Compliance as a Service: What It Is and Who Needs It

In a fast-paced and evolving business world, where digitization, market volatility, and supply chain disruptions are the norm, one aspect remains constant: regulatory compliance. For finance leaders at fast-growth companies, adherence to regulatory requirements is not only a legal obligation, but it’s a crucial strategic element. Whether you’re preparing for an initial public offering (IPO) or ensuring your company meets all of its legal obligations across multiple markets, you’ll want to pay close attention to regulations today and tomorrow. Solutions that streamline compliance and minimize risk will help you and your company stay on top of regulations and their developments.

What is Compliance as a Service (CaaS)?

To understand Compliance as a Service or CaaS, it’s important to know how compliance applies to organizations. Compliance occurs when a company follows the laws, regulations, and internal policies that the organization is subject to — whether industry or region-specific. This creates a broad range of complex compliance requirements and standards, such as the Sarbanes-Oxley Act (SOX), the latest UK SOX regulations, the General Data Protection Regulation (GDPR), the Health Insurance Portability and Accountability Act (HIPAA), and many others. If a business doesn’t comply with the rules and regulations, it will be subject to significant fines and penalties.

With many regulations and complexities, it can be difficult to keep up as organization leaders are faced with the challenges of daily business operations. That’s why it’s so important to understand what you’re getting with solutions and to look for those that have compliance built into their software.

Compliance as a Service embeds product functionality, process automation, and expertise within technology to help organizations achieve regulatory compliance and reduce risk. Companies that don’t have compliance embedded into their technology are more likely to face fines, penalties, and other compliance-related costs. With increased regulatory complexity, there’s more demand and need for this type of technology to minimize costs and resources.

How Compliance as a Service works

Software with compliance built-in leverages automation and expertise to help ensure regulations are followed across an organization. It automates complex compliance-related tasks, such as record keeping, reporting, and documentation, while collecting organizational data in real-time to compare the data against relevant compliance rules and standards. It allows businesses to focus on their core activities while leaving the intricacies of compliance to specialized solutions.

Important capabilities include:

• Customization: The software tailors to business needs. This might include creating compliance policies, procedures, and workflows around the specific regulations applicable to an organization.
• Implementation: The software provider assists in implementing compliance frameworks and strategies within a company. This can include assistance in establishing protocols to ensure compliance, setting up software tools, or having partners to execute a successful implementation.
• Monitoring and reporting: The software continuously monitors regulatory changes and assesses the company’s adherence to those changes. It quickly generates reports and provides insights into compliance status and any areas needing improvement.
• Expertise: Compliance expertise provides guidance for regulations specific to your business and makes recommendations to close any compliance gaps and reduce risks. Providers have experience with peer companies and additional subject matter experts.
• Risk management: The software provider offers risk assessments and management tools to identify areas of non-compliance and vulnerabilities within an organization.
• Audits: Auditing is made easier with off-the-shelf reporting, built-in controls, and customized dashboards to ensure the company is consistently meeting its compliance standards and can easily provide auditors with documentation.
• Artificial intelligence (AI): The most sophisticated software utilizes AI to identify non-compliant behaviors and patterns, and it prescribes recommendations to achieve your compliance goals and overall business strategy.

Ultimately, CaaS allows you to automate manual tasks, perform due diligence, and do more with less — allowing your business to focus on its strategic operations without getting bogged down by manual processes or limited resources.

Businesses with complex compliance needs

Having CaaS technology that supports your compliance objectives is beneficial to many organizations, especially those dealing with complex compliance requirements or operating in an industry that’s heavily regulated. Industries in the list below must consider their specific compliance requirements and evaluate their needs.

• Banking and financial services: Banks, investment firms, credit unions, and other financial institutions must comply with extensive regulations like SOX, Bank Secrecy Act (BSA), Payment Card Industry Data Security Standard (PCI DSS), Anti-Money Laundering (AML), and more.
• Technology and data management: Companies handling customer data, especially in tech, telecommunications, and e-commerce, must comply with data protection laws, such as the GDPR in Europe or the California Consumer Privacy Act (CCPA).
• Healthcare and life sciences: Hospitals, pharmaceutical companies, clinics, and health insurers must follow strict regulations like HIPAA, the Health Information Technology for Economic and Clinical Health Act (HITECH), and more.
• Energy and utilities: Companies operating in energy production, utilities, and related sectors are subject to regulations concerning environmental impact, safety standards, and resource management.
• Retail and e-commerce: Companies that store customer data, process payments, or have operations online are subject to the Payment Card Industry Data Security Standard (PCI DSS).
• Startups: Businesses that must ensure audit compliance and IPO readiness but have fewer resources often need the expertise to manage compliance, allowing them to focus on strategic growth.
• Multinational corporations: Companies operating globally face more compliance complexities due to multiple jurisdictions with their own regulations.

These types of organizations have specific regulations and frameworks that govern their operations, making compliance a crucial aspect of their business strategies. Compliance technology assists these businesses in navigating the intricate web of regulations, mitigating risks, and maintaining adherence to legal obligations.

