How to effectively communicate and collaborate with third parties in business

Anja Bojic

Last updated on: January 20, 2022

Establishing and maintaining relationships in the world of business is no easy task. Although effective communication represents an integral part of doing business successfully, some company leaders are still unsure about what types of communication are important for their establishment and how to achieve effective communication.  

Most businesses operate on two levels of communication:

  • Internal communication happens inside of the organization and concerns all company employees. 
  • External communication happens outside of the organization and includes all third-party companies, such as customers, partners, vendors, suppliers, and the general public.

Although at first it seems that these two don’t have anything to do with each other, in essence, external communication will greatly depend on a company’s internal communication. This is why companies should make sure to plan their internal communication strategy thoroughly. On top of that, the way an entire organization interacts with outside parties will have a deep impact on its reputation and customer relations. 

Stay with us as we go on to define third parties within the framework of business and list some of the most important types. We’ll then move on to explain why it’s important to maintain good communication and collaboration with third parties and highlight some of the most common challenges that might arise between the company and its outside partners. Ultimately, we’ll provide you with a few practical tips to help you get things started properly or make things right with your external associates. You’ll also find free templates that will help you communicate more effectively and collaborate easily with your outside partners and associates. 

How to effectively communicate and collaborate with third parties in business - cover

Quick access to free templates for third-party communication and collaboration: 
🔽 Goals and Expectations Questionnaire 
🔽 Follow-up Feedback Sheet 
🔽 Survey: Effective Communication with Third Parties 

Who are third parties in business?

A third party can be defined as any entity or individual that a company does business with. Usually, this may include vendors, contractors, suppliers, business associates, distributors, resellers, etc. We can make a distinction between the following:

  • Contractors 
  • Freelancers  
  • Vendors
  • DCOs or data centers outsourcing 
  • Consultants 
  • Customers or clients 

Let’s take a closer look at each group individually: 

✍️ Contractors 

A contractor can be defined as an independent, self-employed entity or individual that supplies companies and businesses with goods, services, materials, equipment, or even personnel. Although contractors might work for another company, they aren’t considered company employees. In most cases, contractors work according to a contractor agreement. This agreement outlines what services, products, and materials the contractor will provide to the company, the cost of the deal, as well as any warranties. A contractor can be:

  • A company overseeing construction sites
  • A software company
  • A company coordinating projects, such as evaluating documents or determining sites for renovations

🆓 Freelancers

Although some people consider “contractors” and “freelancers” to be the same, the two terms can’t really be used interchangeably. A freelancer is a professional who provides services from their field of expertise to more than one client. Freelancers usually don’t have permanent clients or contracts and work on a per-job or per-task basis. Since they engage in short-term projects, they are much more flexible than contractors and company employees. Freelancers tend to work in the following sectors: 

  • Film, acting, art, music, or design
  • Journalism, editing, copywriting, and proofreading
  • Website and software development, and computer programming
  • Media and marketing
  • Video editing and production, and illustration 
  • Tourism, event planning, photography, and catering
  • Consulting, tutoring, and language translation 

📈 Vendors 

A vendor or a supplier is a person or company that makes goods and services available to other companies and organizations. Vendors can play a crucial role in the business supply chain.

For example, the HR department in a large business is planning on a New Year’s Eve party for their employees. To be able to do that, they will have to hire an outside company (or more than one) to take care of that. These might include:

  • The owner of the location where the party will be organized 
  • A decorating company to take care of party decorations
  • A catering business to provide for the food 

Each of these would be treated as a separate vendor/supplier of specific products or services.

☁️ DCO or Data center outsourcing

In Gartner’s glossary of Information technology, DCO (Data Center Outsourcing) is defined as “a multiyear, annuity contract or relationship involving the day-to-day management responsibility for operating server or host platforms, including distributed servers and storage.” These services may cover the following:

  • System management
  • Managed hosting
  • Managed storage
  • Application performance monitoring
  • Database administration

🤓 Consultants 

As experts on a certain subject matter or field, consultants are usually individuals or agencies that provide their clients, other individuals, and companies, with professional advice in their respective areas of expertise matter. In essence, a consultant’s job is to provide companies and organizations with expert advice, recommendations, analysis, and opinions aimed at solving company issues or improving overall performance.  

