As companies start preparing for 2023, budgets are often a major talking point. Red Oak Compliance has outlined the five questions companies need to be asking when building the compliance budget.
With the market heading into an uncertain period, budgets are going to become tough to establish. But there are five simple questions that can help ease the struggle.
How has business changed?
The first of these questions is to ask how business has changed. It stated that the pandemic as changed how a lot of companies are operating. As a result, compliance teams need to understand the business’ overall financial standing, prospects and goals. Part of this includes having a clear idea of which items can best support the specific areas of focus.
For example, it explained that many companies scrutinise purchases of technology due to their heavy costs and implementation times. Additionally, technology can often be seen as working in a bubble, rather than making a visible contribution to the organisation.
It said, “If you’re seeking approval for technology resources, highlight the features that get them up and running quickly, and focus on the ways their addition will support specific corporate goals, as well as bring benefits to your own department.”
How can technology be leveraged?
Tied into the previous question, companies should be asking how technology can be beneficial to the organisation.
If a company is looking to scale, technology will be crucial, is said. However, firms should evaluate the offerings in terms of costs and the types of benefits they would bring, such as quicker processing times, accelerated go-to-market, and a decrease in managing paper trails and audit trails.
It added that firms should be aware of the cross-functionality of technology. For example, compliance and marketing teams often have lengthy paper and spreadsheet-driven processes. While IT professionals might not initially think of these departments as needing an automated tool, the departments would most likely be interested.
How can I get a competitive advantage
The third question to ask is how compliance can give the company a competitive advantage. Red Oak explained that businesses are always focused on the bottom line and how to do more with less. Unfortunately, many see compliance as a cost, rather than a valuable tool.
It added, “However, when compliance professionals are included in high-level strategic discussions, they can add valuable dimension to the conversation and ensure the organisation is properly positioned.” Red Oak offered simple questions the compliance teams should ask.
It said, “Compliance demands and regulatory requirements increase daily, leading to risk fatigue from compliance team members and their business unit counterparts. Can you make changes to processes that will improve efficiency, build better relationships or create a stronger culture of compliance?”
The next question revolves around how bottlenecks in compliance can be reduced. “Is there a resource or technology tool that could help you get your information to market faster, so you can edge out your competitors?”
Finally, “Are there areas where you could outsource a project and improve your overall efficiency? Examples might include outsourcing some training-heavy roles, where team members need to read and study diligently in order to maintain a high level of accuracy, and where fines for incorrect information can be intense.”
Smart and efficient compliance officers give companies many competitive advantages. One of the biggest is keeping the firm away from fines.
As a result, when advocating the budget requests, emphasising how compliance can improve the company’s performance is critical.
How can budget investments make compliance more efficient?
Red Oak explained that technology in compliance can reduce the workload of compliance professionals and open them to a new level of responsibility and strategic involvement within their organisations.
Its stated, “For compliance professionals to actively serve and protect their organisations, they need to be fully involved and invested in projects, giving feedback and spotting issues as they arise, rather than cleaning up messes after they occur.
“This line of thinking makes sense both for compliance professionals and for the business, as the aftereffects of non-compliance are significantly more costly than managing the process appropriately from the beginning (2.65 times more expensive on average).”
The RegTech company urged compliance professionals to win their seat at the strategic table by positioning their work as more than just the ‘cost of doing business.’ They should highlight the increasing complexity of business processes and the value compliance brings.
“In these [budget] discussions, compliance leaders can advocate for technology, not as a replacement for experienced team members, but as a means of automating and increasing efficiency in some labour-intensive processes. Then, the bandwidth freed up through these enhancements can be made available for deeper, more strategic analysis and involvement.”
Where is the organisation going?
The final question Red Oak provided revolved around growth plans. Is the company expanding into new markets, will there be new product launches, are there new regulations on the horizon, is there an increase in prices for customers, are suppliers rising their costs, will there be new training programs, and much more. The team needs to have a clear picture of the new year, before they can etch out their budget plans.
However, Red Oak concluded, “The biggest question you need to ask yourself when planning for the budget season is this – how will the expenses I’m planning contribute to the company’s overall success? You need to tie your budgeted expenses back to measurable success metrics, like revenue production or time/expenses. And, compliance leaders need to advocate for a more visible and vocal role in the organisation’s strategic processes, something that can only take place if you’ve allocated resources responsibly to create day-to-day efficiencies.”
Read the report here.
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