Compliance: the often-overlooked yet crucial aspect of business success. 

Many businesses believe that cutting corners on compliance is the quickest path to global success. However, this shortcut often leads to long-term problems. While it may seem tempting to minimize the work, neglecting these requirements can have big consequences. Non-compliance can result in hefty fines, reputational damage, and even legal issues. 

It may seem like a mere administrative chore, but compliance plays an important role in protecting a company’s reputation and employees, and building a culture of integrity. 

The problem is that there are a lot of varying and often overlapping regulations and ethical standards that can be difficult to navigate. 

Want to know what’s tripping up other businesses when it comes to compliance? See the common pitfalls and find simple solutions to keep your business legal and ethical.

1. Lack of Awareness and Understanding

One of the most common compliance pitfalls is a lack of awareness or understanding of relevant regulations. This can lead to unintentional non-compliance, even for well-intentioned companies. 

For example, a US company expanding operations to Colombia may overlook the country’s unique labor laws regarding work hours, overtime pay, and mandatory benefits. If the company fails to comply with these regulations, it could face significant fines and penalties, damaging its well-earned reputation and potentially leading to legal disputes.

To address this issue:

• Identify all applicable regulations, standards, and industry-specific requirements.
• Implement a system to monitor regulatory changes and updates.
• Educate employees about compliance obligations, policies, and procedures.

2. Insufficient Resources and Budget

Businesses, particularly those operating across multiple regions or countries, often face significant challenges in complying with a wide range of legal requirements. Adhering to local labor laws, tax regulations, and other legal mandates can be a time-consuming and complex process. The cost of compliance can be substantial, as businesses may need to hire additional staff, invest in specialized software, or outsource certain functions. Many businesses struggle to allocate sufficient resources to ensure full compliance, which can expose them to increased risks, operational disruptions, and loss of customer trust.

Here’s what you can do:

• Allocate resources for compliance.
• Utilize compliance management software to automate tasks and improve efficiency.
• Explore the possibility of outsourcing certain compliance functions to specialized firms like an Employer of Record.

3. Inadequate Documentation and Recordkeeping

Proper documentation is a must for demonstrating compliance and defending against potential legal actions. It serves as evidence of compliance with local laws and regulations, protects against potential legal disputes, and can significantly streamline audits and inspections.

To avoid this problem:

• Make sure that all required documentation is maintained and up-to-date.
• Establish clear guidelines for document retention and disposal.
• Implement secure and organized storage systems to protect sensitive information.

4. Inadequate Employee Training

Employees are often the first line of defense in ensuring a company’s compliance with local laws and regulations. Their understanding and adherence to these rules are important in preventing unintentional violations that can lead to significant legal and financial consequences.

Let’s say an Australian company looking to expand its operations to the Philippines. While the company may have a strong compliance culture in Australia, the Philippines has its own unique set of labor laws and regulations. 

Without proper training, Australian employees working with Filipino employees may unintentionally violate local laws.

For example, the Philippines has specific regulations regarding minimum wage, overtime pay, and employee benefits. If the Australian employees are not aware of these requirements, they may unintentionally underpay or overwork Filipino employees. This could result in severe legal action and damage to the company.

What you can do with this concern:

• Cover relevant regulations, policies, and procedures.
• Keep employees informed of changes and updates by providing ongoing training.
• Build a safe and open workplace where employees feel empowered to report potential violations.

5. Ignoring Data Privacy and Security

Data privacy and security are on top, especially in today’s digital age.

For example, US companies venturing into new markets like Colombia. With strict regulations like the General Data Protection Regulation (GDPR) and the Colombian Data Protection Law (Ley 1581 de 2012), ignoring data privacy and security can lead to big legal damage.

Here’s what you can do:

• Implement robust security controls to protect sensitive information.
• Stay informed about and comply with relevant regulations, such as GDPR.
• Develop incident response plans to effectively handle data breaches.

A proactive approach to compliance can be a powerful tool for businesses. 

By identifying and addressing potential pitfalls, companies can reduce risks, avoid costly penalties, and protect their reputation. 

This not only guards your organization’s finances but also strengthens your relationships with your employees, enhances customer satisfaction, and ultimately drives business growth.

If these are too overwhelming for you— no worries, you can have an “easy” option!

Partner with an Employer of Record like Filta. 

As your Employer of Record, we’ll ensure your business is fully compliant with local labor laws and regulations in over 150 countries. No more legal headaches or compliance risks. 

Rest assured that our experts will ensure your business and employees are protected, allowing you to focus on your core operations. 
Let Filta handle the heavy lifting. Head to www.filtaglobal.com to learn more about how we can safeguard your business.