The universe in which companies carry out their activities have changed significantly in recent decades; the evolution of technology, the greater ease and also the need to go abroad, different forms of financing. And all these accompanied by new risks that make the compliance for SMEs is also an inescapable duty due to its importance and impact on any business.
The economic crises, which have led companies to go outside their borders as a diversification strategy, and technological advances have made SMEs increasingly have a potential more in tune with that of large companies, and also face similar risks.
The Impact of Information Technology
The Internet has made it possible to cross borders without the need to open physical stores in other countries. The internationalization of the activity has never been so accessible for any business model regardless of its size.
By leaving their comfort zone, the one they know and which they can manage with relative ease, and using these latest technologies available to go abroad, SMEs are also exposed to new risks, partners for which they do not have close references, more regulations to those that they have to abide by and that they should know.
It is, therefore, very important that they verify the identity of the companies with which they establish relationships, such as associates, suppliers or customers. And they must also make sure if these companies or their administrators are trustworthy, if they are on a list of sanctions or if negative information about them has been published.
If SMEs do not address these issues, it could damage their reputation or even imply a sanction, for example, when they interact with a company that is on a money laundering list. And, therefore, their activity and their results would also suffer.
A correct compliance strategy will allow an SME to have protection against the reputational, legal and financial risks that its exposure abroad entails, and this can be helped by specialized products offered by brands of recognized quality.
If we do not worry about adapting our business to the policies that apply to us, we will be exposed to fines that can seriously endanger the continuity of the company, or even sanctions that imply the cessation of activity. And, in addition to regulations against illegal activities related to business activity, such as money laundering, bribery, etc., new technologies are generating new problems to legislate. For example, the processing of personal data has recently been restricted and companies have had to adapt to the requirements set by legislation.
When a bad decision, such as partnering with a company that is on the international sanctions lists, is known to the public, the damage can also be considerable. Today, for this to occur, it is no longer necessary for it to appear in the large traditional media. National newspapers and even televisions have a lesser capacity to quickly spread a story that can go viral in a matter of seconds through social networks. The result can be a reputational crisis with a corresponding impact on the company’s sales and revenue.
In addition, being able to demonstrate that our company has regulatory compliance procedures in place will make us more desirable as a company to work with, we will be a partner with less risk than another that cannot prove it. And it will allow us to opt for bids from international organizations that have this requirement as inexcusable.
Regulatory Bodies and Compliance
Another major advantage that small businesses can get from compliance management technology is that it decreases the financial risks and regulatory risks being faced by organization. Having a good relationship with the local regulatory body can make a lot of difference for businesses. A business that is considered to be a serial offender will end up having a bad relationship and will have to face a lot of scrutiny from the regulators. No business wants the regulators to be breathing down their neck, but that is what happens when there are too many compliance issues in a business.
Large enterprises have a lot of experience in dealing with regulatory bodies, but smaller businesses often find themselves at a disadvantage. Complex technology can help smaller businesses quickly close the gap and become better at ensuring regulatory compliance. One of the most underrated aspects of compliance technology is the difference it makes in the where regulatory body will assess an organization. A common misconception of small businesses is that regulatory bodies only look at the compliance performance of the organization. In reality what regulatory bodies are looking at is the preparedness of an organization.
They don’t just want to know about the compliance issues that an organization is facing, they want to know about the preparations an organization is making to ensure that any problem that has been discovered will not reoccur in the next year. Implementing an automated compliance framework is the easiest way for a small business to show that it is serious when it comes to complex management.
