraph.âTheâimportantâthingâisâtoâgaugeâtheâlevelâofâ interestâfromâtheâclient.âTheyâusuallyâshowâaâkeenâinterestâwhenâtheâgraphsâareâshownâandâdiscussed.âTheyâoftenâsuggestâotherâinformationâtheyâwouldâlikeâtoâseeâgraphicallyârepresentedâinâtheâfuture.
6.4.3d Pie Charts
Balanceâsheetâitemsâareâoftenâbestâshownâinâtheâformâofâaâpieâchart.âMultipleâformatsâcanâbeâused.âFindâtheâformatâthatâworksâbestâforâyourâclientâandâgivesâthemâtheâinformationâthatâisâmostâusefulâtoâthem.
160000
140000
120000
100000
80000
60000
40000
20000
0Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
20xx 20xy
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Figure 6.2 Sampleâbalance sheet
Thereâareâotherâbenefitsâtoâproducingâgraphicalâinformation.
·· Itâtypicallyâgeneratesâadditionalâinterestâwithinâtheâfirm,âasâtheâresultsâareâsoâeasyâtoâunderstand,âandâarousesâstaffâcuriosity.â
·· Standardâformatsâcanâbeâpresetâonâyourâcomputerâsystemâandâcanâbeâproducedâwithâtheâpressâofâaâbutton.â
·· GenerationâYâisâhighlyâcomputerâliterateâandâcanâusuallyâproduceâgraphsâwithâease,âsavingâtimeâandâmoneyâinâtheirâproduction.
·· Theâimageâandâperceptionâofâprofessionalismâareâenhanced.
6.4.3eâ OtherâServices
Aânumberâofâaccountingâfirmsâhaveâbroadenedâtheârangeâofâservicesâtheyâprovideâinâresponseâtoâdemandâfromâcurrentâandâprospectiveâclients.âReviewâtheâfollowingâlistâandâconsiderâwhetherâsomeâofâtheseâservicesâcouldâbeâincorporatedâinâyourâfirm,âinâadditionâtoâtraditionalâtaxâandâaccountingâservices.
·· Annualâplanningâsession:âMeetâwithâclientâeachâyearâtoâmapâout,âorâupdate,âtheâstrategicâdirectionâofâtheâclientâsâbusiness.
·· Develop action plan:âAssistâinâcompletingâtheâactionâplanâtoâachieveâtheâgoalsâidentified.âThisâincludesâidentifyingâtheânecessaryâfollow-upâsteps,âandâallocatingâresponsibilitiesâforâtasksâandâdeadlines.
·· Implement and update the action plan:âEnsureâtheâplanâisâfullyâimplemented,âwithâregularâfollow-upâmeetings,âmentoring,âandâcoaching.
·· Goals and objectives:âIdentifyâandâestablishâtheâgoalsâandâobjectivesâofâtheâbusiness,âandâtogetherâdetermineâhowâtoâgetâthere.
·· Organization chart:âReviewâ theâclientâsâorganizationâchart,â includingâallocationâofâ responsibilitiesâandâaccountabilities.âThisâalsoâincludesâaâreviewâofâpositionâdescriptionsâforâeachâposition.
·· Site visits:â Regularlyâ spendâ timeâ inâ theâ clientâsâ businessâ toâ physicallyâ assessâ theâ continuedâsustainabilityâandâdevelopmentâofâtheâbusiness.
·· Regular Business meetings:âMeetâ inâ personâorâ viaâ video-enabledâ appsâwithâ theâ directorsâ onâaâregularâbasisâtoâdiscussâtheâfinancialâperformance,âgrowth,âandâdevelopmentâofâtheâbusiness.âThisâcouldâbeâonâaâmonthlyâorâquarterlyâbasis.
·· Management accounts: Reviewâtheâbusinessâsâperformanceâagainstâtheâbudget.â
Assets
Liabilities
Net worth
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·· Annualâbudget:âPrepareâandâreview.
·· Annualâcashâflowâforecast:âPrepareâandâreview.
·· Sales pipeline:âRegularlyâreview.
·· Accountsâreceivable: Reviewâandâtrackâaccountsâreceivableâmonthly.âConsiderâtheâimpactâonâtheâcashâflowâforecast,âandâbringâanyâconcernsâtoâtheâattentionâofâtheâdirectors.
·· Accountsâpayable: Reviewâandâ trackâmonthly.âCheckâagainstâ theâannualâ budgetâ allocation,â andâconsiderâtheâimpactâagainstâtheâcashâflowâforecast.
·· KPIs: IdentifyâtheâspecificâKPIsâforâtheâbusinessâthatâareâtoâbeâregularlyâreportedâandârelevantâfinancialâandânonfinancialâinformationârelatingâtoâtheâperformanceâofâtheâbusiness.
·· Finance and funding: Reviewâtheâfinanceâandâfundingâarrangementsâthatâareâinâplaceâtoâensureâthatâtheâmostâappropriateâandâcost-effectiveâformsâofâfinanceâareâbeingâutilized.
·· Bank manager: Meetâ withâ theâ clientâ andâ theâ clientâsâ bankâ managerâ annuallyâ toâ discussâ theâperformanceâofâtheâbusinessâandâfutureâplans.âThisâdiscussionâshouldâincludeâaâreviewâofâtheârelativeâappropriatenessâofâtheâfundingâarrangementsâinâplace.
·· Bank security: Thisâdiscussionâwillâbeâlinkedâtoâaâreviewâofâtheâsecurityâtheâbankâholdsâtoâsupportâtheâfinanceâstructure.âTheseâmeetingsâshouldâcoincideâwithâaâmonthlyâmanagementâmeeting.
·· Corporate structure: Reviewâ andâ considerâ theâ corporateâ structureâ throughâ whichâ theâ businessâoperates,âtoâensureâitâcontinuesâtoâreflectâtheâclientâsâintentionsâforâtheâbusiness.
·· Assetâ protection: Linkâ toâ theâ reviewâ ofâ corporateâ structureâ aâ considerationâ ofâ assetâ protectionâmeasuresâthatâareâinâplaceâandâwhetherâtheâcurrentâstructureâisârelevantâandâwillâcontinueâtoâbeâso.
·· Investment plans: Reviewâandâdiscussâtheâclientâsâ investmentâandâdevelopmentâplans,â inâ lightâofâtaxationâandâinvestmentâbenefits.âBeâmindfulâofâyourâlocalâregulationsâinâregardâtoâwhatââadviceââcanâbeâgivenâhere.
·· Succession: Considerâannuallyâwhatâtheâclientâintendsâtoâdoâregardingâtheirâsuccession.âIncludeâtheâtimingâofâtheirâprogressiveâwithdrawalâfromâtheâbusiness,âandâtheârelativeâpositionâofâtheâbusinessâinâlightâofâtaxationâissues,âstampâduty,âetc.
·· Estate: Confidentiallyâdiscussâandâconsiderâtheâlegalâwillsâofâtheâclientâandâtheâclientâsâintentionsâinâregardâtoâtheirâestateâplanning,âfromâaâfinancialâandâtaxationâperspective.
·· Insurance coverage: Reviewâinsuranceâcoverageâinâplaceâtoâensureâitâisâappropriateâforâtheâcurrentâandâongoingâneedsâofâtheâclient.
·· Insurance broker: Meetâwithâtheâclientâsâbusinessâinsuranceâbrokerâannuallyâtoâdiscussâtheâcurrentâlevelâ ofâ insuranceâ coverageâ andâ provideâ anâ updateâ asâ toâ futureâ plansâ andâ expectations.â Theseâmeetingsâshouldâcoincideâwithâoneâofâtheâregularâbusinessâmanagementâmeetings.
·· Staff salaries and bonus structures: Reviewâandâdiscussâstaffâsalariesâandâbonusâstructuresâannually.
·· Risk assessment: Conductâaâformalâriskâassessmentâofâtheâclientâsâbusinessâannuallyâtoâensureâkeyâareasâofâriskâareâidentified.âAlsoâensureâthatâappropriateâriskâmitigationâstrategiesâareâidentifiedâandârecommended.
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·· Profitabilityâ analysis: Conductâ clientâ profitabilityâ analysisâ andâ productâ profitabilityâ analysisâ toâensureâthatâtheâclientsâandâproductâlinesâthatâyourâclientâdealsâwithâareâprofitable.âIfânot,âreviewâtheirâcontinuation.
·· Key clients: Meetâtheâkeyâclientsâofâyourâclientâtoâdiscussâtheirâfinancialâtermsâandâarrangements.âGainâanâunderstandingâofâtheirâdealingsâwithâandâexpectationsâofâtheâclientâsâbusiness.
·· Key suppliers: Meetâwithâtheâclientâsâkeyâsuppliersâtoâdiscussâtheirâfinancialâtermsâandâarrangements,âandâseekâtoânegotiateâbetterâterms.
·· Business Plans: Reviewâ orâ prepareâ businessâ plansâ forâ theâ clientâ toâ beâ presentedâ toâ banksâ orâfinanciers.
·· Assetsâphysicalâinventoryâreconciliation: Assistâtheâclientâinâsettingâupâaâperiodicâphysicalâinventoryâofâassetsâandâmakeâaâcomparisonâbetweenâassetsâaccountingârecordsâandâdataâissuedâfromâassetsâphysicalâinventoryâinâorderâtoâfindâdiscrepanciesâandâcorrectâerrors.
Whenâconsideringâwhichâotherâservicesâtoâintroduce,âsubjectâofâcourseâtoâyourâclientâsâopennessâtoâembraceâtheseânewâofferings,âyouâshouldâbeâawareâofâethicalâconsiderationsâandâanyâlocalârestrictionsâthatâmayâapplyâinâyourâjurisdiction.
6.4.4 Internal Versus External Strategies
Soâfarâtheâdiscussionâhasâfocusedâonâinternalâstrategiesâtoâexceedâyourâclientâsâexpectations.âOtherâstrategiesâincludeâbuildingâonâtheârelationshipâyouâalreadyâhaveâwithâyourâclient.
