The employment-related tax, HR and payroll compliance landscape is becoming increasingly complex. In 2012 alone, there were 17,000 proposed tax rule changes across 10,000 unique tax jurisdictions*. With this volume of change, finance executives are challenged to find sufficient resources and expertise to fuel effective compliance processes – particularly since rising regulatory demands coincide with stagnating budgets.
In January 2013, ADP and CFO Research, a unit of CFO Publishing, surveyed 150 senior finance executives about their strategies for keeping their companies in compliance. The results of the online survey indicate that finance executives are under pressure to take a more comprehensive view of compliance, streamlining activities to improve efficiency and ensure that they can continue to increase the strategic value that they provide.
Over the next few weeks, we’ll be taking a closer look at the results of this study and the employment tax, HR and payroll compliance challenges companies face. Top challenges include:
- Budgets Not Keeping Pace with Increasing Compliance Volume and Complexity – More than 80% of finance executives report that the task of monitoring tax, employment, and payment-related rule changes has become more time-consuming over the past two years. Even so, 57% anticipate compliance budgets will remain the same or decrease over the next year. This disparity means senior finance executives must do more with less in yet another area of their business.
- Use of Multiple, Separate Information Systems Expose Companies to Unnecessary Risk – More than 70% of companies rely on multiple, separate information systems for their compliance activities, and 81% anticipate the number of vendors they use will either increase (19%) or remain the same (63%) over the next two years. The result is a set of disparate instruments, each designed to address individual compliance elements – but without communication or a connection between them.
- Lack of Strategic Business Intelligence Hinders Efficiency and Limits Growth – More than 75% of finance executives do not have access to real-time, consolidated employment-related compliance data, making it difficult to assess the status and performance of business areas with a truly strategic perspective. Without an efficient way to gather the data, companies are unable to make the critical business decisions necessary to drive growth and ensure efficiency.
An integrated approach provides the comprehensive data needed to support critical business decisions, driving growth and ensuring efficiency.
Armed with the right compliance strategies, CFOs, human resources and finance executives can enable their organizations to maintain employment-related compliance and mitigate risk, improve business process efficiencies and drive organizational growth.
Top strategies include:
- Take a Proactive Approach to Employment-Related Compliance – More than 40% of finance executives say their companies would realize measurable benefits if they took a more proactive approach to compliance. Being more proactive enables companies to stay ahead of pending rule changes, increase the efficiency of day-to-day compliance management and avoid penalties and fees related to non-compliance.
- Streamline Systems and Invest in New Technology – 65% of finance executives say that reducing the number of touch-points and handoffs in their employment-related compliance processes could increase efficiency and productivity at their company – and 47% cite improving existing technology and systems as their top strategy for achieving their compliance management goals. Implementing technology that is compatible with existing ERP, human resources or financial systems of record is essential, as this helps enable maximum efficiency and ROI with minimum investment.
- Leverage Additional Expertise – About 30% of senior finance executives rank improving their company’s ability to foresee regulatory changes as a key strategy for enhancing compliance. Given that regulation will remain a key component of doing business in the future, companies must devote added resources to forecasting new risks, a time-consuming task for which they will likely turn to third parties. Finding the right partner with the right level of compliance experience and expertise allows leaders to move forward confidently and will greater efficiency.
Learn more about how ADP SmartComplianceSM can help companies ease the burden of employment-related compliance management, improve business process efficiencies and drive organizational growth.
*ADP internal data analysis
ADP SmartCompliance is a service mark of ADP, Inc.