Compliance requirements are designed (at least in theory) to enforce the right behaviour, when it comes to your finances, your employees, your customers and the community your business operates in.
But when it comes to small and medium sized businesses, “A lot of them just get on with the job and hope they don’t get pinged for something they don’t know about,” in the words of former NSW Small Business Commissioner, Yasmin King.
Dianne Gibert, (AAIM) is the Managing Director of Certex. Certex sits along side businesses, and helps them identify any gaps in their compliance in order to eliminate risk and ensure that they remain on the right side of the law.
A lot of small businesses just get on with the job and hope they don’t get pinged for something they don’t know about.
“Ethically businesses want to do the right thing, but people are in business to make money. They need to be aware of rules and regulations about how they operate so that they can make money and do the right thing by the people that they work with,” she says.
Keeping up with a myriad of compliance requirements, from tax and health and safety, to the shifting sands of privacy regulation, can be complex, costly and time consuming.
In 2015, the Australian Chamber of Commerce and Industry’s 2015 Red Tape Survey found that a quarter of respondents spent more than 11 hours a week on compliance, and half of them spent over $10,000 annually. Seventy-four percent of the businesses surveyed believe the cost and time burden of compliance is increasing.
In 2015 the Federal Government announced an initiative to cut red tape by more than AUS$1 billion. The first biannual ‘repeal day’, made a start by abolishing tens of thousands of redundant laws.
Nonetheless, complexity remains. Dianne Gibert says that the most common gaps that she finds when working with small businesses are in recruiting staff, ensuring staff are appropriate licensed, making sure staff remuneration meets legal requirements (including superannuation, PAYG and award wages), safety management systems and procedures and privacy legislation.
“Ensuring you understand legal obligations and build them into your workplace is challenging for small business, because you are so busy keeping the business going.”
Dianne points out that while there is an ethical side to compliance, “It becomes complex,” says Dianne, “when doing the wrong thing gives you a competitive advantage. How do you compete when everyone else is doing the wrong thing?”
She does not believe that further regulation is the answer: “It’s not a lack of laws but a lack of mechanisms that support people’s understanding of the regulations and ensure they adhere to them,” she says.
“There are so many small businesses leaders who are too busy and too pressed. Often times they are exactly the ones that need an independent compliance health check. If they are too busy to check, they are quite possibly too busy to have verified they are following the right process. And the law doesn’t allow for ignorance.”
“The courts might make some allowance for an honest mistake, but you’ll still be penalised. It might just be the difference between a $500,000 penalty and a $250,000 penalty. Either penalty could put you out of business.”
Her advice for hard pressed business leaders whose good night’s sleep is disturbed by the threat of a penalty of that size: “Clear the decks, get everything checked, and if nothing else, even the fact you have sought the advice of an independent third party will count for a lot.”