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Entity Compliance as a Competitive Advantage

Can the increasing amount of regulations from all levels of government offer an opportunity for competitive advantage? Businesses typically view government regulations as obstacles in their quest for growth and profitability. However, some companies have gone beyond accepting the inevitable. They are leveraging new highly efficient entity management processes — forged in response to heightened regulatory demands — to create a level of efficiency that also yields a competitive advantage for their company.

The First Wave of Entity Compliance: Legal Department Efficiency

Since the implementation of Sarbanes-Oxley at the beginning of the 21st century both public and private sector companies have been pushed to institute greater controls and procedures into their daily workflows. The need for greater internal oversight and reporting capabilities led to expanded use of technology in corporate legal departments. These additional reporting requirements made more data readily available to the requesting government regulatory agency — and also to the business itself.

The Second Wave of Entity Compliance: Corporate-wide Operational Efficiency

Now, with the regulatory landscape changing at an even faster clip, an opportunity is surfacing for organizations to leverage technology beyond the legal department in pursuit of company-wide compliance and operational efficiencies. Many organizations currently operate from a reactive compliance culture where all levels of the organization scramble to adhere to current regulations or are forced into a patchwork of compliance with new requirements in the pursuit of new contracts and other business opportunities. However, this type of reactive response generally puts a great strain on the already limited resources of the legal, tax, and finance teams, plus, the local management teams.

Alternatively, implementing a proactive entity compliance culture can significantly improve an organization’s ability to handle requirements, while yielding a number of business benefits. These include:

  • Transparency and agility. Company-wide access to business details across the legal, tax, finance, treasury, audit and local subsidiary management teams keeps all parties informed and able to take action without hindrance. Some organizations even make information available to suppliers, partners and vendors, ensuring all can benefit from immediate access to current data.
  • Time and resources. Time that was once lost to locating and verifying entity data is productively spent on mission-critical strategy and operations. Required data is instead immediately available, up-to-date, and correctly mapped to subsidiaries, locations, documents, and other related matters, ready for access to address various government requirements as well as operational business activities.
  • Timely evaluations. Entity data and associated assets can be centrally tracked along with associated compliance activities. Organizations can quickly ascertain their compliance status, pending activities, timelines and critical regulatory deadlines. Additionally, historical records are on-hand for confirmations.
  • Improved decision-making capabilities. With electronically maintained data, the company also benefits from efficient and reliable reporting. The resulting data views and metrics can support evaluations, audits and gap analyses, and quantitative and qualitative decision-making. All this is at a much faster pace than gathering and aggregating spreadsheet data across departments.
  • Risk mitigation. This level of efficiency is critical to avoiding the costly penalties, business, and regulatory issues that, depending on the severity of the problem, can create operational roadblocks and potentially damage an organization’s reputation.
  • Competitive Advantage. In certain industries and locales, regulations create barriers for new market entrants. Companies with efficient compliance processes can be more agile and responsive. This gives them an advantage over companies whose ability to compete may be hindered by inefficient, reactive processes.

Impact Analysis: Competitive Advantage

Achieving a proactive compliance culture can mitigate risks and position organizations to better pursue their business goals. The proactive company can also demonstrate a measurable indicator of a well-run company to regulators and the public.

How would a proactive compliance culture impact the effectiveness of your business? Will your competitors be in the same position?

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