Hiring a service provider? Here’s what to expect from the client onboarding process

Given our increasingly strict and complex global regulatory landscape, a well-designed client onboarding program is more important than ever — and more difficult to develop and maintain. Fulfilling know-your-customer, or KYC, verification checks is a critical step in the onboarding process, but there are other steps that are not as widely known.

When a multinational organisation performs due diligence on a corporate service provider, it should not neglect the area of client onboarding. Does the provider have a dedicated client onboarding team, and if so, for which services? What are the main challenges of onboarding and how does the provider overcome them? What technology does the provider use? What information does the provider require?

To answer these and other questions, we interviewed three Vistra experts with a combined dozens of years of onboarding experience.

Christina Salvo is the executive director and head of client onboarding at Vistra for US-based corporate clients. Darren Beal is the portfolio director for Vistra’s global payroll services. Marc Hrabak is the director of international operations, leading the global services team in Asia and overseeing international expansion services in Singapore.

What is the purpose of a client onboarding program, and what services are typically onboarded?

Christina: An onboarding team acts in a project management capacity and oversees the launch of services, designates key personnel and defines reporting structures. Onboarded services may include establishing a legal entity, completing personnel and post-establishment registrations, and setting up or transitioning a global organisation’s payroll, accounting and compliance services. The goal is to ensure a seamless and efficient delivery of services, while also ensuring that KYC and other applicable regulatory obligations are followed.

What are some of the key steps a client should expect during the onboarding process?

Christina: Clients should have a primary point of contact for the documentation and set-up phase of their global engagement. An onboarding manager should communicate regularly with the client — at least weekly— to review deliverables and modify the project plan as needed. The client and provider should agree on a schedule of key dates for establishing recurring services, such as payroll, accounting, expense management and accounts payable.

Darren: Some clients will be new to onboarding while others will have had previous experience, which may or may not have been positive. The onboarding manager should know from the start what the client’s experience is, and in particular work to understand if client staff are being asked to go outside their comfort zones, including whether they’re working longer hours due to the engagement. In some cases, deadlines may have to be adjusted to account for the realities of the client’s situation.

Are there one or two challenges to the process that routinely surprise clients?

Christina: Clients are often surprised at the level of information required to meet local KYC requirements. Onboarding programs should make the process as easy as possible for the client by detailing requirements, and where possible, using the gathered information to fulfil KYC requirements across multiple countries.

Darren: There are cases where the services to be delivered are not accurately or fully captured during the contracting process, or the services are not understood within the context of the client’s operations. This can lead to problems during the onboarding process.

For example, I know of a scenario in which a client’s monthly reporting requirements were completely missed during the contracting process. The reports were essential to the client’s internal monthly processes — and to the new services being delivered — but they were not understood by the provider. The overlooked requirements were complex and non-standard, and accounting for them delayed the go-live process in the first wave of countries being serviced.

Marc: It’s important to emphasise that these kinds of surprises can be minimised through careful onboarding practices, but not eliminated by them. For example, the service provider may discover that an employee was born in one country but holds a passport in another, which requires additional KYC checks and documentation. Or you may find that a prospective client employs a politically exposed person, which may delay or even derail an engagement due to company policy conflicts.

You’ve worked in onboarding for many years. What’s the single most important change in this area in recent years that clients should be aware of?

Marc: With many companies using the internet as a sales and payment channel, direct and indirect tax questions are becoming more prevalent. Direct tax and permanent establishment triggers occur regardless of whether you have an established legal entity in a country. The OECD’s proposed corporate global minimum tax is changing the thinking of when, how and if a company needs a local entity. And indirect tax requirements are becoming much more complex and administratively burdensome. These shifting regulations and expectations affect onboarding, since clients need to understand and meet existing requirements, but also want to understand how their obligations may change.

Darren: The biggest change has been the move to global services. When I started working in international services 25 years ago, only very large corporations operated in multiple countries. Many companies used to have one central location, with perhaps an overseas office. Now, it’s common for even small companies to operate in multiple countries. Given that so many different types of companies are expanding internationally, it’s critical to have an onboarding program that has clear processes, but that is flexible and can account for organisations of different sizes, from different countries and with different levels of experience.

