17 Aug Is Not Being Compliant Costing You Money?
If you’re a small business with a limited budget, the cost of compliance can initially seem daunting.
You may be tempted to skimp on compliance costs in order to invest in other areas of your business, but cutting this particular corner can result in hefty fines and even heavier repercussions such as criminal charges.
Here are just some of the ways that not complying with the relevant regulations can cost your company dearly in the long run, while also affecting your operations on a day-to-day basis.
The Cost Of Non-Compliance
Having compliance issues can be a costly mistake for business owners, and in some circumstances can even lead to revocation of the licences you need to operate.
Here are some facts about the true cost of non-compliance:
Non-compliance can be almost three times as expensive as the costs to remain compliant: A global report by Ponemon found that the cost to businesses for non-compliance is 2.71 times the cost of staying within compliance regulations. In fact, the expense of non-compliance rose by 45% between 2011 and 2017, meaning non-compliance has become an even costlier option in recent years.
Non-compliance can result in ineﬃcient or unsafe business operations: Compliance regulations aren’t just an extra expense for your business; they help to ensure that your company is being run safely and efficiently.
In the long run, this saves you money by lowering the risk of legal claims being raised against your business, reducing staff injury and illness, and ensuring that your business operates smoothly on a daily basis.
Non-compliance can affect productivity: Failure to comply with the relevant legislation may lead to ineffective management and poor adherence to company policies and procedures. This can affect the overall productivity of your business and the level of revenue it generates.
The penalties can be costly: Fines vary according to the area of compliance, but they can be significant. For example, in 2018/19, the average Health And Safety Executive (HSE) fine rose to £150,000, and over the course of the tax year, UK businesses received a total of £54.5 million in penalties.
Meanwhile, under GDPR, the maximum fine for breaches is £17.5 million or 4% of the business’ annual turnover – whichever is greater.
Your staff’s training and certification may be inadequate: Failure to adhere to compliance regulations may mean that your employees are not legally qualified to carry out their employment obligations. This can result in many issues for businesses, ranging from large fines to potential lawsuits and government sanctions.
Staff illness and injury: No employer wants to experience the guilt of feeling responsible for an employee’s injury or ill-health. Plus, staff illness can also be a great cost to your business: in 2019, the average time spent off work sick was 4.4 days, with the average cost to businesses for each employee out of work being £463.76.
The Other Ways That Non-Compliance Can Affect Your Business
Even if your company escapes any fines or penalties for being non-compliant, failing to adhere to the necessary regulations can still end up costing you money.
Here are the top 3 ways that this happens:
1. Bad Business Reputation: When your business fails to comply with regulations, mistakes are more easily made. Then, word gets around fast; simple errors such as data protection breaches may lead to your business being branded as ‘untrustworthy’, which can result in lost sales opportunities and poor customer satisfaction ratings.
2. Lower Employee Satisfaction, Wellbeing, And Turnover: You may find it harder to recruit new employees if your business has a reputation for failing to comply with HSE and employee wellbeing regulations.
This lack of trust between business owners and staff can also affect your staff retention levels, meaning that you will need to spend more time and money on the recruitment and hiring process.
Additionally, having a poor company culture where employees don’t feel valued means you might struggle to nurture a positive environment where innovation, productivity, and dedication are assured.
3. Ineﬃcient Management: Adhering to compliance regulations ensures that firm procedures are in place which guarantee efficient day-to-day business operations.
Therefore, failure to comply with compliance legislation can result in wasted resources and costly mistakes that disrupt your business processes and cause activities to grind to a halt.
For these reasons and more, having the appropriate compliance policies and procedures in place is essential for effective management, and for helping to prevent operational issues developing.
Want to avoid non-compliance becoming an issue for your business? Give us a call and let’s get started!