Procurement professionals may be the unsung heroes of corporate compliance. In procure-to-pay, businesses expose themselves to all sorts of non-compliance risks, from tax to invoice regulations, to Know Your Customer (KYC) and Anti-Money Laundering (AML) rules.
The increasing complexity of regulations, particularly in the U.S. and U.K., are adding pressure on procurement professionals' due diligence requirements, however, says a new report from Dun & Bradstreet. The analytics firm published its first Compliance and Procurement Sentiment Report this week, surveying more than 600 procurement and compliance professionals across the U.S. and U.K. in conjunction with consultancy firm ComRes. The report emphasizes procurement's ongoing struggles in keeping their organizations on the right compliance track. Regulatory volatility and fraud threaten to knock the enterprise off that track and, while technology can help, many professionals aren't convinced that new tools are the answer.
Dun & Bradstreet Global Head of Supply & Compliance Brian Alster said in an introduction to the report, "In my conversations with compliance and procurement professionals around the globe, their objectives remain unchanged: mitigate risk, reduce costs and create world-class, advanced due-diligence programs. These areas of focus are not mutually exclusive and cannot be done in siloes. There are external and internal factors, often outside the compliance and procurement professional's scope of responsibility, that impact success."
Procurement's Compliance Successes
More than 90 percent of professionals surveyed by Dun & Bradstreet say they are confident about their organizations' existing compliance and procurement practices. Increasingly, professionals are turning to technology to aid in their compliance efforts: 73 percent of U.S. respondents already have an artificial intelligence (AI) or automated technology in-place, or will be doing so in the future. It's worth noting, however, that that figure drops to 58 percent when examining U.K. respondents.
Yet, more than half of respondents said they are concerned about implementation of compliance and procurement processes in the coming six months.
Procurement's Compliance Woes
Procurement and compliance professionals sounded off on their frustrations with regulatory pressures. According to Dun & Bradstreet, nearly two-thirds of survey respondents said the existing regulations are increasing risks to their organizations, and 53 percent said existing regulations prevent them from doing their jobs effectively.
In the U.S., vendor management is atop compliance focus; in the U.K., laws and regulation — particularly, preparing for upcoming legislation — is the greatest priority. It's in this regulatory climate that procurement and compliance officials have to juggle their top priorities for the rest of the year: customer and supplier due diligence, internal training of regulatory understanding, supplier monitoring and implementation of a risk-based approach to their operations.
At the same time, the threat of fraud continues to weigh on these professionals. Most of the executives surveyed said their organization has been the target of fraud in the last two years, and 18 percent of compliance and procurement executives said they had been targeted by fraud in the last 3 months alone.
In a climate of procurement and compliance professionals struggling to manage ever-changing rules while juggling multiple responsibilities, the RegTech industry has caught a sudden burst of attention. Three-quarters of professionals, recently surveyed by Thomson Reuters, said they have a positive view of RegTech (compared to only 40 percent in 2016). The number of professionals who said they already have a RegTech solution in place has nearly doubled, Reuters noted, to 30 percent.
However, Dun & Bradstreet's report reveals far less-compelling evidence of RegTech's traction in the enterprise, at least when it comes to procurement functions. More than a third of survey respondents said they believe technology is actually a barrier to effectively managing procurement and compliance processes. These pain points are felt by procurement and compliance professionals alike and, according to researchers, the data suggests these positions within the enterprise are becoming increasingly interconnected.
"It is no secret that the challenges facing procurement and compliance professionals are very similar, and the lines are blurring," Dun & Bradstreet concluded. The two functions are both responsible for third party onboarding, risk mitigation and cost reduction, the report stated. "At Dun & Bradstreet, we have seen the convergence of responsibilities and focus become more obvious as we look at market trends."