For many, the notion of engaging external compliance services is a thought often met with reservations. And understandably so, the cost of engaging consultants certainly isn’t low. For many ventures, especially early-stage ventures, there is pressure to keep costs at a bare minimum. Often this results in the CEO or other staff member piling compliance duties on top of their already full plate.
Compliance is often viewed as an additional entry on the ledger that should be stalled until absolutely necessary. At the heart of the matter there are two simple truths: One, compliance must be covered, but how compliance is covered allows for some flexibility. Two, hiring outside consultants is almost always going to save money, both in the short term and in the long run.
Fortunately, beyond financial savings, there are some other pretty compelling reasons why even the youngest ventures would benefit from hiring a compliance consultant. We cover five of those reasons below.
1. Compliance Consultants Have Been Around the Block Many Times
As consultants, we’ve seen it all — from the rarest problem birthed from emerging markets and new technologies to the most commonplace issues. At AskDegree we’re not simply a compliance firm, but we are facilitators of a larger network of risk and technology professionals, all working daily to solve compliance issues for businesses in the US market and abroad.
Our collective experience is impossible to find within a single CCO or Compliance Manager. Many times a unique compliance issue requires a divide and conquer – discovery and remediation strategy. Time is often of the essence, speed to resolution can be delayed if the compliance function consists of only one dedicated or semi-dedicated compliance team member. The reality is, no matter the caliber of your CCO, one person simply can’t manage all of the firm’s risk, all the time.
A continued lack of risk mitigation resources will ultimately harm the business. A small mistake, especially an undetected systematic error can mean large-scale problems from enforcement agencies. Early stage ventures still working to validate their business model and build traction cannot afford to absorb penalties or reputational damage that is associated with enforcement actions or pervasive systematic errors.
Your firm can only stand to benefit from our collective experience, but that experience also implies another benefit — outsourced compliance officers have ongoing relationships with key third-parties such as licensing authorities, regulators, and service providers – payment processors, KYC & Fraud solutions, and more.
2. Outsourced Compliance Consultants Eat, Drink, and Sleep Regulation.
If the thought of speaking with a regulator gives you anxiety, you are not alone, speaking with regulators can also be a frightening thought, even for seasoned CCOs and attorneys. Another advantage of working with our team is that we speak to regulators all of the time. We have direct emails and phone numbers for many regulatory authorities, and have built a rapport with these agencies.
Our familiarity with regulators means you can put your anxiety to bed, we often communicate with regulators on behalf of our clients, so there’s no need for you to directly engage them. In instances where there is a need for you to communicate we will be on the call or will help you to draft your written response, feel confident in knowing we will guide you every step of the way.
3. Compliance Consultant Costs < Full-Time CCO and Team Costs
It’s true, hiring external compliance support often means facing costs in the tens of thousands of dollars, which we know, sounds expensive until you consider the costs of staffing an internal compliance department, or the costs associated with insufficient compliance controls – penalties and customer redress. A lack of formalized compliance within an organization can cost you market expansion. We have had several clients engage us because they were at the brink of a lucrative strategic partnership only for the relationship to be delayed until an adequate compliance program could be evidenced.
There’s a reason most small firms don’t hire a full-time CCO and instead relegate that duty to another officer — a full-time CCO is extremely expensive
. Add to that a compliance team, and costs can quickly begin to balloon. Salaries, benefit packages, hardware, subscriptions/user licenses are all costs to be considered when bringing on employees.
Full-time outside compliance support carries a price tag far below the yearly costs of an in-house team. The elimination of overhead costs coupled with seasoned compliance support makes hiring an outside compliance firm even more attractive.
4. Experience Consultants have Muscle Memory that You can Leverage
Another nice benefit of working with an outside compliance consultant is speed. Because consultants have so much experience dealing with compliance and general risk issues over and over, they’ve developed easily adaptable procedures to follow to quickly mitigate these risks. This knowledge is an invaluable resource that can be leveraged again and again.
Compare this to a CCO, who may or may not have the resources to tackle certain regulatory issues. They may be used to having certain resources at their disposal, or they’ve realized they’re getting stretched too thin to keep up with the fast pace of regulatory changes.
Leaning on the experience of a compliance consultant, or outsourced team of them can help an overwhelmed CCO take care of their compliance needs without feeling perpetually pulled in 1000 different directions. The best compliance consultants help to augment a CCO’s abilities, allowing them to respond quickly to new requirements and lead their company successfully through rule changes.
5. Seasoned Eyes Can Catch Mistakes You’re Failing to See
Finally, working with outside compliance firms is an opportunity to have several sets of seasoned eyes examining your operational risks. Having compliance professionals who have vast experience working with product development is invaluable to any start – up team. Most systematic errors are caused simply because the right eyes didn’t look-over the product.
It’s easy, when working at a single company, to develop operational blind spots. Our compliance consultants will not only bring a fresh set of eyes to your firm, but will be looking for specific, recurring issues that are common amongst firms across the board.
If you’re in need of outside compliance support, contact us