👥 Customers

Last but not least, customers are an essential part of most businesses. They are individuals or companies that usually buy another company’s product or service and in that way drive revenue. Without customers, businesses wouldn’t exist. 

Being a successful business will be reflected in the number of customers a business has — the more, the merrier. Thanks to their customers’ input, most businesses are able to better understand their needs and find ways to improve their services or products.

Overall, a third-party relationship can be defined as a contract-based relation between a company/enterprise and the individual/company that provides specific services/products to the said company/enterprise. While it’s important to respect each partner’s unique desires and fulfill their requests, a company has to have a standardized policy on third-party relationships. This can be tweaked in a way to fit each partner individually without affecting the company’s general policy. 

Why is communication and collaboration with third parties important?

The way your company communicates with third parties will impact your reputation and affect how others see your entire business. This is why paying extra attention to your third-party policy and the basics of communication with external partners is paramount for ensuring long-term business success. 

No matter what type of third-party relationship we’re talking about, the rules remain the same. Having a clear understanding of what third-party relations involve, coming up with effective third-party guidelines, and keeping things as transparent as possible are only some of the ways to maintain communication and collaboration with external parties and associates. Plus, if you educate your workforce about which words and phrases are acceptable in business settings and which ones aren’t, you’ll be a step closer to ensuring a better relationship with your outside partners. 

However, the sun doesn’t always shine in the third-party business world. Quite often actually, workplace failure is considered to be the main consequence of ineffective communication and collaboration — about 86% of employees and executives believe this is true

If internal communication suffers, external communication suffers by default. 

In other words, if your interaction with third parties isn’t functioning properly, your entire business will feel the consequences. 

This is why it’s important to recognize the common challenges that might arise between a company and its outside partners. Let’s list some of them: 

Common challenges of communicating and collaborating with third parties

Most business owners, HR managers, and higher-level employees are well aware of how hard it can be to establish clear communication with contractors, freelancers, or vendors and how much this can affect further collaboration. Overcoming communication barriers is an integral part of any business, especially today when a great deal of communication is done over the Internet, telephone, and other means of communication. To help you understand how communication and collaboration between companies and their external associates can go wrong, we’ll list some of the most relevant ones and try to explain these thoroughly. 

Misinterpreted goals 📉

The early stage of communication with a third party represents a critical point in the whole communication and collaboration process. The mere basis here is setting up clear goals and expectations. Everything that follows should be centered around these goals and expectations — they should be a constant reference point. 

Sometimes, miscommunication can occur even at the beginning of cooperation, when one of the sides involved in a project or business agreement misinterprets goals or expectations set by another party. This can prove detrimental to the project’s success and could lead to contract termination. 

🔶 Example of misinterpreted goals

Software Digital is a software company that wants to organize a fun team-building activity for its employees to boost productivity and improve performance. Adventureomatic provides a wide range of exciting activities including escape room experiences, paragliding adventures, and pottery classes. Software Digital hires Adventureomatic to arrange their team-building activity but doesn’t provide them with clear instructions and requirements. Based on the information they were provided with, Adventureomatic organizes a Zipline adventure without getting approval from Software Digital. On the day of the team-building activity, Software Digital’s employees appear at the location, expecting to have an enjoyable and relaxing time. Instead, many give up immediately and go home. Software Digital isn’t satisfied with the services provided by Adventureomatic because it didn’t fulfill its initial goal. 

Broken communication 😶🤔

Broken communication is a loose term that covers a wide range of things — from missed emails, over unread messages, to inappropriate jokes. Communicating with freelancers, suppliers, or customers can be even more specific because they can come with their own assumptions about what effective communication and collaboration should be like. 

Although it might seem that damaged communication with a third party can easily be repaired, the consequences could be far deeper than you think — lack of trust, low productivity, and bad performance are only some of them. Sometimes, even an unintentional mistake or action can lead to a communication breakdown. 

