In an increasingly litigious world, it only takes a single breach or compliance failure to expose your organisation to the multiple threats of fines, prosecution and reputational damage.
SMEs face a dual challenge with compliance dangers coming from two sources. Companies need to safeguard against the internal risks posed by employee actions ? whether it?s honest errors or deliberate acts of fraud. Businesses also need to have protection in place for the external risks of failing to comply with outside legislation. For UK companies, this means having to work within HMRC?s complex tax and VAT framework. Each year, more than 1,000 UK companies are prosecuted for tax fraud and evasion charges as HMRC targets specific industry sectors with their task forces. The 2010 Bribery Act also introduces the threat of unlimited fines and up to ten years imprisonment for companies who breach the rules covering corporate gifts, hospitality and donations. But while the compliance pressures have continued to increase, so has the ability of SMEs to effectively handle them. This is thanks to the emergence of digital management systems. Instead of an expense policies being static documents, each are now able to become an active and integrated part of employee workflow. This is made possible by the move from old manual and paper-based tasks to automated digital processes. Any paper receipts that employees receive can be instantly converted into a digital form using a smartphone app. From this point on, the whole process is handled digitally. Read more from our Accounts & Tax section:
Expenses claims can be updated as and when worker costs are incurred, meaning finance teams no longer have to battle against a monthly wave of paperwork. The move to real-time working allows policy reminders and notifications to be delivered via the smartphone app. Triggers can also be set to alert account managers whenever a suspicious or out-of-policy claim is made. In terms of managing compliance, it has been a game changer. With fast and automated systems, finance teams now have the tools to make sure company policies are properly managed and maintained. These benefits are equally important when it comes to protecting against those external compliance risks. When HMRC officials audit or investigate a company, what they?re looking for is proof that ?appropriate systems are in place?. They want to see evidence that an organisation has a clear policy and they have taken all reasonable steps to properly enforce it. If this is the case, an employer is not held responsible for the actions of an employee. It?s this kind of safeguard that digital systems provide. It doesn?t just give you the tools to manage compliance but also the data to demonstrate that all the correct checks and balances have been carried out. With a digital system, a trail of data is automatically generated and stored. Since 1998, HMRC has said that paper copies of expense records are not required, as long as the same information is readily available in a digital form. The compliance benefits of data over paper-based processes are particularly evident when it comes to business mileage and VAT claims. Instead of relying on employee guesstimates, a digital system uses GPS tracking to record precise routes and distances. It not only helps finance teams to make sure that mileage expenses are legitimate but also that the correct amount of VAT is being reclaimed. So while the compliance pressures faced by SMEs are considerable, the ability for companies to protect themselves has never been better. Digital management does not just provide organisations with faster and smarter ways to work, but also safer ones. Adam Reynolds is the CEO of webexpenses.Webexpenses provides a smarter way to manage your employee expenses. Find out more here.
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