Compliance in a Global Economy
Compliance should not be viewed as a cost of doing business. If you think of it that way, you are missing out on many of the potential benefits which include increased funding opportunities, risk mitigation, better business opportunities and lower operational costs. That’s right, if you view compliance correctly, your organization can reap the benefits of being compliant.
Unfortunately, if you view compliance purely as a cost of doing business, then that’s all it will ever be. For many organizations governance and compliance translates into adherence to various laws, government regulations and procedures. Using this somewhat narrow view of compliance, the main challenges are:
• Adhering to mandated practices
• Documenting policies and actions
This still requires a fair amount of work to be performed to ensure compliance.
1. You must determine which regulations your organization is required to comply
2. Your internal controls or operational processes must ensure that your
organization is compliant with government regulations.
3. Your processes must be defined and document all actions your transactions
associated with the regulated function.
4. You must be able to report on any and all of your regulated activities
For some organizations, this includes everything they do. For others the list may be shorter but still require accurate record keeping with appropriate document and record retention policies.
Failure to comply with government regulations can result in increased operational costs, fines,and in some cases, being shut down. Organizations that are out of compliance have been known to suffer through increased government audits that disrupt their operations. In some instances operations are shut down while these audits are conducted. The cost to these organizations can be enough to close them permanently. Given this, there is no valid reason not to place compliance on the top of your “to do” list.
Now it may seem that compliance is a lot of work. When planned for, and implemented correctly, it becomes an automatic part of your business and operational processes. It does not become burdensome and can help you improve your operational efficiency. Once you accept that you have to monitor and report on your compliance issues, it becomes easier to review your processes for both compliance and efficiency. Further, many compliance issues can help ensure that you have valid processes and have the documentation needed, not only for government reporting, but also for resolution of normal business or operational issues.
So if ensuring that you are in compliance has some benefits associated with it, let’s expand our definition of compliance to include:
• Compliance with multiple governments for multi-national organizations;
• Compliance with funding sources such as Donors, Financial Institutions, and
• Contractual compliance with other organizations.
In today’s global economy, more often than not, you have multiple compliance requirements. Whether you are a small company that ships internationally, or a nongovernmental organization that delivers programs worldwide, your compliance requirements are not insignificant. By becoming proactive with your compliance requirements, you can minimize the cost of compliance and virtually eliminate the penalties of non-compliance.
The more countries you operate in, the more contracts you have, and the more diverse your funding base is, the bigger your compliance exposure is. To ensure compliance, you should start by looking at the big picture and documenting the “who, what and where” of your organization. From here look at your operation and create a list of where you are compliant and where you are not compliant.
This list can form the basis of your ongoing compliance strategy. Getting started may be the hardest part. Once you have begun, the entire process becomes easier to manage.
The three main issues outlined in the beginning still apply regardless of how big your compliance burden is.
• Are your processes in compliance?
• Are you documenting your actions and keeping good records?
• And can you provide reports and information immediately?
Compliance in a global environment can seem complex. Once you understand the basics of compliance and become proactive, you can ensure that you are compliant across funding sources, other business entities, and multiple governments. You can even ensure that you are compliant across continents.
The benefit of being a compliant organization translates into increased opportunities:
• Funding sources are much more willing to commit to organizations who can
demonstrate compliance with government regulations and previous funding
• Government agencies are easier to work with when you can demonstrate
compliance. This leads to both grants and/or contracts.
• Other organizations will be eager to work with you when you can demonstrate
that you document your processes and are compliant with applicable
regulations. You become a no-risk partner.
• And last, but not least, compliant organizations have documented processes
and know exactly when, how and why they need to make changes to improve
So compliance viewed as a cost is just a cost. But compliance viewed as a strategy helps organizations grow and prosper.
Interested in reading more about the various aspects of compliance? Then please visit the compliance news and articles section in our blog.
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Conditions Change, Most Businesses Don't, That's a Problem
For any business to remain effective and profitable, business leaders must continually evaluate their organization and its processes. If you understand your business processes clearly from a day-to-day operational standpoint, you have increased your chances of success and will have greater results.
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All organizational documents should include each related business process maps for not only efficiency and for managing labor resources, but as a knowledge management tool for mission critical documents showing how the business functions internally.
Research often finds that most managers do not realize the amount of income potential the business is losing because their processes have not been evaluated for potential inefficiencies. Furthermore, most organizations have little or no documentation describing their processes and procedures; opening a myriad of compliance issues.
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