The benefits of Compliance as a Service

Beyond the obvious benefit of achieving compliance objectives and avoiding penalties, there are many more advantages to Compliance as a Service. Businesses that take advantage of this technology often reap these benefits as well:

• Mitigate ongoing risks: By monitoring real-time data and establishing compliance procedures and workflows, organizations are better equipped to mitigate risks, minimize errors, and detect fraud as business operations change and grow.
• Easily adapt to new markets: As businesses grow and expand into new markets, they’re subject to different laws and regulations. With CaaS, organizations can scale compliance efforts, along with business operations.
• Remain compliant with new legal and technical requirements: Continuous monitoring of new relevant regulations helps maintain compliance.
• Reduce manual processes: By replacing manual compliance-related tasks with automation, organizations minimize time-consuming processes to free up resources for other initiatives.
• Maintain a positive reputation: Through consistent compliance practices facilitated by CaaS, companies uphold a positive reputation, fostering trust with stakeholders and improving relationships with regulators.

Risks of falling short of compliance requirements

For any organization facing regulatory requirements and industry standards, there are large risks associated with non-compliance.

• Penalties: Failing to adhere to laws and regulations can lead to large fines, penalties, and sanctions. These penalties vary depending on legal, financial, operational, and tax rules.
• Fraud: Companies that don’t comply with laws and regulations may also be subject to fraud, which can lead to a domino effect in legal ramifications, reputational harm, financial losses, operational disruption, lawsuits, loss of talent, and more.
• Poor company culture: Falling short of compliance requirements has external and internal impacts. Employees may be discouraged or leave the company due to ethical concerns and uncertainty about the company's stability and reputation.
• IPO delay: Failure to comply with regulations can delay an IPO due to legal issues, inaccurate financial reporting, and a loss of trust from investors. Non-compliance can also lead to decreased company value.
• Regulatory scrutiny: If a business doesn’t meet compliance regulations, it faces intense audit scrutiny. This scrutiny involves a detailed investigation by auditors or regulators to assess the company's adherence to laws and standards. In severe cases, regulatory bodies might restrict the company's operations or even suspend its ability to do business until compliance is achieved. It could also prevent the company from participating in contracts, bids, or partnerships, limiting growth opportunities and preventing the organization from remaining competitive.
• Remediation costs: Correcting compliance issues involves significant costs in addition to the non-compliance fines. This includes hiring consultants, implementing new systems, or restructuring processes to meet regulatory standards.

Choosing a P2P platform with Compliance as a Service embedded

As organizations prioritize digitization and automation, compliance is just as important. As a business goes through the effort of a procure-to-pay (P2P) transformation, it should look for a strategic partner with a comprehensive P2P platform that has Compliance as a Service embedded as a feature. When choosing a provider, you should prioritize the following:

• Completeness of the solution: Your platform should easily support the reporting, compliance, and audit requirements of a public company. A complete P2P platform should have the ability to seamlessly integrate with your ERP and also include key finance needs, such as compliance, cash management, payments, expenses, and travel built into its platform to support you in your growth milestones — whether it’s evaluating an IPO or another type of liquidity event in the future. It’s important that the solution grows with you and supports the evolution and maturity of your organization today and in the future.
• Proven track record: You should have confidence that the provider you select is financially sound, well-established, able to support complex compliance, able to provide customer references across a broad range of industries, and has experience working with companies scaling from 50 to 200+ employees. With maturity in mind, a provider should be able to support IPO readiness, audit requirements, and merger and acquisition (M&A) activities too.
• Robust data analysis, reporting, and dashboard capabilities: The numbers don’t lie, which is why having reliable, consistent, and up-to-date data is critical to the compliance, health, and success of your organization. To ensure compliance and accuracy, a platform should provide a single source of truth to analyze data, evaluate trends, establish controls, and quickly generate detailed reports. Having a solution with comprehensive data analysis that provides prescriptive insights and key benchmarks will also enable you to optimize operations and improve business performance.
• Wide variety of use cases supported: While many fast-growth companies primarily buy software in their early stages, consider how quickly your needs can change as your business expands. Sales teams need a robust and intuitive travel and expense solution to manage their growing territories. As you add more employees, lab and office supply needs grow exponentially. How can you ensure they’re making compliant purchases? Increased purchasing presents the opportunity to negotiate with suppliers, strategically manage how you pay them, and manage your payments both inside and outside of the company. International expansion presents an opportunity and complexity, too. Purchasing and payment processes need to align with compliance objectives no matter where you’re doing business.

How Coupa can help

Coupa’s unified P2P platform not only has the powerful functions above, but it also provides unmatched visibility and control across the entire procurement lifecycle. It connects all P2P activities in one place and provides a single source of truth for data analysis and reporting. In addition to having a complete P2P solution, equipped with compliance, risk management, and cybersecurity, Coupa’s platform goes above and beyond with its unrivaled community of experts and AI technology that provide compliance guidance and continuous monitoring.

Coupa provides compliance support for many regulations, including:

• SOC 1
• SOC 2
• ISO 27001
• ISO 27701
• PCI
• HIPAA
• FedRAMP Moderate
• ITAR/GovCloud
• TISAX
• APEC PRP and more

Learn more about how Coupa’s platform can manage your compliance needs.

Discover Coupa's Compliance & Control Solution