🔶 Example of broken communication

Penelope is a renowned freelance social media manager who works with several big clients. A company called Charm Infinity is trying to make a breakthrough in the beauty industry with its completely natural beauty products line. They hire Penelope to lead their social media campaign and designate one employee to communicate with her via emails. Penelope sends her proposal for approval to the employee’s email, yet no one responds because the email ended up in the Spam folder. Believing she didn’t contact them, Charm Infinity now thinks Penelope is unreliable and not suitable for the job. On the other hand, Penelope thinks Charm Infinity isn’t serious enough to be her client. No side makes an effort to examine the steps that led to this situation and the whole project ends in failure.  

Missed deadlines ⌛

Another very aggravating challenge that might occur in communication and collaboration with contractors, consultants, or other partners is missing deadlines. Having a busy schedule can sometimes lead to project overlapping or simply forgetting about project deadlines — it’s not an impossible thing in today’s world. Yet, it’s not a good thing either.

Although reasons for missing deadlines can be numerous, in the world of business this brings about a series of unfavorable events that can lead to ruin and communication breakdown. While there’s no way to predict unforeseen events, planning each project to the tiniest detail might help avoid breaking deadlines. The value of meeting deadlines in business can’t be emphasized enough.

🔶 Example of a missed deadline

Bryan is an experienced graphic designer who has been hired by a telecommunication company to create a new logo. They sign a contract with Bryan according to which he has one month to come up with a logo solution. The company wants to reveal their new logo during the party they will be throwing exactly in a month, so they emphasize how important it is to have the logo before that. Confident about his graphic design skills, Bryan doesn’t start working on the new logo for two weeks, so he doesn’t finish the logo for the party. The company cancels the party, terminates the contract with Bryan, and goes on to find another graphic designer to finish the project — and all that at the cost of their reputation.

Budget disagreements 💸

Disagreeing on financial matters is not an uncommon occurrence in business, both in internal and external operations. Besides pointing to other issues, not being on the same page about money can lead to more serious communication problems, contract termination, and project failures. 

While some find money to be the crucial factor for success, often it will depend on effective communication and understanding between the involved parties.  

🔶 Example of a budget disagreement

George is an international hotel owner who wants to redecorate one of his most prestigious hotels in Dubai. He hires the company Ignatious Rubbins, a well-known interior decoration company, to take care of that project. At the same time, his new hotel in London is opening in a month, so he’s not interested in spending a lot of money redecorating the hotel in Dubai. However, he doesn’t communicate his idea clearly to Ignatious Rubbins, which leads them to believe their budget isn’t limited. Upon finishing their project proposal, they meet with George who ends up quite disappointed with their budget estimate. George ends the collaboration because Ignatious Rubbins went too much over his budget. 

Security issues 🛡️

Collaborating with third parties can be a risky business, which means that security can play a paramount role here. Reliability and security have become essential to doing business globally, especially when it comes to ensuring your clients’ and partners’ data security

While security issues can cover a wide range of problems, each has to be dealt with on time and with utter seriousness. Coming up with a detailed security plan for third-party collaborations will help maintain your company’s reputation, attract more reputable customers, and save money in the long run. 

🔶 Example of a security issue

Gaming Dudes is a gaming company with several world-known games. Thanks to Dark Skies Wallbanger, a DCO that provides them with hosting and storage solutions, they have been considered one of the most reliable organizations in the gaming industry. However, Dark Skies Wallbanger becomes a victim of a cyberattack, leading to the loss of all data on their systems, including that of Gaming Dudes. After this, Gaming Dudes’ rating decreases, and they lose millions of users.

Now, don’t be discouraged by the challenges of third-party collaboration and communication that we’ve listed here. Such obstacles are a common occurrence in business. Yet, the way companies deal with third-party communication barriers and solve other collaboration issues with their external associates will determine their success in the long run. 

8 tips on fostering better communication and collaboration with third parties

Without further ado, here’s a list of eight (and a few more) useful tips to help you foster better communication and collaboration with outside associates and partners: 

1. Choose the right people 🤝

Picking the right people to communicate and collaborate with external parties should be a top priority. Considering that each client comes with a unique set of requirements and opinions, they should be connected with like-minded people to ensure a successful collaboration.

