Choosing the wrong client can have harmful consequences for you professionally and personally. While the need to maintain healthy revenues is crucial to the success of any business, it is important to ensure you have constructive relationships with your clients.
That’s why it’s important to pay close attention when engaging in preliminary conversations with prospective clients. Take note of how they communicate and what their needs and expectations are. Pay attention to how closely they follow what you say and how they engage with you when you manage their expectations. These initial observations can give you insight into whether you will be able to have a productive relationship with the client moving forward.
Here are six further actions to help foster productive client relationships and to consider in the event those relationships break down.
Do your research
You should consider researching prospective clients before formally accepting the engagement. You can search for information about them including their presence on social media platforms such as Twitter and LinkedIn. This may provide insight into them as people, but also how they communicate.
The chances of a dispute can rise when providing services to a challenging client, and disputes can be time-consuming and costly. The first step to preventing a dispute with a client is avoiding the wrong client.
CIMA recommends that you contact the outgoing accountant (if there is one) by sending a professional clearance letter or picking up the telephone. While there is no regulatory requirement for you to do this, it would be prudent to do so. The CIMA Code of Ethics does require you to take other reasonable steps to obtain information about any possible threats that could arise from taking on the appointment if you are unable to communicate with the previous accountant. Sometimes the outgoing accountant will be willing to have an informal conversation rather than express concerns in writing. The CIMA guidance on professional clearance is helpful here. You should also look at the CIMA guidance on “tipping off”, which will help you understand the “tipping off offence” under the Money Laundering Regulations. This guidance distinguishes between accountants who are and are not members of professional bodies and the information that is acceptable to share in each circumstance.
Provide a clear engagement letter
Once you have a clear understanding of your client’s expectations, you will want to ensure you have a precisely drafted contract that informs all parties of their rights and obligations. All Members in Practice are required to provide written terms of engagement for all clients. Ensuring you have a clear and comprehensive letter of engagement is one of the main assets in managing a challenging client.
If a client has concerns about your performance, you should be able to refer them to the letter of engagement for clarification. By setting out your obligations clearly and precisely, you should be in a better position to manage client expectations, reducing the scope for a possible dispute. If you need to make material adjustments to the scope of services, you should agree to this in writing with the client and make any necessary amendments to the contract documents. Varying contract terms should always be recorded in writing to avoid any confusion moving forward. You may also wish to include a dispute resolution clause in the contract. Read more on this later.
Ambiguity is not your friend. Miscommunication is one of the biggest causes of complaints and disputes. It is very common for people to engage in a conversation and have very different recollections of what was said. This is in part because different words or phrases can have different connotations and the interpretation of language can be surprisingly subjective. Throw in the use of metaphors and idioms in casual conversation, and you have a fertile breeding ground for confusion.
Often, when miscommunication occurs, the stress of the dispute can lead people to respond out of frustration or anger. Equally, while written communication is encouraged, it is easy for tone to be misconstrued. That is why using precise language, whether communicating orally or in writing, is crucial. One helpful technique is to finish explaining the point you wish to make and then asking your client to communicate their understanding of what you have said, to ensure you are both on the same page. If this conversation takes place orally, then it would be prudent to follow up with an email to confirm what was said. Equally, keep minutes of any meetings. These can be circulated to all attendees for correction. This allows for all parties to have an accurate reference of any discussions if confusion later arises.
Don’t just walk away from a problem. A dispute in itself is not necessarily grounds for a complaint of misconduct to CIMA, but if you do not address the issue promptly, maintaining communication, a client may have grounds for a complaint of unprofessional behaviour. Mistakes can happen — be honest and apologise and make reparation where necessary.
Use your complaints-handling procedure
If a dispute arises and you have vetted the client, you have an engagement letter in place, and you have tried to discuss the issues with the client without success, you should make use of your complaints-handling procedure. This provides a standard approach to addressing any complaint raised by a client, setting out the length of time for acknowledgement and for a formal response to the complaint.
A complaints-handling procedure provides an opportunity to resolve any concerns raised before they escalate further. This may be difficult if you are a sole practitioner, but you are still required by CIMA to have a procedure, and that can give the client confidence that you will take a complaint seriously and address it within a timescale.
If your complaints-handling procedure has been exhausted and the issues persist, you may wish to offer a form of dispute resolution. For example, your engagement letter can stipulate that the parties agree to participate in mediation as a way of resolving disputes before litigation. It is very important to remember that alternative dispute resolution does have costs associated with it, and you will want to ascertain what they are, as far as possible, before promoting this course of action. You can find a mediator via the Centre for Effective Dispute Resolution website.
Consider disengaging from the client
Sometimes a business relationship can break down irreparably. If you think you can no longer provide services to a client, you should disengage in accordance with the notice period in your terms of engagement. An exception would be if you have grounds to suspect the client of illegal activity, in which case you can disengage immediately to avoid any accusations of complicity. We recommend that you respond to any requests for professional clearance from the new accountant, even if there is not much to say. It may be a temptation to withhold any documents if you are owed fees, and we recommend that you read the CIMA guidance on withholding client documents to ensure that you remain within the law and enable the smooth transition to a new accountant.
Use the Ethics Helpline
If you are facing an ethical dilemma and are unsure of how to proceed, it is prudent to seek support. You may wish to speak to colleagues and seek their opinion or obtain independent legal advice. Alternatively, while CIMA is unable to provide legal advice, you can contact its Ethics Helpline where we can provide links to appropriate sections of the Code of Ethics and practical guidance on communication — useful information to help support members. If in doubt, reach out.
Xose Lumor is the manager, Advocacy & Professional Ethics–Management Accounting at the Association of International Certified Professional Accountants, representing AICPA & CIMA, and is based in the UK. To comment on this article or to suggest an idea for another article, contact Oliver Rowe at Oliver.Rowe@aicpa-cima.com.