Compliance Concerns: When to Bring In a Third Party

As your business grows, so do your compliance concerns. This is particularly true as you begin to juggle an expanding product line and client base. Keeping up with laws, regulations, and industry standards is a daunting task. While a dedicated in-house team can often effectively manage compliance issues, there is the option of working with other businesses that can do this work for you.

Outsourcing Compliance

Does outsourcing compliance sound strange? It shouldn’t. Many suppliers work with consultants and service providers to handle key aspects of their business, such as liquidation, merchandising, supply chain logistics, and domestic sourcing. These businesses frequently offer compliance management with these services, adding significant value to your partnership.

Here are some reasons to consider outsourced compliance management:

Complexity. If you are working in an industry with complex regulations or standards, it can be extremely difficult to plumb the depth of knowledge needed to keep your organization in compliance. It can be even more difficult to keep track of changes in laws, regulations or business policies.

Staff mobility. Some businesses rely on one or two people to handle compliance issues. The problem with this is that the best compliance professionals typically spend years immersing themselves in the laws, regulations, and standards of their industry. If a staff member leaves your organization, his knowledge is lost to you. Unless you have a large team, losing your in-house expert can put your organization in a precarious position.

In-house strain. Despite your best efforts, you may find it challenging to develop a true compliance culture in your organization. Some departments and individuals may resent and find it difficult to work with your organization’s “enforcers.” If this conflict between colleagues negatively affects office morale, putting compliance in the hands of an outside party can restore peace and productivity at your workplace.

Cost-effectiveness. Crunch the numbers. You may find that the cost of the service provider is less than trying to handle every aspect of your business in-house. Take a particular look at your compliance costs, including the financial risks of being out of compliance. Even if you have managed to adhere to regulations and standards so far, as your business grows, so does the chance of making a costly error. Hiring a third-party can act as liability insurance against violations. 

Lainie Petersen previously served as a senior compliance administrator for a large educational company and is currently editor of Walmart News Now.