External strategies
Someâaccountantsâhaveâsemi-regularâcontactâwithâsomeâofâtheirâclientsâonâanâadâhocâbasis.âManyâaccountantsâonlyâseeâtheirâclientsâonceâaâyear,âtoâsignâtheirâtaxâreturnsâandâfinancialâstatements,âorâconductâanâaudit.
Buildingâ closerâ relationshipsâwithâ yourâ clientsâdependsâonâ changingâ thisâ around.âSetâ aâplanâ forâ regularâcontactâandâaâ rangeâofâactivities.âThisâhasâaâveryâpositiveâprovenâeffectâonâclientâ relationshipsâandâ theâretentionâofâkeyâclients.âItâwillâalmostâcertainlyâexceedâtheirâexpectationsâandâdeepenâtheârelationshipâyouâhave.
Theâmostâimportantâfactorâisâtoâhaveâaâplanâthatâcovers:
·· Whom shouldâweâinvite:âclients,âprospects,âreferrers,âallianceâpartners?
·· What shouldâweâinviteâthemâto:âwhatâareâtheirâinterests?
·· Where isâtheâeventâorâfunction:âhowâdoâweâgetâclientsâthere?
·· When wouldâthisâsuitâtheâclient?
Itâisârecommendedâyouâdoâthisâforâyourâtopâtenâorâtwentyâclients,âbutâyouâshouldâalsoâconsiderâdoingâthisâforâyourâprospectiveâclients,âreferrersâandâallianceâpartners.âItâreallyâisâanâexcellentâwayâtoâbuildâandâdeepenârelationships.âMapâtheseâpointsâinâaâtable,âasâshownâinâTableâ6.7.
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Table 6.7 Sampleâplanâforâregularâclientâcontact
Who What Where When
1. ABC Ltd ClientâNetworkingâEventâCirque du Soleil City March
2. CBCâBank BusinessâFinancingâLunch Localârestaurant May
3. Lewâ&âWing GovernmentâBudgetâBriefingâforâSmallâBusiness North Shore May
4. Sokyaâ&âEpstein Football:âclientâisâkeenâsupporterâofâWestsâfootballâclub Footballâstadium July
5. Morganâ&âAssoc TulipâFestival:âclientâisâplantâbreeder/horticulturalist Regional September
6. LawyersâCo Breakfastâmeetingâtoâdiscussâreferralâandâallianceâprospects
City October
7. FrontlineâPR LocalâRaceâDayâsponsoredâbyâBusinessâNetwork RaceâClub November
8. ITâPartners CharityâGolfâDay Muirfield June
9. Abbottâ&âCo HealthâSmartâLuncheonâwithâGuestâSpeaker Harbor April
10. DamienâW LeadershipâSeminar Central January
Subjectâtoâyourâcountryâsâlawsâorâprofessionalâregulations,âthereâmayâbeâlimitationsâonâwhatâyouâcanâdo.âTheâimportantâpointâisâtoâmakeâtheâeventâorâactivityâappealingâtoâyourâclientsâorâcontacts.âItâisânotânecessaryâtoâspendâaâlotâofâmoney:âitâsâtheâcontactâthatâmatters.âInâfact,âitâmattersâmoreâthanâtheâevent.
Youâmightâalsoâdecideâtoâincreaseâyourâclientâoutingsâandâcontactsâasâanâimportantâstepâtowardâgrowingâandâdevelopingâyourâfirm.âIncludeâmembersâofâyourâteam.âThisâwillâdeepenâtheârelationshipâtheyâhaveâwithâtheâfirmâandâallowâthemâtoâbuildâcloserârelationshipsâwithâtheâclients.
Byâplanningâyourâactivities,âyouâwillâ seeâhowâmuchâ timeâyouâhaveâavailable.âYouâmayâwonderâwhyâyouâhavenâtâdoneâsomethingâlikeâthisâbefore!âWhatâaâwonderfulâwayâtoâexceedâyourâclientsââexpectations,âandâwillâundoubtedlyâenjoyâyourselfâasâwell.
ReferâtoâTableâ6.8âasâanâexampleâofâtheâformatâtoâuseâasâaâplanningâtool.
Table 6.8 Clientârelationshipâmanagementâactionâplan
Client Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
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6.5 Benchmarking Service Levels
6.5.1 Benchmarks
Benchmarksâ provideâ aâ powerfulâ mechanismâ forâ monitoringâ businessâ performanceâ andâ identifyingâopportunitiesâ forâ improvement.â Atâ theirâ mostâ basic,â benchmarksâ compareâ oneâ setâ ofâ informationâ withâanother.âItâsâimportantâtoâdecideâexactlyâwhatâyouâwantâtoâcompareâandâwhat/whoâtoâcompareâagainst.
Benchmarkingâtoolsâthatâcompareâaâbusinessââperformanceâagainstâindustriesâandâpeersâareâfreelyâavailable,âsimple,âandâeasyâ toâuse.âWhenâusedâ inâconjunctionâwithâgovernmentâstatistics,â theyâcanâprovideâusefulâinsightsâintoâaâclientâsâriskâprofile.âForâfirmsâwishingâtoâprovideâexpertâbenchmarkingâservices,âthereâareâaâwideârangeâofâonlineââuserâpaysââdiagnosticâtoolsâandâhealthâchecksâwhichâfacilitateâtheâprocess.
Firmsâmightâalsoâwishâtoâreferâtoâsurveysâthatâallowâthemâtoâcompareâtheirâownâfirmâsâperformanceâagainstâpeersâbasedâonâfirmâsizeâandâregion.
Theâ followingâ keyâ indicatorsâ canâ beâ benchmarkedâ forâ clientâ relationshipâmanagement.âWorkâ yourâ wayâthroughâthisâlistâofâindicators,âandâselectâtheâonesârelevantâtoâyourâfirm.âDetermineâyourâownâbenchmarks.âThenâregularlyâtrackâyourâactualâfirmâperformanceâagainstâtheseâbenchmarksâ(seeâTableâ6.9).
Table 6.9 Benchmarkingâclientârelationshipâmanagement
Client Relationship Management Key Indicators
People
Staffing Numberâofâfull-timeâequivalentsâ(FTEs)
Numberâofâemployees
Client-facingâstaff NumberâofâFTEsâ(withâclient-âfacingâresponsibilities)
Percentageâofâtotalâstaffing
NumberâofâFTEsâwithâclient-facingâresponsibilitiesâClient-facingâstaffâasâpercentageâofâtotalâstaff
Weâwantâthisâtoâincreaseâasâweâimproveâourâclientârelationshipâculture
RevenueâperâFTE FirmâsâbillingsâdividedâbyânumberâofâFTEs
IndicatesârevenueâperâFTE
Firmâsâaimâisâtoâincreaseâthisâoverâtime
Networkingâmeetingsâattended
Numberâofâmeetingsâattended
Indicatesâintentionâofâteamâtoâproactivelyâmarketâtheâfirm
Toâbeâtrackedâregularlyâandâcomparedâagainstâtarget
Mentoring hours Numberâofâhours Indicatesânumberâofâhoursâteamâmembersâhaveâbeenâmentored
Toâbeâtrackedâregularlyâandâcomparedâagainstâtarget
Productivity
Workâinâprogress $ Value Indicatesâhowâmuchâtimeâisârecordedâonâtimesheetsâyetâtoâbeâbilledâtoâclient
Emphasisâshouldâbeâonârecordingâtimeâwhichâtheâclientâwillâappreciateâinâtheâcompletionâofâtheirâwork
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Client Relationship Management Key Indicators
Workâinâprogressâ(WIP)
Ageâ(WIPâDays) Indicatesâhowâlongâworkâhasâbeenâinâofficeâandâinâprogress
EmphasisâshouldâbeâonâreducingâWIPâdays,âtherebyâimprovingâturnaroundâtimesâforâclient
AccountsâReceivable
Ageâ(DebtorâDays) Indicatesâhowâlongâclientsâtakeâtoâpayâtheirâaccountsâ
Aâveryâgoodâindicatorâofâclientâsatisfaction
Alsoâaâgoodâindicatorâofâourâinternalâfollow-upâandâcontrol
Write-offs Write-offâ($âvalue) Indicatesâtimeâcharged,âbutânotârecoverable
Firmâtakesâdecisionânotâtoâinvoiceâclient,âandâwritesâitâoffâWIP
Emphasisâtoâbeâonâreducingâwrite-offs.âTimeâchargedâshouldâbeâofâvalueâtoâtheâclient,âandâthereforeâbillable
Profitability
Netâincomeâpercentage
Netâincomeâasâpercentageâofâtotalâfirmâsâbillings
Indicatesâprofitabilityâofâfirm
Indicatorâofâcapacityâofâfirmâtoâreinvestâinâpeopleâandâclientâservices
Laborâasâpercentageâofârevenue
Laborâcostsâasâpercentageâofâtotalâfirmâsâbillings
Showsâemploymentâcostsâasâpercentageâofâbillings
Indicatesâifâtooâmanyânon-productiveâstaff
Services
Servicesâutilized Numberâofâservicesâutilizedâ(#)
Indicatesânumberâofâservicesâutilizedâbyâclientsâ
Indicatesâdepthâofâclientârelationship
Emphasisâtoâbeâonâincreasingâtheârangeâofâservicesâutilized
Numberâ(perâannum)âofâadditionalâservicesâtakenâupâbyâexistingâclients
Indicatesâadditionalâservicesâtakenâupâthroughoutâyear
Emphasisâtoâbeâonâincreasingâtheâservicesâutilizedâbyâeachâclient
Numberâ(perâannum)âofânewâservicesâintroducedâbyâfirmâduring year
Indicatesânewâservicesâintroducedâthroughoutâyear
Emphasisâonâcontinuingâtoâintroduceânewâservicesâtoâclients
Positionsâfirmâasâinnovativeâandâcreative
Firmâmayâdeliverâtheâservice,âorâitâmayâcomeâfromâanâallianceâpartner
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Client Relationship Management Key Indicators
Revenueâ($âperâannum)âfromânewâservicesâintroducedâbyâfirmâduringâyear
IndicatesârevenueâvalueâofânewâservicesâintroducedâImportantâtoâseparatelyâidentify
Specificâcostsâcanâbeâallocatedâagainstârevenueâtoâdetermineâgrossâprofitâcontribution
Numberâofâunsolicitedâclientâcontactsâmadeâduringâweek
Indicatesâhowâspontaneousâandâproactiveâyouâare.âYouâneedâtoâbe!
