3 Reasons Financial Compliance Can No Longer Be Overlooked

For any organization operating globally, regulatory compliance has become a minimum condition of any procure-to-pay or automation strategy. The problem is the lack of proper oversight. An astounding one-third (34%) of finance and procurement professionals can’t ensure global regulatory compliance with worldwide invoicing mandates, according to Visible Commerce: Overcoming Operational Blind Spots, a report by Basware. This statistic signals that financial compliance – even with the rise of many countries’ mandates – isn’t rigorous enough. Let’s walk through three compelling reasons why you need to pay close attention to your process and stop simply crossing your fingers in hopes that your organization is complying.

Regulatory guidance and practical interpretations vary and are not always clear

Global invoicing and tax compliance is complex, fragmented, and constantly developing, posing a real challenge for globally active organizations. Plus, with e-invoicing surging across the globe, myriad laws, mandates, and new compliance requirements abound. From the European Union to China to India to Latin America, mandates are firmly in place around the world with other countries, like France, already announcing future requirements. 

In practice, global organizations need to understand all the different local and cross-border requirements, design solutions for those requirements, and then continually manage change in the business environment as requirements change. Yet that is much easier said than done. In fact, one of the key reasons for needing better data visibility, cited by more than half (57%) of leaders in the Basware report, is accounting complexity due to multijurisdictional compliance requirements.

It’s a full-time job (and then some) that most enterprises don’t necessarily have the bandwidth to do. These organizations should be able to focus all their energies on their day-to-day business operations, not sifting through the constant barrage of local mandates and finding out what the best ways are for their business to be compliant with ever-changing requirements.

Many companies are relying on trust – is yours?

With the intricacies of compliance, one would assume that organizations are knee-deep in the data to ensure they are complying with the most relevant rules. Just the opposite. Companies have too much trust and not enough proof. Shockingly, the Visible Commerce report found that almost half (48%) of respondents said that when it comes to compliance, they rely too heavily on trust over data insight. Perhaps your company is (alarmingly) in that blind-trust bucket as well. If so, your organization also becomes very vulnerable to fraud, something else to keep you up at night.

Failure is costly – to your bottom line and reputation

Non-compliance is not just a business blunder or hand-slap. Since taxes are a significant source of revenue for many governments, the consequences of non-compliance can be very severe. These can range from fines and protracted audits to sanctions under criminal law. And global organizations can’t afford to redistribute funds that are intended for research and development to pay for non-compliance fines.

It's clear that inadequate finance and procurement data management is leaving many firms at risk of falling foul of regulatory requirements, and the financial penalties worry finance and procurement professionals. Rightly so, financial leaders stated that financial penalties are the biggest risk (31%) of having a lack of visible finance data, according to the Basware Visible Commerce report. Additionally, consider the damage to your brand and reputation as well. Many would argue it could be more costly than financial penalties as fines can be paid, but reputational damage is often beyond repair.

And when it comes to mandates, there isn’t one thing optional about them, so now is the time to check - and double check - your global invoicing and tax compliance processes. The good news in all this is that there is one clear way to simplify compliance with worldwide requirements – accounts payable (AP) automation that goes hand in hand with an e-invoicing network. With an AP automation solution from a seasoned provider, you gain efficiency, compliance and control. That’s because a solution comes with expert human support too, from identifying obligations and assessing requirements to designing and managing solutions. No more crossing your fingers! You have all the support and right tools to enable more compliant business processes.

More insights from finance and procurement professionals’ regarding financial compliance and supplier risk management are available in Visible Commerce: Overcoming Operational Blind Spots, a research report by Basware.