A staggering 85% of SME business owners have identified compliance as the biggest source of stress in a poll recently conducted by non-bank lender ScotPac. Given the pre-pandemic trend towards commoditisation of compliance across the accounting and taxation sector, COVID has proven to be an interesting litmus test for the importance of being compliant and has identified that while everyone can ‘do’ compliance, not all businesses do compliance well.
How compliance assisted business throughout the pandemic
Assisting our clients to implement timely compliance has been critically important throughout COVID as it enabled them to respond effectively and reach a level of certainty required to forge ahead.
For some clients, strengthened compliance meant they were better positioned to access Government stimulus measures. Given the significant financial stress many businesses were placed under, this was imperative to their survival.
For others, sound compliance resulted in better cash flow management. This in turn meant they could continue to pay suppliers, retain staff, and maintain a budget forecast.
Some clients simply found that increased compliance led to more effective and timely management decisions.
Regardless of how it was able to support our clients throughout the pandemic, the implicit value of good compliance habits was realised.
Automation of compliance still presents as an important component of business evolution. The pandemic has highlighted though that automation does not mean autonomy. Business owners who do not understand the intrinsic metrics within their business or turn a blind eye to their compliance obligations (often due to fear of the outcomes), have been put under extreme duress throughout the past two years.
In many cases, this could have been avoided or at least reduced with the right systems and processes in place, especially given the flexibility and fiscal support that has been available to many small businesses.
Compliance beyond the numbers
As we find ourselves traversing the new normal, a common threat to businesses is the great resignation and the inability to attract and retain talent as easily as before. Businesses are going to many lengths to meet this challenge and introducing good compliance throughout the employee lifecycle will go a long way to doing so.
Businesses can do this by ensuring the correct processes are adhered to during the hiring and end of employment stages, keeping mandatory records, paying award rates including penalties and allowances and developing a Code of Conduct outlining appropriate behaviour.
Executing sound human relations compliance enables a business to protect its people and build its reputation as an employer of choice.
The new normal hasn’t only brought threats but also opportunities, one of which has been the opportunity to become more agile and intuitive in the face of a crisis. Increased agility leads to higher resilience, with businesses better able to respond to unforeseen circumstances and do so in a timely manner. There’s also evidence that agility leads to improved customer experience as the business is better able to meet the ever-changing customer demand; enhanced employee engagement through increased collaboration; and greater operational efficiency.
The lessons for SME business owners are clear: sound, accurate and timely information leads to effective and confident decisions, irrespective of the challenges faced and the uncertainty of the surrounding environment. Business owners that were forced to make decisions during the pandemic while playing catch up on their compliance requirements were always going to be placed under enormous stress. If you don’t already have complete confidence in your compliance function, now is the time to improve it before the next wave of uncertainty impacts your business.
For assistance enhancing your compliance function and to develop other areas of your business strategy, contact your local William Buck advisor today.