Increaseâthisânumber
Numberâofâhoursâspentâonânon-chargedâclient-relatedâinitiatives
Indicatesâtimeâyouâinvestâinâyourâclients
Aânumberâtoâtrack,ânotânecessarilyâincrease
Caution:âdonâtâbeâexcessiveâonâthis.âYouâcanâtâdoâeverythingâforâfree!
Numberâofâproposalsâforânewâorâadditionalâservicesâdeliveredâduringâmonth
Indicatesâsuccessâofâmarketingânewâorâadditionalâservices
Emphasisâisâtoâincreaseâthisâuntilâtargetâlevelsâofâserviceâutilizationâareâreached
Client service
Client ratings Excellentâ(%)â
Satisfactoryâ(%)â
Unsatisfactoryâ(%)
Measureâclientâsatisfactionâwithâregularâsurveys
Providesâfeedbackâonâfirmâperformanceâandâclientâperception
Emphasisâshouldâbeâonâcontinualâimprovement
Disputes Numberâofâdisputes Clientâdisputes.âTrackâtheânatureâofâtheâdisputeâandâdollarâimpact
Goal:ânoâdisputes
Extraâserviceâactivity
Numberâofâoccurrences Trackânon-standardâserviceâandâassistanceâprovidedâtoâclients
Overâandâaboveânormalâserviceâlevels
Emphasisâisâonâincreasingâthisâactivityâonâongoingâbasis
Clientâreferrals Numberâofâreferrals Numberâofânewâclientsâreferredâtoâtheâfirm
Indicatesâifâexistingâclientsâhappyâwithâserviceâlevelsâandâexperience
Clientâseminars Numberâofâseminars Indicatesânumberâofâseminarsâheld
Toâbeâtrackedâregularlyâandâcomparedâagainstâtargetâinâmarketingâplan
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6.6 Embracing Opportunities for Enhanced Relationships
Soâfar,âthisâmoduleâhasâshownâwaysâtoâdevelopâtheârelationshipâwithâyourâclientâthisâisâofâgreatâimportanceâtoâtheâfirm,âandâthereâareâvariousâmethodsâtoâuse.âTheânextâsectionâisâonâmakingâtheâmostâofâtheâopportunitiesâthatâariseâasâaâresultâofâthisâenhancedârelationship.
Recallâtheâclientâclassificationâmodelâ(seeâSectionâ6.3.1).âYouâwillârecallâthatâyourâgoalâisâtoâmoveâyourâclientsâfromâtheirâcurrentâclassificationâcategoryâtoâtheânextâlevelâup.
6.6.1 Using Gap Analysis
Gapâ analysisâ isâ oneâ ofâ theâ moreâ powerfulâ businessâ developmentâ tools.â Itâ isâ simple,â yetâ canâ produceâremarkableâresults.âTheâmodelâisâproducedâinâTableâ6.10;âhowâtoâuseâitâisâshownâbelow.
Figure 6.3 Gap analysisâmodel
Gapâanalysisâprovidesâaâbrilliantâframeworkâforâyourâclientârelationshipâmanagementâstrategy.âItâprovidesâtheâcontextâwithinâwhichâyouâdetermineâyourânextâstep.
Quadrant 1: Existing services to existing clients
Quadrantâ1â isâallâaboutâunderstandingâyourâexistingâclientâbase.â Itâanswersâ theâquestion,â âDoâallâofâourâclientsâuseâallâofâourâservices?ââTheâanswerâisâtypicallyââNo!ââ
Theâfollow-onâquestionâthenâbecomes,ââWhichâofâourâclientsâuseâwhichâofâourâservices?ââTheâanswerâtoâthisâquestionâwillâhighlightâwhereâtheââgapsââare.âItâwillâhighlightâwhereâyourâmarketingâactivityâneedsâtoâfocus,âwithâtheâaimâofâincreasingâtheânumberâofâservicesâeachâclientâuses.
Asâ aâmatterâ ofâ priority,â listâ allâ ofâ yourâ clientsâ andâ theâ servicesâ theyâ use.â Itâ worksâ bestâ toâ doâ thisâ onâ aâspreadsheet.âThisâwillâclearlyâshowâyouâtheâclientsâyouâshouldâbeâtargetingânow,âtoâincreaseâtheâtakeâupârateâofâservices.âTableâ6.10âgivesâexamplesâofâtheâservicesâusedâbyâdifferentâclientsâofâanâaccountingâfirm.
Quadrantâ1âalsoâshowsâtheââPathâofâLeastâResistance.ââYourâclientsâknowâandâtrustâyouâandâareâmoreâlikelyâtoâbeâopenâtoâyourâsuggestionâtoâuseâadditionalâservices.
Services
1 2Existing
Existing
Clients
3 4New
New
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Table 6.10 Existingâclientâserviceâmatrix
Audit Accounts VAT/SalesâTax Income Tax Finance
1. ABC Ltd X X X
2. SCKâChinâPtyâLtd X X X
3. Smithâ&âWest X X
4. Impalaâ&âCo X X X
5. LawyersâCo X X
6. Frontline X X X
7. HanifâPartners X X X
8. LaurenceâYuen X X X
9. Jersey Co X X
10. SanâMarco X
Showingâtheâservicesâutilizedâinâthisâmatrixâformatâdemonstratesâwhereâtheâopportunitiesâlieâforâpromotingâadditionalâservices.
Identifyâwhereâtheââgapsââare,âandâfocusâyourâattentionâonâthoseâclientsâwithâgaps.âMeetâwithâthemâtoâdiscussâtheâotherâservicesâyouâhaveâtoâofferâandâhowâtheyâcanâbeâofâbenefitâtoâtheâclient.
Quadrant 2: New services to existing clients
Thisâpresumesâyouâhaveânewâservicesâavailableâandâtheyâreâreadyâtoâtakeâtoâtheâmarket.
Quadrantâ2âshowsâ thatâ theâbestâmarketâ toâpromoteâyourânewâservicesâ toâ isâyourâexistingâclientâbase.âExistingâclientsâwhoâareâsatisfiedâwithâyourâfirmâsâserviceâwillâbeâopenâtoânewâservices,âevenâifâonâaâtrialâbasis.
AfterâQuadrantâ1,âQuadrantâ2âisâtheâsecondâpathâofâleastâresistance.âItâshouldâbeâpursuedâonceâyouâhaveâminedâQuadrantâ1âcompletely.âYouâalsoâhaveâtoâthinkâaboutâtheâclientâsâabilityâtoâpay:âsomeâofâthemâpayâforâaccountingâservicesâbecauseâofâanâimposedâcomplianceâobligationâbutâmayâbeâreluctantâtoâpayâforâotherâservicesâevenâifâtheyâareârelevant.
PastâIFACâGlobalâSMPâSurveysâhaveâidentifiedâthatâoneâofâtheâmostâimportantâdriversâofâpracticeâgrowthâforâSMPsâisâadditionalârevenueâfromâexistingâclients.âPastâsurveysâhaveâhighlightedâtheâimportanceâofâworkingâwithâexistingâclients,âensuringâ theyâareâhappyâwithâyourâexistingâservices,â therefore,âmakingâ themâmoreâopenâtoâapproachesâaboutânewâservices.âRememberâtoâfocusâonâtheâbenefitsâtheâclientâwillâreceiveâfromâtheânewâservice.â
Quadrant 3: Existing services to new clients
Here,â youâ areâ lookingâ forâ newâ clientsâ toâ utilizeâ yourâ existingâ services.â Theâ advantageâ hereâ isâ thatâ theâservicesâareânotânewâtoâyou.âYouâreâfamiliarâwithâtheâprocessesâinvolved,âyouâknowâwhatâyouâreâdoing,âandâtheâsystemsâareâallâinâplace.âIFACâSMPâGlobalâSurveyâresultsâhaveâcontinuouslyâidentifiedâtheâacquisitionâofânewâclientsâtoâbeâtheâprimaryâdriverâofâfutureâpracticeâgrowthâforâSMPs.
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Quadrant 4: New services to new clients
Thisâisâwhereâyouâlookâtoâbreakâintoânewâmarketsâwithânewâservices.âQuadrantâ4âisâtheâhardestâoption:âtheseâservicesâareânewâtoâyouâandâalsoânewâtoâtheâmarket.âThereâareâlikelyâtoâbeâmultipleâaspectsâyouâhaveâyetâtoâcomeâtoâtermsâwith.âAtâtheâsameâtime,âyouâwillâbeâcomingâtoâgripsâwithâaâwholeânewâprospectiveâclientâgroupâyouâwillâneedâtoâmarketâtoâandâunderstand.
Fromâaâbusinessâdevelopmentâperspective,âitâisâbetterâtoâexhaustâtheâotherâthreeâquadrantsâbeforeâaddressingâQuadrantâ4.âItâisâbestâtoâconsiderâveryâcarefullyâduringâtougherâeconomicâtimes.
6.6.2 Summary: Maximizing Opportunities
TheâstepsâtoâmaximizeâtheâopportunitiesâfromâanâenhancedâclientârelationshipâareâsummarizedâinâTableâ6.11.
