What Is Regulatory Compliance and Why Is It Important? – Complete Guide
Regulatory Compliance: Over half a million businesses open their doors every year. Many entrepreneurs find themselves quickly jumping head-first into the school of hard knocks that is owning a company.
As those business owners navigate everything from inventory sourcing to taxes, one of the most daunting shadows over their businesses they’ll have to contend with is regulatory compliance.
What Is Regulatory Compliance?
That’s a big question that has different answers based on what you do and where you work. There are, however, broad-stroke concepts worth understanding about compliance. We’ll touch on them in this post so you have a jumping-off point into what your corporate obligations may be.
Curious to learn more? If so, dive into the post below and start fulfilling your need to know!
Regulatory Compliance Defined
Regulatory compliance means following the rules of whatever governing bodies have control over your business. For everyone, that’s federal, state, and local governments. For some, you’ll have private regulatory boards that can also exercise influence over operations.
When governing bodies issue edicts and your business takes those and creates policies around them to ensure that day in and day out, you’re doing everything that’s expected of you, you’re managing your regulatory compliance obligations excellently.
What Are Some Examples of Regulatory Compliance?
Regulatory compliance, as we’ve mentioned, will look different across every industry. Take medical professionals as an example. One of the chief regulatory compliance statutes they need to stay mindful of is HIPAA compliance.
HIPAA is a whole set of standards that are aimed at protecting patient information.
Other industries will have to deal with SOX compliance while other’s primary focus will be on GLBA compliance.
There is no shortage of compliance statutes out there and many may affect you in combination. The sooner you can work with a qualified individual that can make you aware of what compliance standards you should be paying attention to, the safer your business will be.
Why Is It Important to Follow Compliance Measures?
Regulatory compliance measures aren’t without teeth. As a matter of fact, businesses get fined billions of dollars collectively each year across various fields for not complying.
All it takes is one doctor peeking at a family member’s medical records without being their treating physician or putting up a social media post describing a patient’s journey to rack up a fine that could be worth hundreds of thousands of dollars.
Unless you have that kind of money lying around, you have ample reason to take your compliance obligations seriously.
The Issue of Changing Rules
Many professionals get a taste of what compliance looks like in their fields during their education period. While learning about your compliance obligations in school will prepare you to start working within a certain proximity of your graduation date, 10 years into the future, that compliance training may be worthless.
That’s because rules around your industry almost certainly change on a yearly basis. Sometimes, those changes are drastic. Therein lies the need to have workflows in place that enable you to stay abreast of what’s happening in the environment your industry operates in.
Remember, violating a new piece of regulation and claiming ignorance isn’t a defense that’s likely to net you leeway.
How Can You Protect Your Company?
We’ve walked through the ins and outs of the what is regulatory compliance question. By now, we’re sure you’ve begun to appreciate the importance of being aware of compliance statutes.
But what if following all of the many regulatory rules you’re beholden to feels impossible? How do companies deal with that?
There are several strategies companies use when feeling overwhelmed and want to make progress. Our suggestions on how to get started would include:
You’re an expert at building websites, treating illnesses, or fixing cars. You’re not an expert on the law.
With that in mind, sharp professionals oftentimes lean on regularly compliance services as a means to make sure they’re doing what they need to do.
Regulatory compliance services are offered by third parties. They’ll come into your business, audit what you’re doing, and issue you a report on where you’re falling short and how to fix your problems.
That’s extremely helpful in that all that’s required of you after will be to go through the check-list of items you’re issued.
Do a Self-Compliance Audit
Are you not in a position to hire an auditing professional at the moment? While we can’t stress enough a professional’s value when it comes to analyzing your business, if you’d like to conduct a DIY-audit, don’t hesitate to do so.
Figure out which regulations you’re beholden to and inspect each of your business practice against them. Does anything you’re doing stand out as being a blatant offender?
If so, issue a fix.
Train Your Team
Regulatory compliance isn’t only your obligation. It’s everyone on your team’s.
That means your team must receive training, at least once per year, that describes what it is they’ll need to do in order to keep your company out of hot water.
What Is Regulatory Compliance? Your Questions Answered
We’ve taken the deep dive into the big what is regulatory compliance question. We hope you’ve walked away with a base understanding of the importance of compliance, what compliance might look like, and how to make sure that your business is protected.
Still looking for information on how to get the most out of your business? If so, we welcome you to explore new legal, entrepreneurial, and related advice on our blog.