This is where knowing your workforce will come in pretty handy — being aware of who’s an effective communicator and who’s got the proper skills will help you make a great team for managing all your external communication. On top of that, make sure that the employees in charge and your partners know who to contact when needed — to reduce the possibility of miscommunication.  

🔶 Bonus tip: Create a short “Effective communication with third parties” survey for your employees to find out what your employees know about communicating with external associates. This will indicate their strengths and weaknesses while helping you direct your further steps. Those who do exceedingly well in the survey can be your number one pick when the time comes to form a team for the next third-party cooperation.

🔽 To help you speed up the process, we’ve created a free survey template. Download it here: Survey: Effective Communication with Third Parties 

2. Foster clear communication 💬 

Once you’ve gone over the initial steps of establishing a collaboration with a third party, maintaining regular communication is essential for the development of the project. Making sure that the employees in charge of the project and the client remain in constant contact will prove beneficial for both sides. And thanks to the communication app available, it’s easier than ever.

For example, Pumble is a team messaging app that helps teams communicate quicker, exchange relevant information, and files. While the app was designed to foster real-time communication among team members, its guest access feature allows non-company people to easily communicate with company employees. This can be really helpful in remote and hybrid work settings, where asynchronous communication is the main mode of interaction. 

Managing guest access in Pumble
Managing guest access in Pumble

🔶 Bonus tip 1: To keep communication between employees and third parties as professional and concise as possible, you can create a new, private Pumble channel and add only the people involved in a certain project, including your outside partners. This way, you’ll get insight into the entire communication process, reduce the amount of casual small talk, and act as a moderator when necessary. 

🔶 Bonus tip 2: Make sure that you engage your outer partners in various communication situations to encourage better communication and collaboration. Regular video meetings, feedback sessions, and casual conversations are only some of the ways to promote a healthy relationship between your company and external partners.  

3. Set explicit goals and expectations 📑

After choosing the right people for your third-party collaboration, the next step is to set clear goals and expectations. When collaborating with third parties, setting goals and expectations is twofold — both sides have to clearly say what their goals are and what they expect from this interaction. 

A strong start with plainly stated goals and expectations will reduce the chances of miscommunication further down the road. Don’t hesitate to state what you expect and what you want to achieve with this collaboration — it will save you valuable time. Honesty can be a powerful business tool that can protect companies from terrible clients, foster better external relationships, and save money. 

🔶 Bonus tip: Create a general “Goals and expectations” questionnaire that both you and your associate can fill in. Make sure that your questions are clear and precise so that you collect the information relevant to your project. Use this as a referring guide throughout the project. This can help keep both parties on the same page and serve as a starting point in case of changes further down the road. 

🔽For an easy start, download our free questionnaire template here: Goals and Expectations Questionnaire 

4. Determine needs and requirements 📃

Once you agree to collaborate with an external partner and set goals and expectations, it’s essential that both sides clearly state their needs and requirements. Make sure to ask all the questions before you engage in a certain activity or project, especially those in relation to the deadlines or budget. 

Although many rely on oral communication even for important details and information, don’t be afraid of writing all relevant data down. Encourage employees to use a note-taking app or write important info down in their planners. Later on, they can rely on these notes whenever necessary to make sure things go according to plan. 

🔶 Bonus tip: Ask your external associate to create a memo containing all important information, including their specific needs and requirements. Print it and hand it out to employees as a first-aid kit. For quicker access, share the memo with your employees on the Pumble workspace. 

5. Provide maximum security 🔐

Security issues can be a deal-breaker, especially today when cybercrime is becoming more sophisticated by the minute. The amount of data that is being created, stored, and collected online is huge, which increases the risk of security threats and cyber-attacks. This can greatly affect communication, especially if you rely on modern communication technology to stay in touch with your outside associates. 

To make your partners feel comfortable enough to communicate and collaborate freely, provide them with a safe work environment, secure communication tools, and complete privacy.  While building trust and credibility can take some time, providing security to your external partners, clients, and customers will bring you a step closer to that. 