Table 6.11 Maximizingâopportunitiesâfromâenhancedâclientârelationships
Opportunity ActionâRequired
1. Beâclearâonâtheâdirectionâyouâwishâyourâfirmâtoâtake.âThisâshouldâbeâclearlyâstatedâinâyourâbusinessâplan.
2. Beâspecificâaboutâwhichâservicesâyouâwillâofferâyourâclients.
3. Haveâaâgoodâunderstandingâofâhowâtheâservicesâwillâbeâdelivered,âandâhowâtheyâwillâbeâpriced.
4. Undertakeâaâgapâanalysisâonâyourâclientâbase.
5. Identifyâtheâadditionalâservicesâyouâcanâmarketâtoâyourâexistingâclients.
6. Setâaâplanâforâhowâandâwhenâyouâwillâapproachâyourâclients.
7. Haveâmarketingâmaterialâavailableâatâallâtimes,âwhichâoutlinesâtheâbenefitsâofâadditionalâservices.
6.7 Developing Strategies to Provide a Full Range of Quality Services
Thereâisâaâseriesâofâstepsâtowardâdevelopingâstrategiesâtoâprovideâaâfullârangeâofâqualityâservicesâ(setâoutâinâTableâ6.12).
Table 6.12 Stepsâtoâdevelopingâaâfullârangeâofâservices
Action By Whom By When
1. Determineâwhatâyourâmarketâconsidersâtheâfullârangeâofâservicesâtoâbe.
2. Identifyâthoseâservicesâyourâfirmâcurrentlyâprovides.
3. Decideâwhichâadditionalâservicesâyourâfirmâwouldâlikeâtoâdevelopâcapabilityâin.
4. Determineâwhichâservicesâyouâwillâreferâtoâotherâfirms.
Asâaâresultâofâtheâinformationâgained,âyourâfirmâcanâdecideâwhichâservicesâitâwillâcontinueâtoâprovide,âwhichâservicesâitâwillâdevelop,âandâwhichâservicesâitâwillâreferâtoâotherâfirms.
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6.7.1 Identifying the Services Required in the Marketplace
Askâyourâclientsâwhatâtheirâcurrentârequirementsâareâandâwhatâtheyâexpectâthemâtoâbeâoverâtheânextâfewâyears.âYouâmayâdoâthisâbyârunningâaâfocusâgroup,âorâsimplyâbyâaskingâyourâclientsâandâcontacts.
UseâtheâlistâofâsuggestedâservicesâinâTableâ6.13âtoâdetermineâtheâlevelâofâinterestâforâeachâserviceâsuggested.
Table 6.13 Servicesâchecklist
ServiceDo you Use this Service Now?
Would you Expect to Use it in the Future? Comment
1. Auditâandâassurance
2. Taxationâadvice
3. Financialâstatements
4. Managementâaccounting
5. Taxâreturnâpreparation
6. Regulatoryâcompliance
7. Companyâsecretarial
8. VATâpreparationâandâcompilation
9. Businessâvaluationsâandâdueâdiligence
10. Financialâplanning
11. Businessâcoachingâandâmentoring
12. Taxâplanningâandâconsulting
13. Insolvencyâandâliquidation
14. Corporateâfinance
15. Riskâmanagementâandâassetâprotection
16. Financeâbrokingâandâmortgageâlending
17. Successionâplanning
18. Wealthâmanagementâandâcoaching
Tableâ6.14âlistsârelatedâservicesâthatâaccountingâfirmsâmayâprovide,âorâcouldâprovideâintroductionsâfor.âAgain,âyouâmayâchooseâtoâaskâyourâclients,âpotentialâclientsâandâcontactsâwhichâofâtheâfollowingâservicesâwouldâbeâofâinterestâtoâthemâandâtheirâbusinesses.
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Table 6.14 Relatedâservicesâchecklist
ServiceDo you Use this Service Now?
Would you Expect to Use it in the Future? Comment
1. Informationâtechnologyâprovider
2. Residentialârealâestateâagent
3. Commercialârealâestateâagent
4. Financeâbroker
5. Taxationâspecialist
6. Stockbroker
7. Personalâriskâinsuranceâagent
8. Lawyer
9. Banker
10. Generalâinsuranceâbroker
11. Humanâresourcesâprovider
12. Utilities
13. Stationeryâandâofficeâconsumables
Theseâquestionsâworkâwellâwhenâaskedâinâaâformalâandâstructuredâway.âManyâaccountingâfirmsâsimplyâdonâtâaskâmanyâquestionsâofâ theirâ clientsâ toâgainâaâbetterâunderstandingâofâ theirâneeds.âYouâcanâdifferentiateâyourselfâinâtheâmarketâbyâaskingâquestionsâlikeâthese,âandâgainingâanâunderstandingâofâwhatâyourâclientsâreallyâwant.âYourâfirmâmustâthenâdecideâifâitâwillâprovideâtheâservice,âdevelopâtheâcapabilityâinternally,âorâreferâclientsâonâtoâotherâfirms.
Considerâ usingâ theâ questionnaireâ shownâ inâ Tableâ 6.15.â Firmsâ lookingâ toâ introduceâ aâ broaderâ rangeâ ofâservicesâtoâtheirâclientsâandâtheâmarketplaceâinâgeneralâmayâcompleteâthis.âYourâopportunityâtoâofferâtheseâservicesâwillâbeâsubjectâtoâlocalârestrictionsâandâethicalâconsiderations.
Table 6.15 Internalâquestionnaire
Question Reply/Comment
1. What servicesâdoâourâclientsâneed?
2. Whatâisâtheâbestâwayâtoâfindâout?(forâexample,âquestionnaire,âfocusâgroup,âetc.)
3. Canâweâprovideâtheseâservices?âIfâso,âwhichâones?
4. Ifânot,âwhichâservicesâcanâweâdevelopâinternally?
5. Whatâresourcesâandâtrainingâwillâbeârequiredâifâweâchooseâtoâdevelopâtheâcompetencyâin-house?
6. Whichâservicesâshouldâweâreferâtoâanotherâfirm?â(Seeânextâsection.)
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6.8 Strategies for Providing a Full Range of Quality Services: Mergers, Networking, Referrals
Theâexercisesâaboveâmayâdemonstrateâtoâfirmsâthatâtheyâneedâhelpâtoâprovideâaâfullârangeâofâservices.âSomeâfirmsâmayâwishâtoâformâanâallianceâwithâanotherâfirm.âTableâ6.16âshowsâtheâquestionsâtoâask.
Table 6.16 Formingâanâalliance
Question Reply/Comment
1. Whomâshouldâweâalignâwith?
2. Howâwillâweâassessâtheirâcompetenceâandâcapabilities?
3. Whatâstructureâshouldâourâallianceâorâreferralâarrangementsâtake,âifâany?
4. Whatâqualityâassuranceâprocessesâwillâweâhaveâinâplace,âtoâensureâourâpartnersâprovideâqualityâservice?
5. Shouldâthereâbeâanyâfinancialâarrangementsâtoâconsider?
6. Whichâservicesâshouldâweâreferâtoâanotherâfirm?â(Seeânextâsection.)
Inâdecidingâwhichâorganizationâtoâallyâwith,âtheâstartingâpointâisâforâtheâfirmâtoâassessâtheâservicesâtheyâareâlikelyâtoâreferâtoâotherâfirms.âTheâfirmâshouldâthenâconsiderâtheâlikelyâcontendersâ(seeâexamplesâshownâinâTableâ6.17).
Table 6.17 Targetâlistâofâpossibleâalliances
SpecializationName of Firm, or Person
Preferred Arrangement
ActionâRequired By Whom By When
FinancialâPlanning Sharpe Planning Joint Venture Meetâtoâdiscuss PK April 15
Stockbroker Geckoâ&âAssoc Alliance Lunch PKâ&âGG May 31
Auditâandâassurance Smithâ&âCo Referral Meetâtoâdiscuss PK June 25
BusinessâCoach MaximusâConsulting Potentialâmerger Dueâdiligence Third-partyâfirm Octoberâ15
6.8.1 Common Concerns with Referrals or Introductions
Aânumberâofâconcernsâariseâwhenâclientsâofâoneâfirmâareâintroducedâandâreferredâtoâanotherâfirm.âTheseâincludeâconcernsâthatâtheâreferredâfirmâwill:
·· Notâgiveâtheâclientâaâgood,âprofessionalâexperience;
·· Notâprovideâserviceâatâtheâstandardâthatâtheâclientâandâreferringâfirmâwouldâexpect;
·· Disappointâorâupsetâtheâclient;âor
·· Destabilizeâtheârelationshipâtheâclientâhasâwithâtheâreferringâfirm.
Theseâconcernsâallâstemâfromâtheâfactâthatâmostâfirmsâstrenuouslyâprotectâtheârelationshipsâtheyâhaveâwithâtheirâclients.âMostâfirmsâwillâdoâallâtheyâcanâtoâretainâtheirâclientsâandâenjoyâaâlongâandâhealthyârelationship.
Priorâtoâtheâcommencementâofâanyâreferrals,âeachâfirmâinvolvedâisâadvisedâtoâdoâaââminiâdueâdiligenceââonâeachâother.âThisâwillâallowâtheâfirmsâtoâconfirmâthatâeachâhasâtheâsameâconcernâforâclientâwelfareâasâtheâotherâdoes.âThisâshouldâalsoâensureâthatâtheâclientâhasâanâexcellentâprofessionalâexperience.
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Table 6.18â willâ assistâ youâ toâ determineâ theâ attitudeâ ofâ yourâ referralâ partnerâ towardâ clientâ serviceâ andâsatisfaction.
Table 6.18 DiscoveringâYourâPotentialâReferralâPartnerâsâAttitudes
Question Reply/Comment
1. Describeâhowâyouâandâyourâfirmâwillâdealâwithâanyâclientsâweâmayâreferâtoâyou.
2. Describeâtheâattitudeâyouâandâyourâfirmâhaveâtowardâclientâservice.
3. Howâwillâyouâensureâthatâourâclientsâwillâhaveâaâgoodâprofessionalâexperienceâwithâyourâfirm?
4. Describeâtheâlevelâofâclientâserviceâyouâandâyourâfirmâprovide.
5. Whatâassurancesâcanâyouâgiveâthatâyouâwillânotâupsetâtheâclient,âorâdestabilizeâtheârelationshipâweâhaveâwithâthem?
6. Whichâservicesâshouldâweâreferâtoâanotherâfirm?â(Seeânextâsection.)
Thisâtypeâofâdiscussionâwillâallowâeachâfirmâtoâbetterâunderstandâeachâotherâsâserviceâstandards.âItâwillâalsoâallowâeachâfirmâtoâmakeâitsâexpectationsâclearâtoâtheâother.
