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SMBs Advised to Prepare for Compliance Standards As Regulations Reach SMBs, Technology That Improves Internal Audits, Workflow and Record-Keeping Gives Companies a Jump-Start
ATLANTA, January 30, 2006 – The majority of the American public equates the word audit with the Internal Revenue Service. Many small- and medium-sized businesses (SMBs) relate compliance regulations, like the Sarbanes-Oxley Act, with large public companies. However, as regulations like Sarbanes-Oxley more strictly monitor and hold accountable enterprise-level organizations, the standard set for big companies is starting to shift focus to the SMB market. Information relationship management software provider FileVision advises that the best way SMBs can prepare is to tap into a cost-effective technology solution that regulates the company internally. Failure to comply with regulations has serious consequences, including fines, loss of business or even the risk of not being in business. “Unless a company is entirely family-owned and self-financed, at some point in the near future, it will be impacted by Sarbanes-Oxley or a regulatory measure from its industry, partnering vendors, investors and liability insurance providers, just to name a few,” says Laurie Shufeldt, vice president of strategic business development, FileVision. According to Gartner, a leading provider of research and analysis about the global information technology industry, spending on financial compliance management technology will increase to between 10 and 15 percent of total IT budgets in 2006, up from less than 5 percent in 2004. “The best way to be prepared for compliance standards is for a business to regulate itself. In today’s lean, competitive business world, the only way to do that efficiently is with a technology solution that manages internal audits, monitors employee’s workflow and provides secure and immediate access of records to the appropriate members of an organization,” says Shufeldt. Since enterprises are prevalently required to be compliant with large scale federal compliance standards, many SMBs that are franchisees of restaurants, car dealerships and retail stores are also closely monitored and required to provide financial audits to parent companies. The Payment Card Industry Data Security Standard ("PCI Standard") is another example of an industry standard affecting the mid-market. The PCI Standard is intended to protect cardholders’ credit card account and transaction information. As a result, American Express®, Diners Club®, Discover® Card, JCB®, MasterCard International®, Visa® U.S.A. all issued a requirement for merchants and service providers to comply with the PCI standard as well as pass quarterly and annual audits to help ensure compliance. Merchants who do not comply could face restrictions by the card brands. If a company’s exit strategy is to sell the business, non-compliance will be a liability. Investors are hesitant to touch a company that lacks document retention, records management systems and audit trail capabilities, for example. Technology providers and resellers are key partners to helping their SMB customers comply with various regulations. Providers and resellers can educate SMBs on what compliance standards they’ll face in the near future and how technology can deliver an ROI by helping them remain compliant and also more profitable. “Now more than ever, SMBs need guidance on affordable compliance solutions. Not only is compliance expensive, the market lacks technology tools and solutions that are specifically designed and priced for the middle market,” says Shufeldt. “Large-scale, expensive enterprise solutions are simply out of reach for SMBs. To help offset the hefty cost of compliance, SMBs can benefit in the long run by implementing technology solutions that not only help meet compliance regulations, but also solve business problems and improve business processes for the overall operation.”
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