Compliance as a Service (CaaS): what it is and how to leverage it
The business ecosystem is becoming increasingly complex. Companies have come to operate in a global environment with a broad and fragmented legislative framework, which in many cases is subject to exhaustive control. In this scenario, compliance has acquired great importance in organizations.
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What is compliance?
Compliance, or corporate compliance, refers to the set of procedures and best practices applied to ensure that a company and its members comply with regulatory frameworks. This includes monitoring the legislation that affects the company in each country where it operates, as well as other aspects related to ethics and the company's values. For example, business governance, data confidentiality, or financial transparency.
Compliance is not something new. It originated in the Anglo-Saxon world, primarily within the financial sector due to the extensive regulations that companies must comply with. However, nowadays it has expanded to all sectors due to globalization.
Why Compliance as a Service (CaaS)?
Currently, regulatory compliance is directly related to technology. Companies worldwide are in the midst of digital transformation, an evolution that leads to the use of technological tools at various operational levels of companies.
Compliance as a Service (CaaS) is a service that allows organizations to outsource and automate their regulatory compliance (fiscal, commercial, etc.). This means that the Compliance provider is responsible for managing and ensuring that the company complies with the regulations and norms applicable to its industry. The aim is to reduce the workload for companies, minimize economic costs, and, above all, simplify compliance requirements.
Traditionally, this service has been highly demanded in highly regulated sectors such as pharmaceuticals, banking, or finance. However, nowadays any company operating in a global market may need to comply with varying regulatory requirements.
Thanks to technology, compliance services are integrated into company operations through automation. Implementing CaaS solutions requires a certain level of digitalization for companies, but the cost savings from process optimization, improved efficiency, as well as the advantage of scaling solutions, make it worthwhile to consider CaaS as part of a broader digital strategy.
Advantages of outsourcing the CaaS service
- Elimination of risks of regulatory non-compliance in electronic transactions (fines, penalties, etc) that entail economic, time, and resource expenses, as well as consequences for the company's reputation.
- Keeping up to date with legal and technical requirements.
- Reduction of management costs by outsourcing a specialized service that requires continuous responsiveness to changes to comply with regulations.
- Focusing resources on the company's strategic objectives.
- Rapid adaptation to new markets.
- Specialized advice for tackling new projects.
- Constant updating of cloud services.
Proactive Compliance vs Reactive Compliance
The complexity of operating in a globally fragmented market in terms of regulations increases the risks of tax non-compliance, security breaches, etc. This necessitates the need to anticipate and proactively identify changes and requirements to achieve compliance.
A proactive strategy involves identifying compliance and non-compliance risks to address new projects. Having a partner to ensure international compliance in all electronic transactions allows organizations to operate securely.
Compliance as a Service and electronic invoicing
Complying with legal requirements for electronic invoicing and electronic VAT reporting is often entrusted to Compliance as a Service, as these tasks can be challenging to handle internally. In this way, through consultants and technology providers, the monitoring and review tasks of new or updated regulations are delegated to ensure compliance with the legislation.
In recent years, electronic invoicing systems have become mandatory in many countries worldwide, and there are currently existing regulations in the implementation phase. However, the requirements for correctly issuing this document vary from one place to another: different standards, formats, reporting deadlines, security mechanisms, etc. The result is a growing demand for CaaS solutions among companies.
The relationship between CaaS and electronic invoicing lies in the fact that regulatory compliance can include aspects related to the issuance and management of electronic invoices. In many countries, companies are required to comply with specific requirements and regulations for issuing electronic invoices, such as using a specific format, including certain mandatory data, and using digital signatures or security certificates.
In this context, a CaaS provider can offer services related to the implementation and management of electronic invoicing as part of its regulatory compliance offering. This may include configuring electronic invoicing systems and tools, integrating them with the company's existing systems, ensuring compliance with legal and fiscal requirements, and generating reports and files necessary for tax authorities.
Thanks to CaaS, the management of regulatory compliance is outsourced. CaaS provides companies with the ability to manage their compliance efforts from start to finish, automating processes and managing compliance-related information. This involves the collection, storage, and analysis of relevant data for compliance, such as policies, procedures, reports, audit evidence, among others. By centralizing and organizing this information, CaaS facilitates access and retrieval, streamlining decision-making and response to regulatory requirements.
Thanks to Compliance as a Service (CaaS), companies can outsource the management of regulatory compliance, allowing them to access specialized experts and leverage technological solutions to automate processes and efficiently manage information. This not only contributes to cost reduction and improved efficiency but also helps ensure compliance with applicable regulations and norms.