Theâvariousâstrategiesâthatâcanâactuallyâdeliverâtheâfullârangeâofâservicesâtoâtheâclientâbaseâandâmarketplaceâareâshownâbelow.
6.8.2 Mergers
Thisâisâwhereâtwoâfirmsâjoinâtogetherâtoâformâoneânewâfirm.âItâwasâdiscussedâinâModule 3âasâaâgrowthâstrategyâandâ isâequallyârelevantâwhenâconsideringâtheâdeliveryâofâqualityâservices.âMergersâareâalsoâexaminedâ inâmoreâdetailâinâModule 8.
Thereâ areâ aâ numberâ ofâ issuesâ thatâ typicallyâ ariseâ duringâ aâmerger.â Differingâ workâ culturesâ oftenâ raiseâquestionsâabout:
·· Workâethics;
·· Workâlifeâbalanceâ(hoursâexpectedâtoâbeâworkedâeachâweek);
·· Workâpractices;
·· Blendingâofâpersonalities;
·· Humanâresources;
·· Differentâexpectations;
·· Technology;
·· Billingâandâdebtâcollectionâpractices;
·· Profitabilityâvariations;âand
·· Twoâbecomesâone.
Thereâareâalsoâaânumberâofâadvantagesâandâdisadvantagesâtoâconsider.
Advantages
·· Eachâfirmâbringsâitsâuniqueâstrengthsâtoâtheâcombinedâfirm,âtherebyâmakingâmoreâservicesâavailableâtoâall.
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·· Thereâareâeconomiesâofâscale:âaâmoreâefficientâteamâcanâusuallyâdoâmoreâwork.
·· Thereâisâaâreductionâinâduplicationâofâeffortâandâcertainâstaffingâroles.
Disadvantages
·· Aâmergerâisâanâextremeâpositionâtoâtakeâifâyouâareâsimplyâprovidingâoneâorâtwoâadditionalâservices.
·· Theâissuesâarisingâfromâtheâmergerâmightâcauseâsignificantâdistractionâtoâtheâbusiness.âThisâmayâhaveâaânegativeâimpactâonâprofitability,âworkflowâandâtheâoverallâclientâexperience.
6.8.3 Cherry-Picking
Ratherâthanâmergingâtwoâfirms,âitâmayâbeâpossibleâforâoneâfirmâtoââcherry-pickââorââheadhuntââaâpartnerâorâseniorâmanagerâfromâanotherâfirmâwhoâhasâspecialistâskillsâtheâfirmâneeds.
Theâspecialistâmayâhaveâaâsmallâteamâofâworkersâwhoâmayâalsoâjoinâtheânewâfirm.âEssentially,âthisâallowsâtheâfirmâtoâcreateâaânewâdivisionâandâprovideâaâbroaderârangeâofâservices.
Advantages
·· Simplicityâofâapproach.
·· Usuallyâonlyâminimalâdisruption.
Disadvantages
·· Itâcouldâbeâanâexpensiveâexerciseâtoâattractâtheârightâperson.
·· Itâcouldâbeâanâexpensiveâexerciseâifâitâdoesnâtâworkâout.
6.8.4 Alliances
Whenâtwoâorâmoreâfirms,âorâspecialistsâwithinâfirms,âworkâtogetherâonâclientâmattersâonâaâproject-by-projectâbasis,âthisâisâanâalliance.
Advantages
·· Eachâpartyâretainsâitsâindividualâidentityâandâstructure.
·· Thereâisâaâcombinedâfocusâonâtheâjointâobjectiveâofâsatisfyingâtheâclientsâârequirements.
·· Itâallowsâeachâpartyâtoâbringâtheirâspecialistâskillsâtoâtheâtable,âforâtheâoverallâbenefitâofâtheâclient.
·· Theâfeeâonâtheâassignmentâisâusuallyâsplitâonâtheâbasisâofâcontributionâtoâtheâproject.
Disadvantages
·· Thereâisâpotentialâdifficultyâwithâsharingâresourcesâonâoccasion.
·· Noâcentralizedâadministration.
·· Thereâisâpotentialâforâconflict,âasâoneâpartyâtypicallyâneedsâtoâtakeâtheâleadârole.
6.8.5 Referrals
Oneâfirmârefersâworkâtoâanotherâfirmâ(seeâTableâ6.19).âTheseâarrangementsâareâveryâpopular.âSomeâareâtightlyâstructured,âwithâaâminimumânumberâofâcross-referralsârequiredâperâmonth.âOthersâareâlooselyâstructured,âandâthereâisâsimplyâanâagreementâbetweenâtheâfirmsâtoâreferâworkâasâtheâneedâarises.
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Inâsomeâarrangements,âreferralâfeesâareâpaidâbetweenâtheâfirms,âusuallyâinâsomeâproportionâtoâtheâvalueâofâtheâfeeâonâtheâproject.âOthersâhaveânoâreferralâfees,âasâtheâreferringâfirmâisâsimplyâconcernedâaboutâtheâclientâmatterâgettingâresolvedâbyâtheâmostâsuitableâperson.
Advantages
·· Theyâareâflexibleâinâstructure.
·· Theyâareâflexibleâinâfinancialâarrangement.
·· Theâarrangementâallowsâeachâfirmâtoâstayâfocusedâonâitsâareaâofâspecialization.
·· Eachâpartyâretainsâitsâownâindependence.
Disadvantages
·· Theâreferringâfirmâhasânoâcontrolâoverâtheâworkâperformanceâofâtheâreferred-toâfirm.
·· Low-standardâworkâbyâtheâreferred-toâfirmâmayâreflectâbadlyâonâreferringâfirm.
·· Theâreferringâfirmâmustâtrustâinâtheâabilityâofâtheâreferred-toâfirm.
YouâshouldâconsultâtheâIESBAâCodeâorâyourâprofessionalâbodyâforâfurtherâguidanceâregardingâtheâreceiptâofâreferralâfeesâorâcommissions.âEthicalâthreatsâandâsafeguardsâareâexaminedâinâModule 7.
Table 6.19 Sampleâplanâtoâdeliverâaâfullârangeâofâqualityâservices
Services RequiredâbyâClients and/or Market
Services Currently Provided
Strategy for Delivery of Service We do not Currently Provide ActionâRequired
By Whom By When
Taxation Yes Notâapplicable N/A
Audit No Referralâtoâauditâfirm Developârelationshipâwithâprofessionalâcolleaguesâwhoâprovideâauditâservices
PK Marchâ31
Companyâsecretarial
Companyâsecretarial
Notâapplicable N/A
Business valuationsâandâdueâdiligence
No Referralâtoâspecialistâfirm
Findâappropriateâfirm.âCheckâwithâprofessionalâcolleaguesâforâreputableâfirm
PK June 25
Liquidation No Referralâtoâspecialistâfirm
Contactâpreviousâcolleagues
PK As soon as possibleâ(ASAP)
Successionâplanning
No Referral,âthenâpossibleâmerger
HaveâlunchâwithâBrianâtoâdiscuss
PKâandâBC
October
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6.9 Invoicing and Collection
Thisâmoduleâhasâsaidâaâgreatâdealâaboutâtheâimportanceâofâaâgoodâworkingârelationshipâwithâyourâclient.âHowever,âitâisâequallyâimportantâthatâyouâgetâpaidâforâtheâworkâyouâdo.âTheâfollowingâdiscussionâaddressesâcreditâcontrolâandâsomeâprovenâcollectionâtechniques,âbeforeâdiscussingâsomeâofâtheâreasonsâwhyâsomeâclientsâdonâtâpay.
6.9.1 Credit Control
Useâtheseâtipsâtoâdevelopâanâeffectiveâapproach.
·· Developâaâcreditâpolicy.âWriteâaâclearâandâconciseâcreditâpolicyâthatâappliesâtoâallâclients.
·· Considerâflexibleâarrangementsâforâyourâlargerâclients.
·· Specifyâclearâterms:âmakeâyourâclientsâfullyâawareâofâyourâtermsâandâconditions.
·· Implementâtheâpolicy:âtrainâyourâemployeesâonâtheâpolicyâandâhowâtoâenforceâit.
·· Screenâprospectiveâclients:âthereâisânoâsenseâtakingâonânewâclientsâifâtheyâdonâtâpayâyou.
6.9.2 Collection Techniques
Theseâtechniquesâwillâenableâmoreâsuccessfulâcollectionâofâpayments.â
·· Explainâyourâcreditâtermsâandâexpectationsâclearlyâfromâtheâoutset.â
·· Makeâsureâyourâclientsâunderstandâthem.
·· Quantifyâyourâfeesâinâadvanceâwhereâpossibleâ(itâusuallyâis).
·· Provideâpaymentâalternatives.
·· Followâupâdebtsâsystematicallyâandâfrequently.
·· Replaceâtheâagingâclassificationâofâyourâdebtors;âinsteadâofââCurrent,â30âDays,â60âDays,â90âDays,â90+âDays,ââuseâonlyââDueâNowââandââOverdue.â
·· Commenceâfollow-upâearly.
·· Makeâitâeasyâforâyourâclientsâtoâpay.
·· Anâeffectiveâcollectionsâprocessârequiresâregularâweeklyâattention.
Toâgetâtheâbestâresults,âfocusâonâtheââjustâoverdue,ââasâtheseâareâtheâeasierâaccountsâtoâcollect.
6.9.3 Some Fundamental Rules
·· Invoiceâbyâemailâratherâthanâpost:âitâisâfasterâandâprovidesâyouâwithâonlineârecords.
·· Invoiceâasâcloseâasâpossibleâtoâtheâtimeâyouâdeliverâtheâservice.
·· Startâtheâfollow-upâprocessâearly.
·· Donâtâwaitâ toâ followâup.âWhenâ theâ accountâ isâ overdue,â startâ remindingâ theâ clientâ thatâ paymentâ isâexpected.
