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Business Basics Get Complicated Overseas

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Personal relationships are an important part of business dealings in Latin America, where punctuality is a variable commodity and business meetings often start and end late. In France, a bright line separates a persons work life and their home life. Businesspeople in certain Arab countries sometimes use the word "yes" in order to delay a decision, rather than to make one.

Every culture has its identifying idiosyncrasies, and recognizing them, or, at the very least, not running afoul of them, is a vital part of any credit and risk professional's international development. However, unless a company plans to have business dealings only in the United States, or only in one particular country other than its own, it can't take a one-size-fits-all approach to cultural sensitivity.

This can often stymie efforts to increase organizational consistency using communication guidelines in credit policies and procedures. "Understanding different cultures involves the use of soft skills, which are difficult to spell out in a policy or procedure," said Craig Simpkins, CCE, CICP, director and global process owner of the order-to-cash cycle at Johnson Controls, Inc. "However, there are developmental tools that the organization can offer to their employees that will help drive success in understanding different cultures."

These developmental tools can be as simple as doing a minor bit of research into different countries and building relationships with occupants of different cultures. But while there's no universal policy to insulate a company from any cultural misunderstandings, there are some communication principles and other techniques that credit professionals can use to make themselves more adaptable.

High vs. Low

As far as communication is concerned, cultures typically fall into one of two categories: high context and low context. "High context communication styles refer to societies or situations that have long-established, strong connections," said Simpkins. "Because of the strength of the relationship or connection, the communication is understood through implication and less is communicated in an explicit manner." For example, in high context cultures, a company's management team might communicate with its employees a bit more vaguely, allowing and trusting individuals to interpret their meaning. "Asian and Arab cultures are considered high-context cultures," he added.

On the other end of the spectrum, in low context cultures, much less room is left for interpretation. "Low context communication refers to a situation where people have an expanded network of contacts. However, each contact serves a specific purpose, and the communication takes a shorter period of time. Expectations are less inferred by the situation and more spelled out." Low context cultures are often found in the West, in the U.S., Canada, Australia and Germany for instance.

"Think of it this way: in the U.S., every street is identified and office buildings have an address. In Tokyo, very few streets are identified by a name or number, and building numbers are nonexistent or arranged in random order," said Simpkins.

Knowing what type of context characterizes a particular country ultimately allows a credit professional to avoid a great deal of miscommunication. When working in Japan or Egypt, two high context cultures, it's important to know that not every detail will be filled in and not every business relationship will be painstakingly enumerated. The buyer will more than likely leave things open for interpretation, which could require some editorializing on the part of the credit professional and their company. Taking the same tack with a lower context culture, such as Germany or Finland, could have disastrous results, as such cultures traffic in a more precise brand of communication.

Adaptation and Tips

While its impossible to overstate the importance of being able to successfully cultivate business relationships, being able to establish a tighter, essentially interpersonal relationship becomes especially important in higher context cultures. Business in these countries is much more of a family affair than it might be in their lower context counterparts, and being prepared for the time it takes to create that dynamic will be vital in laying the groundwork of a long-term exporting relationship.

Still, not every culture is high context, so credit professionals need to work to make themselves into communication chameleons, able to shift the shape of the message to suit the customer in question. "The best advice would be to understand the country and the culture before interacting on a global basis," said Simpkins. "In fact, err on the conservative side when interacting with companies and businesspeople in other countries."

A few techniques never go out of fashion, Simpkins noted. "Regardless of communication method, it is imperative to communicate in a manner that is well-received by the person on the other end," he said. "Some tips include listen effectively, speak in a slow and transparent manner, repeat yourself to ensure that you are understood, avoid slang or technical terms, speak in short sentences and try to use closed-ended questions."

Other items that are always important to consider include assessing the seriousness of the audience. Humor isn't always welcome, and a quick read on the room can save a credit professional some potential headaches. "For example, a person may begin the conversation with small talk related to the person's weekend or may begin a presentation with a small joke to break the ice, while the person on the receiving end may take the attempt at discussing personal business in an offensive manner, or they may take a small joke at the beginning of a presentation as being too casual or inconsiderate," said Simpkins. "Also, it is important to ensure that a presentation is designed to not include anything flashy or use words such as 'fantastic' or 'amazing opportunity,' as that can be portrayed as childish or immature."

But if the goal is to enhance your own ability to shift your point of view on a culture-by-culture basis, the best way to practice is to simply go for it. It's like cooking: if you want to learn how to cook, pretend that you know how to cook. "The common theme involved in the successful adaptation of behavior is the strength of a relationship and the size of your network," said Simpkins, who noted that the best place to start is within one's own company. "The best way to develop yourself when it comes to communicating with other cultures is to leverage the resources around you," he added. "In most global organizations, there are individuals of a similar culture that are located in a country in which you need to communicate. They can help guide you through a situation and you may be able to leverage them as a resource."

Such employees can prove to be both a resource for personal and professional as well as actual business growth. Having key company personnel, or at least a network of professionals or consultants, on the ground can prove priceless during a sales push. "It is important for global organizations to leverage their local resources in the particular region in which growth is expected," said Simpkins. "For instance, if the focal point is increasing market share in Slovakia, then you need to have experienced individuals from that country to leverage during the period of generating new or additional sales. That individual understands the country and the culture, and will be the key to establishing and maintaining the relationship."

Not every company that's aiming to expand has access to these resources, but it may be more cost effective to work toward developing such resources before going into a new market without them. "It is not impossible to achieve new or additional sales without leveraging local talent," he added. "However, it is a steeper hill to climb."


While it takes practice to make one's communication skills considerably more flexible, it also helps if company policies provide both for this development and for adjustment on a regional standpoint. Simpkins' expertise on how to adapt on a culture-by-culture basis comes at least in part from his responsibilities with his current company, where he was responsible for standardizing operations across five different regions. Companies setting out to do the same should take a cue from high context cultures and leave room for interpretation.

"In order to standardize company policies across separate regions, it is imperative that the credit department develops a global policy through the collaboration of all business partners involved in the process. For cultural or regulatory differences that may exist, a regional process will bridge the gap," he noted. "For instance, the bank guarantee process in Germany is more rigid than other countries in Europe and other regions; therefore, the regional process will include an exception to the global policy. This enables an organization to maintain a global policy, while still managing exceptions at the regional or country level."

Successfully managing receivables internationally ultimately requires a finely-tuned radar for cultural and communicative differences. It also requires an understanding of how relationships work across borders. "For credit professionals, while their main role is to protect the organization from financial risk, maintaining a solid relationship and a high level of trust with the customer is a top priority," said Simpkins. The ability to build that level of trust regardless of the customer's location requires a strong network of both internal and external professionals which, "if structured in the correct manner, will provide a priceless return on your investment when dealing with other cultures."

"High context communication styles refer to societies or situations that have long-established, strong connections... Low context communication refers to a situation where people have an expanded network of contacts."

"The common theme involved in the successful adaptation of behavior is the strength of a relationship and the size of your network."

"In order to standardize company policies across separate regions, it is imperative that the credit department develops a global policy through the collaboration of all business partners involved in the process."

To grow your professional network and enhance your ability to communicate effectively across borders, visit FCIB's website at


Jacob Barron, CICP, NACM staff writer, cart be reached at

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