PwC’s 2019 State of Compliance Study notes an interesting perspective on the disastrous consequences of not paying enough attention to compliance. It points out, “Non-compliance costs may start with fines but losses from eroded consumer trust, employee morale and competitive advantage can be substantial. These, in turn, may further erode investor confidence and share prices”.
Compliance is a term that most organisations link primarily to taxes and regulatory submissions. But never before has the word ‘compliance’ permeated to include everything around us - from data, software, banking, financial technology, payroll, insurance to risk management. Digital technology has ‘compliance’ hovering over every service subscription or payment gateway that you would never know until it hits you unawares.
Securing solid buy-ins from senior management to invest in compliance is very important given the crippling effects of its darker side. Most businesses withdraw their decisions based on costs but what they miss is how much more expensive and penalizing the whole affair can become if the company is flagged over non-compliance in any of its verticals. And payroll, the often-ignored department, would be the first to take the bullet.
Compliance in payroll and employee welfare is a complex labyrinth of regulations that cannot be solved through internal audits. Even if organisations have executive compliance committees to govern compliance, there is a greater chance of risk as businesses expand and serve in different geographical locations.
Companies Acts that operate in host countries maybe widely different from what it is in the home country, forcing leaders to insulate their business from violations from day one of the audit season. Labour taxes, insurance and claims also ride on similar risks – the only catch being that there is no guideline or rulebook to avoid them. In many countries, MNCs are required to know the rules by default before making tax submissions or starting paperwork for hiring talents.
All these necessities are further complicated by the arrival of the digital. If you think one still has to comply by manual submissions, then you’re wrong. The spate of online submissions is humongous and dates and deadlines just flicker away on government and tax websites if you don’t pay attention. If any notifications are missed, then companies may need to invest more to rectify those lapses.
In such cases, taking action before the arrival of compliance deadlines is a must. It also makes up for a case why companies should be better prepared for such pitfalls and invest strategically before financial penalties pile up. As debilitating as it sounds, it also deviates attention from the core business to have compounding effects on other functions.
Businesses new to the compliance landscape must look at viable options and invest in compliance management firms that have the capacity and resources to help deviate some of that risk and those heavy fines. Professional Employer Organisations or PEOs can be reliable partners as their core competencies lie in tracking, reporting and meeting compliance along different verticals.
They also make sure employee data and payroll functions fulfil mandatory regulatory checks while also anticipating upcoming changes in labour laws, taxes and withholding tax rates. By outsourcing the burden of compliance to an authentic partner firm, businesses can be rest assured that all necessary updation, renewals and processing will happen without interference or pressure.
The cost of not adhering to compliance can be exorbitant as payroll and compliance require robust continuity even in the face of multi-country expansion or workforce augmentation. Competition is unavoidable and companies who are exploring opportunities need to eliminate the constraints of payroll risk as it can be a possible hazard in the way of unrestrained growth. That applies to data security as well. If companies miss out on leveraging their people data - spread over payroll and HRIS systems - then they may not be able to make strategic decisions using data analytics.
Cloud-based payroll infrastructure also allows for low-risk solutions as data can be hosted over a central server even if companies are switching locations or their offices. By investing on secure anti-malware software, users can be assured that their data is seen and collected only by authorized agencies. These facilities ensure sizeable savings for companies aiming for better compliance and sustainable growth via digital transformation.
Propay Partners is a payroll and employee mobility solutions company truly committed to achieving compliance and bolstering employee mobility solutions. Our two-decade long experience in payroll and compliance has given us vast experience with multinationals of all kinds. As specialists in tax, anti-fraud and wage regulations, we host secure employee and payroll data on ISO-backed systems.
Through varied compliance metrics, we ensure that global companies benefit from our strong compliance reporting, ethical standards and best practices in the payroll industry. Our transparent approach to compliance will help companies gain greater insight into managing and developing policies to keep noncompliance off the charts.