·· Alwaysâbeâcourteousâandâprofessional.
·· Collectionsâshouldâbeâaâprocess,ânotâaâpunishment.
·· Mostâclientsâareâhonestâandâwillâpayâifâtheyâknowâtheyâhaveâto.
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·· Aâseriesâofâgentle,ânon-confrontationalâremindersâwillâgetâmostâclientsâtoâpay.
·· Beâpersistentâandâconsistentâthisâisâessential.
·· Considerâtheâbenefitsâofâofferingâincentiveâoptions,âlikeâsmallâdiscountsâforâearlyâorâpromptâpayments.
Asâyouâcanâsee,âthisâprocessâisâreallyâallâaboutâcommunicatingâwithâclientsâtoâmakeâsureâtheyâareâfullyâawareâofâyourâfirmâsârequirements.
Oneâofâtheâsecretsâofâeffectiveâdebtâcollectionâisâtoâhaveâaâsystemâthatâmakesâitâasâeasyâasâpossibleâforâyourâclientsâtoâpayâonâtime.âAâgoodâcollectionâsystemâstartsâwithâtheâinitialâclientâcontact,âandâmovesâthroughâtheâwholeâworkflowâprocessâtoâinvoicing,âandâthenâtoâanyâfollow-up.
Earlyâ identificationâ ofâ clientsâwhoâ haveâ poorâ intentionsâ regardingâ paymentâ ofâ theirâ accountâwillâ ultimatelyâdetermineâtheâsuccessâof,âorâlevelâofâfrustrationâwithâyourâsystem.âNotâhavingâaâsystemâwillâensureâpoorâresults.
6.9.4 Why Clients Donât Pay
Thereâareâtypicallyâaânumberâofâreasons,âmostâofâwhichâyouâcanâdealâwith.
1. Client has a genuine dispute
Theâbestâapproachâisâtoâstartâfollow-upâearly.âAâreminderâletterâwillâflushâtheâissuesâout,âandâitâisâfarâeasierâtoâresolveâaâcomplaintâwhenâtheâmatterâisâstillâfresh.
Waitingâninetyâdaysâtoâfindâoutâaâproblemâexistsâsignificantlyâreducesâyourâchancesâofâaâsuccessfulâresolutionâandâpaymentâinâfull.
2. Client is careless
Theâclientâforgotâtoâpayâtheâinvoice,âorâsimplyâdidnâtâunderstandâwhenâtheyâwereâsupposedâtoâpay.âThisâmayâhaveâbeenâbecauseâyouâwerenâtâparticularlyâclearâaboutâyourâterms.
Theâbestâapproachâisâtoâstartâearly,âandâmakeâitâeasyâforâyourâclientsâtoâpay.âAâreminderâletterâisâaâgentleâpromptâandâhasâaâgreatâresultâforâthisâgroup.âThereâareâmanyâotherâthingsâyouâcanâdoâbefore you issue the invoiceâthatâwillâincreaseâyourâchancesâofâbeingâpaidâonâtime.âItâisâimportantâtoâbeâextremelyâclearâwithâyourâclientâinâregardâtoâyourâtermsâandâexpectations.
3. Client is disorganized
Onceâagain,âtheâbestâapproachâisâtoâstartâearlyâandâmakeâitâeasyâforâyourâclientsâtoâpay.âIfâtheyâareâdisorganizedânow,âtheyâwillâstillâbeâinâtroubleâinâsixtyâdays.âDonâtâjoinâtheâqueueâofâcreditors:âmoveâtoâtheâfront.
4. Client has no money
Theâintentâisâthereâbutânotâtheâcash.âAgain,âtheâbestâapproachâisâtoâstartâearlyâandâmakeâitâeasyâforâyourâclientsâtoâpay.âGettingâpaymentâarrangementsâagreedâuponâearlyâensuresâaâgreaterâchanceâofâbeingâpaidâinâfull.âSmallâregularâamountsâconfirmâtheâclientâsâintent.
Ifâtheyâareâinârealâtrouble,âitâisâimportantâtoâfindâoutâearly.âThisâletsâyouâavoidâdoingâmoreâwork.âAlternatively,âyouâmightâseeâanâopportunityâtoâassistâtheâclientâinâsortingâoutâtheirâproblems.
5. They are unconcerned and canât be bothered
Theâbestâapproachâisâtoâstartâearlyâandâbeâdifficultâtoâignore.âYouâmustâbeâpersistentâwithâthisâtypeâofâclient.âYouâshouldâalsoâconsiderâalternativeâpaymentâarrangementsâbeforeâyouâdoâfurtherâwork.
Youâshouldâalsoâassessâwhetherâyouâwishâtoâcontinueâactingâforâclientsâsuchâasâthese,âasâtheyâareâlikelyâtoâbeâoutsideâyourâtargetâclientâmodel.
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6. They are dishonest
Thisâisânotâtheâtypeâofâclientâyouâshouldâcontinueâwith.âTheâbestâapproachâisâtoâstartâearlyâandâbeâdifficultâtoâignore.âAlso,âdonâtâgetâemotionallyâinvolvedâinâyourâcommunicationsâwithâthisâclient.âEnsureâthatâyouâhaveâestablishedârulesâinternallyâandâthatâyourâcollectionâsystemâisâfollowedâconsistently.
Doânoâfurtherâworkâforâthisâclient,âandâdecideâonâanâexitâstrategyâforâthemâafterâtheyâhaveâpaidâinâfull.
6.9.4aâ TheâEngagementâLetter
Theâengagementâletterâoutlinesâtheâscopeâofâworkâyouâwillâdoâforâtheâclientâandâalsoâoutlinesâtheâtermsâandâconditionsâofâtradeâofâtheâfirm.âEachâfirmâshouldâcarefullyâconsiderâhowâtoâincorporateâtheirâtradingâtermsâintoâtheirâclient-engagementâletter.âThisâbecomesâaâstrongâpieceâofâevidenceâinâanyâdispute,âparticularlyâwhenâtheâclientâhasâsignedâtheirâacceptanceâofâtheâengagement.
6.10 ConflictâResolutionâandâArbitrationâServices
Thisâmoduleâ isâaboutâ theâdevelopmentâofâclientârelationships.âUnfortunately,âsometimesâthatârelationshipâbreaksâdown.âThisâsectionâwillâconcentrateâonâtheârelationshipâbetweenâtheâclientâandâtheâfirm.âHowever,âitâisâworthânotingâthatâtheâstrategiesâdiscussedâapplyâequallyâwellâtoâallârelationships,âwhetherâtheyâareâinâtheâworkplace,âorâinâaâprivateâcontext.
6.10.1 Five Signs of Rising Conflict
Inâorderâtoâbeginâtoâresolveâconflict,âthereâneedsâtoâbeâanâawarenessâthatâconflictâisâhappening,âorâisâaboutâtoâhappen.âYouâneedâtoâbeâsensitiveâtoâtheâsignsâofâconflict.âThereâareâfiveâlevelsâofâescalatingâseriousnessâinâaâtypicalâconflictâsituation.
1. Discomfort
Discomfortâisâtheâvagueâfeelingâthatâsomethingâisânotâquiteârightâbetweenâyouâandâtheâclient,âevenâthoughânothingâmayâhaveâbeenâsaidâorâdoneâovertly.âThisâisâaâgoodâtimeâtoâconsiderâreachingâoutâtoâtheâotherâpersonâtoâexploreâwhetherâorânotâthereâisâaâproblem.
Thinkâaboutâpossibleâcausesâofâtheâdiscomfort,âeitherâinâyourself,âtheâotherâpersonâorâtheâtotalâsituation.âAskâyourself,ââWhatâstepsâcanâIâtake,âwhatâquestionsâcanâIâask,âwhatâcanâIâdoârightânowâtoâclarifyâandâperhapsârelieveâtheâproblem?â
Thisârequiresâyouâtoâtakeâtheâfirstâstepâinâclarifyingâanyâissue.âItâmayâbeâdifficultâtoâbringâyourselfâtoâdoâthis,âbutâitâisâanâimportantâstep.
2. Incidents
Thisâisâwhereâthereâisâaâminorâclashâorâdisagreementâbetweenâyouâandâtheâclient.âAlthoughâyouâdonâtâfeelâparticularlyâupset,âitâmayâdisturb,âsurpriseâorâirritateâyouâenoughâtoârememberâitâforâaâdayâorâtwo.âThisâisâaâstepâbeyondâmereââdiscomfort.â
Youâmayâchooseâtoâdiscussâthisâwithâyourâclient,âinâorderâtoâclarifyâanyâissuesâorâfalloutâfromâtheâdisagreement.âHowever,âyouâmayâfindâthisâawkward,âdecideâtoâletâtheâmomentâpass,âandâletâtheâpassageâofâtimeâhealâanyâsmallâwounds.
3. Misunderstanding
Inâ situationsâ whereâ thereâ areâ differentâ expectationsâ betweenâ yourâ clientâ andâ yourâ firm,â orâ whereâcommunicationâisâincomplete,âwordsâandâactionsâcanâbeâmisinterpreted.âUnfortunately,âthisâcanâoftenâleadâ
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toâmisunderstanding.âThisâisâespeciallyâtheâcaseâwhereâthereâisâaâlackâofârapportâorâopennessâbetweenâtheâclientâandâtheâfirm.
Asâaâresult,âyouâstartâtoâpayâcloseâattentionâtoâthingsâthatâconfirmâwhatâyouâhadâalreadyâstartedâtoâbelieveâaboutâtheâotherâperson,âorâaboutâtheâsituation.âThisâthenâbecomesâaââself-fulfillingâprophecyââasâyouâseeâmoreâandâmoreâinstancesâconfirmingâyourâbeliefâthatâtheâclientâisâinâtheâwrong.
4. Tension
Whenâyouâareâexperiencingâtensionâinâtheâclientârelationship,âyourâfeelingsâandâperceptionsâaboutânearlyâeverythingâtheyâsayâorâdoâcanâbecomeâquiteânegative.âItâmayâcomeâaboutâfromâaâsimpleâmisunderstandingâthatâquicklyâescalates.
