The Australian business sector today comprises of Small to Medium Enterprises (SMEs) operating in a landscape that is constantly evolving due to numerous legal and regulatory aspects. As a result, SMEs are now constantly at the risk of incurring costs regarding compliance and business risk management.
A recent survey revealed that 82% of small businesses felt a significant impact from red tape, with more than half noting an increase in time and money spent on compliance.
With negligence comes great consequences in the form of legal costs, detrimental image, operational interruptions, heavy financial sanctions, and for some, all of the aforementioned.
For example, AUSTRAC as a national body does not treat negligence lightly. Since 2018, the AUSTRAC has penalised companies which do not adhere to the compliance expectations, and the fines have summed to approximately fifteen billion dollars.
In the financial markets, ANZ’s savings accounts interest expense miscalculation of customer interest led to negative scrutiny from Australian Securities and Investment Commission.
Moreover, the newest legislative actions make it possible for harsher repercussions such as $10 million fines for infringing violations of the Food and Grocery Code of Conduct by supermarkets with the intention of having retailers and suppliers treated equally.
These examples highlight the critical importance for Australian companies to adhere to regulatory requirements to avoid severe financial and reputational consequences.
Nonetheless, a good number of organisations operate with small teams and have tight budgets, making it challenging to spend significant resources on governance, risk, and compliance (GRC) activities.
Automated risk and compliance tools are revolutionary in these scenarios. With the help of technology, companies can improve compliance workflows, minimise human involvement, and maintain regulatory compliance while containing costs.
Adherence to Compliance Policies: Challenges of the Traditional Model
1. Limitations on Resources: Most SMEs do not have the resources for compliance departments and have to depend on employees with a multitude of other job functions to handle risk and compliance. A survey conducted by payroll software company Yellow Canary discovered that 20% of employers suspect that they have been incorrectly compensating their staff which shows the gap in necessary compliance tools.
2. Financial Implications: Supervising authorities like AUSTRAC do not take non-compliance lightly. They have issued over $15b in fines since 2018. Legal costs are very expensive. Remember the retainer of a Senior Counsel, or the fee of a senior barrister, needed to dispute such accusations.
The more promptly you onboard your customer, the more promptly you can begin revenue-generating business. The more time it takes to onboard your customers, the more time revenue realisation is delayed. It is truly a case of “time is money”.
3. Manual Processess: Compliance reporting, documentation, and communication are done with the use of emails, spreadsheets, and papers and as a result become inefficient, erroneous, and non-compliant.
Client experience and survey results indicate that employees working in organisations with manual GRC processes spend approximately one third of their time managing issues such as tracking actions, finalising incomplete checklist, and generating reports.
4. Regulatory Complexity: Rapid changes of regulations across different industries. Complicated and overlapping regulations. Along with other Australian businesses, Australia needs to comply with frameworks such as ISO 27001, SOC 2, APRA CPS 234 and also the Privacy Act which makes compliance very time-consuming.
How Automated Risk and Compliance Tools Help
Automated compliance tools offer lean teams a means to efficently attend to their compliance obligations economically. Some of the notable benefits include the following.
1. Centralised Compliance Management
Automated systems allow all organisational compliance information and records, policies, processes (and even audit logs) to be captured in one system. This prevents siloed information and improves organisational transparency.
2. Reduced Manual Work and Errors
With the automation of compliance activities like risk assessment, policy review, or audit tracking, workers gain the opportunity to lessen the admin burdens and devote more time to strategic planning.
3. Real-Time Monitoring and Alerts
Subscribing to advanced compliance tools enables businesses to reposition and risk trends along with internal status of compliance in real-time with tracking alerts ensuring that issues do not arise.
4. Cost-Effective Scalability
Such shifts in compliance requirement can now be managed without the need for additional bodies, thus reducing the need to recruit extra staff, these shifts can instead be handled using technology.
Businesses can reduce costs because there are no upfront costs to deal with unlike other solutions because the cloud-based systems scale up based on the needs of the business.
5. Audit Preparation Marked Improvement
Using automated documentation lowers the time and effort needed during compliance assessments while the businesses prepares for an audit.
Selecting the Best Solution for a Company
The entire range of activities involving compliance are performed in a single system, and this enables an organisation to view its compliance status holistically and thus mitigate possible risks more effectively.
In Australia, the efficacy of a compliance management system is being recently put to the test. For example, The Fair Work Ombudsman, for example, has warned Australian Universities to stop employing wage theft practices, or else face fines and damages of $4.7 million. Such events demonstrate the need for offering effective compliance frameworks to avoid legal and reputational ramifications.
Conclusion
Using automated risk compliance tools enable lean teams to maintain compliance without having too much resources set aside, which makes them incredibly helpful. These tools enhance task automation, making it easier to improve efficiency and reduce costs while managing risks more effectively. With these tools, businesses are protected from the costs of non-compliance, making them financially beneficial in the long run.
No matter the budget or size of the firm, Australian businesses can strengthen their compliance system using automation and looking at the results maximised compliance.
About Lahebo
This article is not only written from the perspective of a technology provider, but also from the lens of compliance professionals.
Lahebo is able to provide multiple solutions to different industries that seek to improve the compliance processes. Here are some common features and solutions that Lahebo software can provide:
Automated Updates-
Customisable Control Measures-
1. User-friendly legal item creation with specified control
2. Evaluation of Compliance feature for ongoing adherence to standards.
Don’t miss out on discovering how Lahebo can transform your risk and compliance management. Join our free demo and experience firsthand the capabilities that can empower your business.