17 Feb The Consequences Of NOT Being Compliant
Being compliant refers to having business procedures in place that are in accordance with the current laws, legislation, and industry best practices.
However, many businesses remain unaware of the dangers of not being compliant, and the devastating consequences this could have on their business.
Below, we look at six of the key dangers of being found non-compliant — and what you can do about it.
Perhaps the most common consequence of being found non-compliant is a fine. These can be sizeable (well into millions of pounds sterling for large corporations), and thus may be devastating for your business.
Even smaller fines that must be paid quickly can have a hugely negative impact on cashflow and company budgets. This is why many businesses have some kind of ‘emergency fund’ that is reserved for unexpected fines or charges, but clearly it is more efficient to avoid being fined in the first place.
Carefully assess the key areas in which you must be compliant and make a concerted effort to meet the requirements. If you are unsure of where you stand, consider hiring a compliance professional.
For more complex cases, there may be consequences beyond a fine.
Court appearances or sanctions can not only harm your business financially, but also damage its image and legitimacy. Receiving such a negative impact to your reputation can cause a devastating loss of trust to develop between you and your potential customers, so it should be avoided at all costs.
Legal consequences can also be costly and time-consuming, meaning they can affect the overall running of the business, interfere with daily operations, and drain your cashflow.
To avoid these outcomes, consider consulting with experts in legal and compliance-related matters even when you are confident no such issues exist. This can help you to prevent any potential problems from developing into major headaches, well in advance of the first visible signs appearing.
Compliance is not simply a financial or legal issue, it can also relate to the safety and wellbeing of your workforce. In fact, many compliance requirements and regulations are in place because they are considered to be the safest way to do things.
Being non-compliant can not only result in fines and legal consequences, but it can also get someone seriously hurt. Remaining compliant at all times is a crucial way to avoid this happening.
Prevented From Operating
In some of the worst cases, or while a case is being investigated, your business may be prevented from operating at all.
This is usually to prevent any further potential damage, whether tangible – such as safety concerns, or non-tangible – such as data protection, for example.
Being prevented from operating can seriously harm your business to the point where some are unable to recover.
In order to prevent something so final, many businesses will ensure that they effectively identify small issues in compliance before they have the chance to become major problems.
Being Ineligible For Opportunities (especially the most lucrative contracts)
Some areas of compliance can be more voluntary than others. This means they may just be advisable rather than compulsory, but still of great benefit to your business.
A lack of compliance in these areas may bar you from certain opportunities. For example, if you do not have a key safety certification in place, it may mean that your business is unable to tender for the most lucrative contracts.
It can be helpful to not only seek compliance in the major, compulsory areas, but also to look at the ways that you can go ‘above and beyond’ to inspire confidence.
Loss Of Trust
Along with all the serious financial and legal consequences faced by those who are non-compliant, there is also the negative impact on customer and client trust to consider.
Businesses hit with heavy fines, court appearances, or other undesirable circumstances are bound to be overlooked in favour of those with an unblemished reputation.
Sometimes these trust issues can be corrected, but it is always best to avoid them in the first place.
What Can You Do About It?
If you are concerned about failing in key compliance areas, it is important to identify and correct the issues as soon as possible. If done quickly enough, there may not be any damage done.
To help accomplish this, hiring a qualified compliance expert with experience in your industry can be an excellent idea.