Inâtheseâsituations,âyouâwillâfindâitâdifficultâtoâinteractâorâworkâwithâthemâwithoutâfeelingâanxiousâorâdefensive.âItâisâthenâlikelyâthatâyouâwillâbeâconcernedâaboutâlosingâthemâasâaâclientâandâtheâpotentialâdamageâtoâyourâfirmâorâreputationâasâaâresult.
5. Crisis
Inâaâcrisisâsituation,âpeopleâtendâtoâbehaveâinâextremeâwaysâthatâtheyâwouldânormallyânotâevenâconsider.âThisâmayâhaveâsignificantâconsequencesâforâaâfirm,âdependingâonâtheâactionsâtheâclientâorâtheâfirmâtakes.
Asâexamples,âtheâtypesâofâbehaviorâthatârepresentâaâcrisisâincludeâactualâorâthreatenedâphysicalâviolence,âverbalâandâemotionalâabuse,âdestructionâofâproperty,âorâtheâbreakdownâofâtheâclientârelationship.âThisâcanâbecomeâparticularlyâdifficultâforâaâfirmâifâtheâclientâtakesâlegalâactionâagainstâtheâfirmâandâreportsâtheâfirmâtoâtheirâprofessionalâbody.
6.10.2 Dealing with Conflict
Fortunately,â youâ canâ addressâ anyâ ofâ theseâ stagesâ inâ aâ numberâ ofâ ways.â Itâ isâ importantâ toâ learnâ theseâmethods,âasâyouâneverâknowâwhenâyouâmayâneedâtoâcallâonâthem.
1. Donât react, respond!
·· Keepâyourselfâcalmâinâtheâpresentâmoment.
·· Breatheâdeeplyâtoâcomposeâyourself.
·· Maintainâyourâcomposure;âbeâreceptive.
·· Keepâtrackâofâyourâemotions,âreactionsâandâbodyâlanguage.
·· Considerâhowâyouâareâcomingâacrossâtoâtheâotherâperson.
2. Let your position go
·· Donâtâbeâdefensive.
·· Respectâtheâotherâpersonâsâneedâtoâexpressâhowâheâorâsheâfeels.
·· Moveâasideâfromâyourâpositionâforânow.
·· Beâpreparedâtoâbeâflexible,âandâconsiderâoptions.
·· Ask,ââWhatâwouldâitâtakeâtoâsolveâthisâissue?â
3. Focus on the other person
·· Listenâactivelyâandâreflectâfeelingsâandâtheâmeaningâheâorâsheâhasâexpressed.
·· Listenâsoâthatâpeopleâcanâandâwillâtalk.
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·· Areâyouâreallyâlistening?âIsâthatâclear?
·· Acknowledgeâtheâimportanceâofâtheâotherâpersonâsâissuesâandâconcerns.
4. Seek clarity
·· Check,âclarifyâandâconfirmâbyâaskingâopenâandâreflectiveâquestions.
·· Honestlyâexploreâproblems,âeffectsâandâpossibleâcauses.
·· Lookâforâopportunitiesâinâwhatâyouâareâhearing.
·· Whatâwouldâtheyâlike?âWhatâwouldâtheyânotâlike?
·· Seeâtheâproblemâinâaâbroaderâcontext.âAreâpeopleâseeingâtheâwholeâpicture,âorâjustâtheirâownâpointâofâview?
5. State your position
·· Explainâhowâitâisâforâyou,âusingâstatementsâwhichâclearlyâstateâyourâposition.
·· Stayâinâtuneâwithâyourâvalues,âprinciplesâandâobjectives.
·· Expressâyourâownâneedsâandâconcernsâassertively,âbutânotâaggressively.
·· Attackâ theâ problem,â notâ theâ person.â Speakâ soâ thatâ peopleâ willâ listen,â notâ inâ angryâ orâaggressiveâtones.
·· Beâsoftâonâtheâpeople,âhardâonâtheâproblem.
6. Look for a win-win outcome
Withâaââwin-winââoutcome,âbothâpartiesââneedsâandâconcernsâareârespected.
·· Whatâareâtheâbestâpossibleâoptionsâtoâmeetâbothâpartiesââneeds?
·· Identifyâareasâofââcommonâgroundââandâbuildâfromâthere.
·· Whatâwillâhelpâachieveâsolutionsâthatâareâmutuallyâsatisfying?
·· Wouldâmoreâtimeâorâinformationâhelp?
·· Identifyâandâworkâonâtheâissuesâcausingâtheââblockages.â
·· Ifâpossible,âworkâtogetherâforâchange,âorâyouâmayâagreeâtoâdisagree.
·· Beâcreative,âlookâforâpossibilities.âWhatâsâtheâmostâpositiveâoutcomeâyouâcanâbothâachieve?
·· Getâcommitmentâandâagreementâonâtheânextâsteps.
7. Maintain the relationship
·· Reviewâprogressâandâfollowâup.
·· Takeâtimeâtoâmaintainâandâstrengthenâtheârelationship.
Asâyouâcanâsee,âconflictâresolutionâisâaâbigâissueâbutâthereâareâtoolsâandâtechniquesâforâdealingâwithâit.âTheârelationshipâwithâyourâclientâisâanâimportantâoneâandâhasâfar-reachingâconsequences.âByâgainingâaâbetterâunderstandingâofâconflict,âandâwaysâinâwhichâtoâhandleâit,âyouâwillâbeâbetterâableâtoâcopeâwithâtheseâsituationsâifâtheyâarise,âandâcontinueâaâsatisfactoryârelationshipâwithâyourâclient.
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6.11 Ceasing a Client Relationship
Afterâcompletingâtheâclient-classificationâexercise,âyouâwillâbeâinâaâgoodâpositionâtoâassessâtheâclientâbaseâofâyourâfirm.âOneâofâtheâoutcomesâofâthisâprocessâmayâbeâthatâyouâdecideâtoâendâsomeâclientârelationships.â Itâmayâbeâthatâtheyânoâlongerâfitâtheâprofileâofâyourâfirm,âorâthatâafterâconsideringâaânumberâofâfactorsâyouâhaveâdecidedâyourâfirmâshouldânoâlongerâdealâwithâthem.âWhateverâtheâreason,âyouâhaveâcomeâtoâaâsignificantâdecision.
Theâwayâyouâhandleâtheâclientâdepartureâisâveryâimportant.âThereâareâaânumberâofâwaysâtoâendâaârelationshipâwithâaâclient,âincluding:
·· Sendingâaâletterâstatingâthatâyouâareânoâlongerâavailableâtoâactâonâtheâclientâsâbehalf;
·· Increasingâfeesâuntilâtheâclientâleaves;
·· Referringâtheâclientâtoâanotherâaccountingâfirm;
·· Sellingâtheâclient;âor
·· Meetingâwithâtheâclientâandâtalkingâitâover.âEachâofâtheseâisâdiscussedâbrieflyâbelow.
6.11.1a Sending a Letter
Thisâisâtheâmostâformalâand,âsomeâwouldâargue,âtheâmostâprofessionalâwayâofâendingâaâclientârelationship.âTheseâlettersâtendâtoâbeâfairlyâbriefâandâtoâtheâpoint.âHowever,âtheâcontentâusuallyâdependsâonâtheârelationshipâtheâfirmâhasâhadâwithâtheâclientâoverâtheâyears.âThisâwillâdetermineâhowâmuchâdetailâtheâfirmâdisclosesâasâtoâwhyâitâisâendingâtheârelationship.
Whateverâtheâreason,âitâisâimportantâtoâstateâquiteâclearlyâthatâtheârelationshipâwillâend,âorâhasâended,âandâthatâtheâclientâshouldâseekâalternativeâprofessionalâadviceâandâservice.âItâisâalsoâcustomaryâtoâaddâyourâbestâregardsâandâwishâtheâclientâwellâinâtheirâfutureâendeavors.
6.11.1bâ IncreasingâFees
Thisâmethodâinvolvesâincreasingâtheâfeesâchargedâtoâtheâclientâonâaâprogressiveâbasis.âItâisâhopedâthatâtheâclientâwillâeventuallyâcomeâtoâtheâconclusionâthatâtheâfirmâhasâbecomeâtooâexpensiveâandâmakeâtheâdecisionâtoâleave.
Thereâareâaânumberâofâproblemsâwithâthisâstrategy.
·· Theâclientâmightânotâleave.âIfâtheyâdonâtâleave,âyouâwillâhaveâtoâcontinueâputtingâupâwithâthemâ(butâatâleastâyouâreâgettingâpaid!).
·· Theâclientâmightânotâpayâtheâfee,âbutâstillâexpectâtheâworkâtoâbeâdone.âIfâthisâhappens,âyouâwillâhaveâincurredâcostsâinâpreparingâtheâworkâbutâwillâthenâseeâlengthyâdelaysâgettingâpaid.
·· Theâclientâmayâbecomeâobnoxiousâ(orâmoreâobnoxious).âTheyâmayâalreadyâbeâobnoxious,âbutâtheyâmayâbecomeâworse.âThisâputsâadditionalâpressureâandâstressâonâyourâemployees.âSuchâpressureâisâprobablyânotâworthâit.
·· Theyâmayâreportâyouâtoâyourâprofessionalâbody.âYouâmayânotâbeâbreachingâanyâregulations,âbutâyourâclientâmayâargueâthatâyouâareânotâactingâprofessionally.
Anotherâpossibleâoutcomeâisâthatâtheâclientâcomesâtoâappreciateâtheâtrueâvalueâofâtheâserviceâyourâfirmâisâproviding,âandâtheârelationshipâimproves.
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6.11.1câ ReferringâtoâAnotherâFirm
Thisâ isâ quiteâ aâ popularâmethod.â Firmsâwithâ differentâ specializationsâ orâ skillsâmayâ referâ clientsâ betweenâthemselves.âTheâreferringâfirmâmayâhaveârealizedâthatâ theârelationshipâwithâtheâclientâ isânotâworking,âyetâthinksâitâmightâworkâwithâanotherâfirm.âTheâreferralâcanâtakeâplaceâinâwriting,âfaceâtoâface,âorâoverâtheâphone.âTheâfirmâmaintainsâcredibilityâinâtheâeyesâofâtheâclient,âasâtheâclientâhasâbeenâprovidedâwithâanâalternativeâadviser,âandâtheâmatterâhasâbeenâhandledâinâaâprofessionalâmanner.