🔶 Bonus tip 1: Invest money in proper security practices for your business. This may cover a detailed data security strategy, secure collaboration tools, and regular safety checks. 

🔶 Bonus tip 2: Organize an online presentation on security management practices for your employees, clients, and external associates. Use this opportunity to educate them about current security risks and trends and to provide them with material for furthering reading. 

6. Reinforce transparency 🔎

Communicating clearly is the basis of any healthy professional relationship — the same rule applies to third-party communication. The key to establishing long-term trustworthy relationships with outside parties is to be transparent in business, especially today when delivering quality products and services greatly depends on speed. 

This can particularly be important for companies that offer products and services to users across the globe. A professional business is one that’s transparent, secure, and easy to reach. Nothing upsets an unsatisfied client like not getting proper information about a product or service they are interested in. 

Even if your company doesn’t deal with users or customers, maintaining transparency will keep loyal partners close and attract new ones — a formula for success. 

🔶 Bonus tip 1: To keep communication breakdown at bay, organize a workshop on business jargon to educate your team about the use of appropriate business words and phrases, help them practice transparency in their speech, and work on improving communication with outside associates. 

🔶 Bonus tip 2: If your company has a lot of users globally, having 24/7 customer service will help build your company’s reputation. Hiring the best people who are trained for answering your customers’ questions timely and precisely will ensure professionalism and credibility. 

7. Monitor the process 🕵️‍♀️

Once you get past the clumsy beginnings, you should pay close attention to how the interaction with a third party progresses. While there’s no need for strict control, being a silent supervisor and checking in from time to time just to see if everything is going in a good direction is more than enough. 

If your team encounters some disagreements in communicating with a third party at some point, fear not, as this is only normal. As long as all dilemmas and quarrels are resolved properly, there should be no major communication breakdowns. But keeping an eye on signs of miscommunication will help dodge a bigger bullet later on. 

🔶 Bonus tip: Showing interest in what’s going on with external partners will be beneficial for the success of your business. Keeping your third parties involved and letting them know you are at their disposal will build trust and ensure a successful collaboration.  

8. Review, reconsider, revise ✔️

Evaluating an already finished project is always a good idea — you can learn a lot from the mistakes you’ve made and think of constructive ways to solve these the next time around. In a way, communicating and collaborating with contractors, vendors, and freelancers is always a unique project. Once finished, it deserves a proper review, especially if you’ve encountered some bumps along the road. 

Although being an effective communicator isn’t easy, it’s also something that can be learned and improved. To examine communication and collaboration with your external partners, you can apply the 3R rule: 

  • Review the success rate: Take a close look at how successfully the collaboration ended and examine if both you and your outside associate are satisfied with the entire communication process. 
  • Reconsider previous steps: Think of what wasn’t working well and what can be improved for the following third-party collaborations. Ask yourself the following questions:
    • Did you choose the right people for this?
    • Did you and your third-party collaborator do your best to ensure effective communication and collaboration?
    • Is there anything that you would do differently the next time?
  • Revise the communication strategy: Having a good communication strategy is always good. However, if it’s not functioning, it might be time for a change. Take your time to reevaluate your communication strategy and think of ways to upgrade it. 

🔶 Bonus tip: Use a follow-up sheet to get feedback from your external partners. 

🔽 To get a basic understanding of how to formulate your follow-up sheet, download our free template here: Follow-up Feedback Sheet 

Final thoughts 

Effective communication is every company’s most valuable asset. While it can be hard to achieve at times, it fosters credibility, trust, and loyalty between companies and their external associates. With continuous work and improvements, maintaining effective third-party relationships can indeed be a walk in the park. What’s more, it will ensure stability and long-term business success.  

We’ll end this piece with a quote from Tony Robbins, an entrepreneur and philanthropist: “To effectively communicate, we must realize that we are all different in the way we perceive the world and use this understanding as a guide to our communication with others.”

Author: AnjaBojic

Anja is a former Communication researcher and author at Pumble. Often found networking with other working moms, advocating mental health at work, and trying to be a present and engaged parent.

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