Red tape is a bug bear for all organisations. Despite attempts to reduce the number of rules and regulations, businesses still spend a great deal of time and money ensuring that they are compliant with commercial, tax, health and safety and environmental laws. The Forum of Private Business (FPB) calculated that the total cost of compliance in small and medium-sized enterprises (SMEs) with up to 250 employees is in the region of £41 billion. This is made up of real costs (£20 billion), plus the opportunity cost of time spent on compliance (£21 billion). Of course, regulatory compliance must be a priority as fines can be onerous and the damage to reputation can have lasting effects.
However, compliance should not be seen as a burden but as an opportunity to improve business efficiency. By establishing policies and implementing systems and processes that enable employees to operate in complete accordance with regulations, SMEs can be more productive and deliver a better service. Customer communications, in particular, can benefit greatly with the need for compliance promoting more effective management of documents throughout their lifecycle, from creation and distribution to storage and archiving.
SMEs handle information of a private or commercially sensitive nature every day. Depending on the industry in question, this might include medical test results, financial statements, credit card details and legal documents. At the very least, all will hold details of employment contracts and employee bank and contact details. SMEs that process personal information must operate in accordance with the Data Protection Act 2006. Amongst other obligations, the Act requires organisations to secure personal information that they hold, whether in printed or electronic form, and to prevent disclosure to third parties.
While cyberattacks are becoming a more frequent cause of data leaks, a vast majority of Data Protection Act breaches are caused by carelessness and inadequate processes. This often includes loss of paperwork and sending documents to the wrong recipient. Small businesses can mitigate the risk of such occurrences by adopting technology that automates the preparation and sending of customer communications. Not only will this reduce the requirement for human interaction and the opportunity for error, but companies are able to reallocate their limited resources into more important business-growing activities. Furthermore, firms can more easily keep records up-to-date by implementing data management tools, enabling them to avoid the extra costs incurred from having to reissue items sent with faulty addresses.
Another major piece of legislation that applies to all UK companies is the Companies Act 2006. This requires company directors to keep adequate accounting records so that, at any time, they can disclose the financial position of the company. Records should include details of income and payments as well as company assets and liabilities, and they must be available for inspection for up to three years.
Compliance with the regulation is dependent on defined processes and efficient record-keeping, yet many still rely on manual paper-based processing and storage. Manually managing documents often results in human error, wasted time – in regards to data collection, entry and document retrieval – and a lack of control over data access. As such, SMEs should digitise the process. Digitisation not only automates data collection, entry and document archiving – ensuring the accurate recording of information – but documents are then stored in a central database where they are retrievable by those with the relevant clearance. This makes employee collaboration simpler, customer queries more easy to resolve, and companies remove the costs associated with storing physical documents.
Ultimately, as the number of regulations continues to increase, SMEs can no longer rely on ad hoc manual processes. Ensuring compliance requires detailed and accurate data processing and, as data becomes more complex and is collected from an ever-growing number of sources, companies should view it as a reason to adopt modern digital processes. Alongside the obvious benefit of fine avoidance, digitisation will have a positive impact on cost control, productivity and customer satisfaction – factors that lead to growth.
By Phil Hutchison, operational marketing director, Neopost