Regulatory compliance is one of the most important aspects of running a business. In the absence of a dedicated compliance team, your company might quickly find itself reeling under the pressures of penalties and lawsuits.
Also, any form of non-compliance could take a toll on your company’s reputation and customer relationships. It could affect employee productivity and morale as well. The good news is that you can use entity management software to mitigate risks associated with non-compliance.
It can go a long way to help your company overcome operational challenges, and comply with all internal codes and external laws. Also, it preserves the integrity of corporate data, thus enhancing compliance even further.
In this blog post, we’ll take a closer look at the role of legal entity management software in maintaining corporate regulatory compliance. Let’s get started.
Corporate Compliance: A Quick Overview
Simply put, corporate regulation compliance is an umbrella term for various techniques that help your company adhere to internal policies and standards, as well as federal, state, and local laws that are relevant to your industry.
The compliance function prevents your business from violating laws pertaining to ethical conduct, environmental protection, and more. Also, it ensures that your company has the necessary permits and licenses to conduct business in the respective jurisdictions.
It even helps your company comply with tax standards and other applicable laws. The role of compliance in modern organizations can’t be emphasized enough.
But maintaining corporate regulatory compliance is easier said than done. Small businesses often lack a dedicated legal or compliance function. Compliance-related tasks are often managed by the CEO or HR head of the company.
Even if your organization has a dedicated team to ensure compliance, they’re bombarded with requests from other departments and external stakeholders for reports, documents, and other information. It leads team members to adopt a reactive approach to non-compliance.
That’s where legal entity management software steps into the picture. It minimizes the load on the compliance department by automating several routine tasks. Also, it creates a central repository for storing, sharing, and accessing corporate entity data. That further helps mitigate the risks of non-compliance.
The Role of Entity Management Software in Corporate Compliance
Corporate entity management software has become an integral part of new-age organizations. Its primary purpose is to create a central location to facilitate the secure storage of business data.
You can use entity management systems to store and organize a ton of corporate data, including ownership structure, shareholder information, and subsidiary details. Also, you can combine it with a virtual data room to simplify due diligence. It facilitates secure sharing of sensitive documentation, such as tax summaries, business licenses, partner agreements, etc.
However, one of the most significant applications of legal entity management software is to ensure regulatory compliance. Here’s how it helps your company achieve all its compliance goals.
Improved Entity Data
Entity management software eliminates the need to store multiple copies of corporate data in different spreadsheets. That, in turn, reduces the chances of errors and communication gaps arising due to data duplication.
It ensures that everyone in the company has access to the same version of any corporate data or documents. Also, it prevents employees from making any unauthorized changes to the data.
Even if they make any accidental changes, the entity management system logs all member activity along with time stamps. You get an overview of whether a particular document has been tampered with. Also, you can hold the respective employees responsible for their actions.
The better the quality of corporate data, the easier it becomes to maintain compliance.
One of the biggest benefits of entity management software is that it automates routine tasks, such as data analysis and report generation. It prevents your legal and compliance departments from getting flooded with requests for documentation and reports.
Instead, you can simply give employees access to specific entity data. The software takes care of providing them with relevant reports and actionable insights from the data.
When the compliance team isn’t caught up with these routine tasks, they’ll have more time for strategic thinking. It’ll help them stay up to speed with the latest legal regulations and compliance requirements.
Traditionally, companies use a reactive approach to deal with the consequences of non-compliance. But that could prove to be a fatal mistake for modern organizations.
Corporate entity management software helps avoid such scenarios by issuing timely notifications for regulatory compliance. For instance, it can alert the accounts team before the deadline for filing taxes. Similarly, legal personnel can be notified about the upcoming renewal of specific permits.
Such a proactive approach is instrumental in helping companies avoid penalties and lawsuits due to non-compliance.
Entity management software is a must for corporate compliance. It improves the quality of corporate data and ensures that it is accessible to stakeholders wherever they are. Also, it skyrockets the efficiency of legal and compliance teams, thus averting the risks of non-compliance.