6.11.1d Selling the Client
Itâmayâbeâpossibleâtoâbundleâaânumberâofâclientsâtogetherâandâsellâthemâtoâanotherâfirmâthatâmayâappreciateâtheseâclients.
6.11.1eâ MeetingâwithâClient
Thisâisâtheâpreferredâapproach.âAfterâall,âtheâclientâyouâareâsayingâgood-byeâtoâhasâpaidâyourâfirmâoverâtheâyears.âTheyâhaveâsupportedâyouâtoâsomeâdegree.âButânow,âforâanyânumberâofâreasons,âtheârelationshipâhasâcomeâtoâanâend.
Aâface-to-faceâmeetingâisâmostâhighlyâregardedâbyâclientsâwhenâtheyâareâtoldâtheirârelationshipâisâover.âItâgivesâ theâopportunityâ forâotherâmattersâ toâbeâdiscussed.â Itâalsoâallowsâ forâanyâmisunderstandingsâ toâbeâclearedâup,âandâforâbestâwishesâtoâbeâgiven.
6.12 Conclusion
Strongâandâeffectiveâclientârelationshipsâareâtheâbackboneâofâyourâfirm.âAsâthisâmoduleâhasâmadeâclear,âyouâneedâtoâreallyâknowâyourâclients,âandâwhatâtheyâwant.âGoodâbusinessâpracticeârequiresâthatâyouâmeetâand,âwhereâpossible,âexceedâtheseâexpectations.âThereâareâmanyâresourcesâandâmethodsâavailableâtoâhelpâyouâtoâimproveâandâcementâyourâclientârelationships,â includingânetworks,âreferrals,âandâotherâalliances.âEvenâwhereâthereâisâconflict,âgoodâclientârelationshipâskillsâcanâhelpâyouâtoâachieveâaâpositiveâoutcome.
6.13 FurtherâReadingâandâIFACâResources
TheâIFACâGlobalâKnowledgeâGatewayâisâaâdigitalâhubâwhereâprofessionalâaccountantsâcanâeasilyâaccessâthoughtâ leadershipâ andâ resourcesâ fromâ IFAC,â memberâ organizations,â andâ otherâ notableâ groupsâ andâindividuals.
TheâGatewayâPracticeâManagementâsectionâincludesâadditionalâarticles,âvideos,âandâresourcesâtoâcomplementâthisâmodule.âWeâencourageâyouâtoâreviewâtheâcontent,âprovideâ feedback,âengageâwithâcontributors,âandâshareâyourâownâinsightsâonâcontemporaryâpracticeâissues.
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Appendixâ6.1âCaseâstudiesâ
Case study 1
This case study relates to Section 6.4.3, âExceeding client expectations.â
WilliamâandâIndiraâhadânoticedâthereâwasâincreasedâcompetitionâinâtheâmarketâtheyâwereâoperatingâin.âMoreâaccountantsâwereâcompetingâwithâthemâforâtheâsameâclients,âbutâsomeâofâtheseâaccountantsâwereâreducingâtheirâpricesâtoâincreaseâtheirâmarketâshare.âWilliamâandâIndiraâdecidedâtoâprovideâadditionalâvalueâtoâtheirâclientsâratherâthanâsimplyâmatchingâtheâlowerâfeesâtheirâcompetitorsâwereâoffering.
Theâfirstâareaâtheyâreviewedâwasâtheâpresentationâofâclientsââfinancialâstatements.âTheyâagreedâwithâtheâideaâthatâgraphsâshouldâbeâincludedâinâallâreportsâpreparedâforâtheirâclients.âTheyâdiscussedâthisâwithâtheirâstaff,âandâtheâstaffâalsoâagreedâitâwouldâaddâanâextraâelementâtoâtheirâfinancialâstatements.
Oneâemployee,âManu,âhadâexcellentâskillsâinâExcelâandâputâtogetherâaânumberâofâstandardâtemplateâgraphs.âHeâsavedâtheseâasââMastersââonâtheâofficeâcomputerâsystem,âwhichâmeantâtheyâwereâthenâavailableâforâtheâentireâstaffâtoâuse.
ManuâtrainedâtheâstaffâinâhowâtoâupdateâtheââMastersââwithâtheârelevantâclientâinformationâandâsaveâthemâasâseparateâclientâfiles.
Onceâtheâtrainingâwasâcomplete,âIndiraâsentâaâmemoâtoâallâstaffâinstructingâthemâtoâcompleteâaâsetâofâgraphsâwithâallâyear-endâfinancialâstatementsâ forâclients.âWilliamâandâ Indiraâhadâdecidedâ thatâ forâ theâmajorityâofâclientsâtheyâwantedâaâlineâgraphâtoâplotâsalesâforâtheâyearâagainstâsalesâforâtheâpriorâyear.âTheyâalsoâwantedâaâpieâchartâtoârepresentâtheâbalanceâsheet.âStaffâwereâinstructedâtoâprepareâtheseâgraphsâeachâtimeâtheyâranâaâfinalâsetâofâaccountsâforâtheirâclientsâunlessâtheâinformationâwasâunavailableâorâwouldârequireâtooâmuchâtimeâtoâcompile.
Clientsâreactedâveryâfavorably.âMostâclientsâappreciatedâtheâextraâinformationâtheâgraphsâprovided,âthoughâsomeâwereâ concernedâ itâ wouldâ createâ additionalâ costs.âWilliamâ andâ Indiraâ assuredâ theâ clientsâ thatâ theâgraphsâwouldânotâcauseâaâfeeâincreaseâandâtheyâwereâincludedâsoâtheâclientsâcouldâmoreâeasilyâunderstandâtheâfinancialâinformationâtheyâreceived.
AnâunintendedâbenefitâaroseâforâWilliamâandâIndiraâsâfirmâafterâtheyâstartedâproducingâtheâgraphsâwithâtheâfinancialâstatements.âThereâwasâanâincreaseâinâtheâlevelâofâinquiryâfromânewâclientsâwhoâhadâheardâaboutâtheâgraphsâbeingâproducedâbyâtheâfirm;âtheyâalsoâwantedâgraphsâwithâtheirâfinancialâstatements.
Theâ levelâofâ interestâwhichâhadâbeenâgeneratedâ fromâ theâ introductionâofâaâ simpleâ initiativeâsuchâasâ theâgraphsâencouragedâWilliamâandâIndiraâtoâconsiderâotherâmeasuresâtheyâcouldâintroduceâtoâaddâadditionalâvalueâforâtheirâclients.
(Thisâcaseâstudyâisâbasedâonâaâtrueâstory.)
Case study 2
This case study relates to Section 6.6, âEmbracing opportunities for enhanced relationships.â
Williamâdecidedâtoâ introduceâaâplanning-sessionâmeetingâ forâhisâkeyâclientsâatâ theâbeginningâofâ theânewâfinancialâyear.âHeâdecidedâheâwouldârestrictâtheâplanningâsessionâtoâjustâhisâtopâfiveâclientsâandâseeâhowâwellâtheâideaâwasâreceived.âAllâofâtheâclientsâheâdiscussedâtheâideaâwithâwereâdelightedâtoâbeâinvolved.
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Williamâstructuredâtheâsessionâaroundâtheâfollowingâagenda:
PlanningâSessionâAgenda
·· Identifyâtheâkeyâobjectivesâforâtheâbusiness
·· Identifyâthreeâgoalsâtoâbeâachievedâthisâyear
·· Identifyâtheâmostâpressingâissueâtoâbeâaddressedâurgently
·· Identifyâtheâkeyâmilestones
·· SWOTâanalysis
·· Identificationâofâclientâsâstrategicâplan
·· Reviewâorganizationâchart
⊠Allocateâresponsibilities
⊠Identifyâaccountabilities
·· Budgetâandâcashâflow:âsetâdateâforâcompletionâandâreview
·· Otherâbusiness
·· Setâdateâforânextâmeeting
Williamâwasâpleasedâwithâtheâresponseâheâreceivedâfromâhisâclientsâwhenâheâstartedâworkingâwithâthemâonâtheâplanningâforâtheirâbusinesses.âHeâhadâassumedâmostâbusinessâownersâspentâquiteâaâdealâofâtimeâonâplanningâalreadyâandâwasâsurprisedâtoâdiscoverâthatâmostâspentâveryâlittleâtimeâonâthisâmostâimportantâaspectâofâtheirâbusinesses.
ThereâwasâonlyâoneâclientâwhoâwasânotâparticularlyâinterestedâinâassistanceâfromâWilliam.âAfterâdiscussingâtheâ reasonsâwithâ theâclient,âWilliamâdiscoveredâ thatâ theâclientâconsideredâWilliamânotâparticularlyâskilledâinâ thisâareaâandâpreferredâthatâWilliamâstayâ inâ theâaccountingâarena!âHowever,âallâ theâotherâclientsâwereâdelightedâtoâtakeâupâWilliamâsâofferâforâassistanceâwithâtheirâplanning.
Oneâ ofâ theâ keyâ resultsâ ofâ theâ planningâ sessionâ isâ toâ establishâ keyâmilestonesâachievementsâ thatâ theâbusinessâ seeksâ toâ reachâ throughoutâ theâ year.âAchievingâ themâ letsâ theâbusinessâownersâ knowâ theyâareâonâtrackâtoâachieveâtheirâfull-yearâgoals.âItâalsoâmeansâWilliamâgetsâtoâmeetâtheâclientsâatâregularâintervalsâthroughoutâtheâyear,âwhichâgivesâhimâtheâopportunityâtoâprovideâadditionalâservicesâandâgenerateâadditionalâfees.
(Thisâcaseâstudyâisâalsoâbasedâonâaâtrueâstory.)