Is there anything multinational companies can do to prepare to make the onboarding process easier?

Christina: I’d urge companies to ask about the onboarding process during the sales stage. In particular, they should inquire how the service provider can streamline the process. For example, the provider can jumpstart the process by gathering critical KYC and entity information early on, such as information on shareholders, directors and beneficial owners.

Darren: From a payroll perspective, I always stress to clients to engage their local delivery teams at the earliest opportunity. When transitioning to a new payroll provider, there’s an increased amount of work for these teams. For example, they may need to complete delivery and validation processes in a payroll parallel run, all while maintaining their everyday work obligations.

Marc: A company should also be aware that onboarding involves providing a lot of information, and that one question will frequently lead to another set of questions. This can be frustrating, but knowing this fact in advance will soften the frustration a bit — and the fact of the matter is, a provider is not only trying to protect its reputation and legal standing, but also that of its client. A provider that isn’t asking questions isn’t doing its job. That said, a company should also demand that the onboarding process is efficient, and that the company doesn’t have to provide the same information in cases where it’s not needed. In some cases, the same information does need to be legalized, authorized or certified.

You’re based in different regions. Are there different onboarding practices, expectations or requirements based on where you or the client is located?

Darren: Ideally, that shouldn’t be the case. As I’ve mentioned, clients should look for service providers that focus on a consistent global experience in onboarding. That said, each country has different rules. In the case of payroll, for example, there are different tax, HR and other laws and requirements in different countries and states within a country. There is ultimately no one-size-fits all payroll processing platform. So, the onboarding process should be as consistent as possible while allowing for local compliance variations.

Marc: One way a service provider can help clients is to ensure that their service agreement includes a data-sharing clause so they can legally share KYC documents across jurisdictions. That helps make the process easier.

What are some of the hallmarks of a positive client onboarding experience?

Christina: Communication is number one. Clients should always know their project status and what they need to do. Onboarding must clearly specify deliverables and deadlines to keep the set-up or transition on track.

Darren: I’d add that having a project manager role within the client’s operations can help ensure success. This is a given in larger corporate organisations, where project managers might also be overseen by a global programme manager. In smaller organisations, I’ve seen situations where regular client payroll staff are expected to deliver a payroll transition with little internal centralised support. These staff members have never experienced a payroll transition and don’t know what’s expected. Even if a project manager isn’t available, a client representative should oversee the process. Without this internal oversight, the client’s experience can be confusing and frustrating.

What role does technology play in the process?

Marc: It’s essential to work with a service provider that offers a secure, shared portal, which will reduce the risk of security breaches and of accidentally sending sensitive KYC documents to the wrong recipient.

Darren: Service providers typically use “middleware,” meaning software that can connect the client’s and the service provider’s programs within one platform. These online systems have entry points for data provision, workflows to ensure smooth operational servicing and repositories for clients to collect data and reports. A series of global reports can help the client make sense of the various country-specific requirements, provide standardised approval steps and offer dashboards for employees to access services.

What are some of the challenges involved when a client switches services from another provider, and what have you learned about effectively addressing those challenges?

Darren: Though most service providers act professionally, there are occasions when the exiting vendor is not fully committed to the exit programme and doesn’t supply the required data to the new provider in a timely fashion. The client should understand that only they can manage that situation.

Marc: I’d add that the owner of the client’s data is the client, or let’s call it the company. When a service is outsourced, the right for the company to have access to the record of truth — or the latest correct information of the company — should be absolute. The company should therefore demand timely data access as part of the provided service, regardless of how the data is accessed, such as by email, portal or application.

What happens when the onboarding process is over, for example, do you maintain a relationship with the onboarded client?

Christina: Once an onboarding project is complete, the client is typically supported by a managed services team. If the client adds new services, the same onboarding manager will usually re-engage with the client.

Darren: I encourage clients to meet the operational relationship manager during the onboarding process to build the relationship and smooth the transition from onboarding to ongoing service delivery.

Marc: In my role as commercial relationship manager, I make sure we take a proactive approach to client communication throughout the life of the relationship. This may include, for example, updating KYC-related information, if necessary, after the formal onboarding process is complete.