Whether a large corporation or small business, every enterprise must comply with the prevailing regulations in their industry domain. Business compliance is all about adhering to rules, standards, legislation, and legal requirements. Enterprises violating these parameters will likely attract hefty fines, penalties, and even lawsuits.

For a small and growing business, keeping track of all applicable regulations across its various functions is challenging. Regulatory compliance for small businesses is driven by maintaining the visibility and traceability of their business data. This is where ERP solutions can play an important role.

In this blog, we shall discuss how small companies can achieve compliance management with ERP software.

ERP Improves Compliance Management

How does ERP Compliance Work for Small Businesses?

The first question that arises is how regulatory compliance is achievable with ERP solutions. Among its many benefits, ERP solutions enable enterprises to have real-time visibility into their business operations. ERP modules manage business data and processes across the entire enterprise through a unified system. Irrespective of their size, enterprises can add ERP modules to cover every business function, including:

  • Sales
  • Customer relationship
  • Human Resources
  • Supply chains
  • Procurement

Typically, each of these business functions is subject to industry regulations. ERP systems can integrate regulatory practices into every business process to simplify compliance. For instance, U.S.-based public companies need to adhere to the Generally Accepted Accounting Principles (GAAP), which requires them to report their financials using common accounting standards & procedures. With ERP compliance, public companies can codify GAAP standards into their automated workflows and audit trails.

On its own, an ERP system cannot guarantee regulatory compliance – nor point out the regulations your company must comply with. However, ERP solutions can improve regulatory compliance through:

  • Customized dashboards where individual teams can monitor compliance in real-time.
  • Traceability in product development allows companies to track the source of every product component and where the final product is sold.
  • Customizable reports which track and audit compliance procedures.

Next, let’s discuss how ERP solutions deliver improved compliance management.

How ERP Improves Compliance Management

What are the benefits of ERP compliance for small companies? Here are some of the benefits:

1. Enhanced Control and Visibility

ERP systems integrate various business processes into a single centralized system. This means your organization has better control over business information and workflows. Further, ERP dashboards and reports improve visibility into overall business performance.

With enhanced visibility, organizations can perform authentic audits and comply with bookkeeping regulations. This is a key requirement for the 2022 Sarbanes-Oxley Act to safeguard customers from fraudulent activities.

2. Data Security

Data security and privacy is a mandatory regulation across customer-facing industries. ERP systems have access to confidential data, including customer information, account numbers, and health-related data. On their part, ERP solutions can secure data from potential hackers through proper access control and user permissions. Additionally, ERP solutions can deliver regulatory compliance by tracking and verifying every process transaction.

3. Reduces Manual Errors

Manual processes can result in human errors that can lead to compliance-related violations. ERP solutions enable organizations to automate and reduce manual work, thus decreasing data-related errors made by human resources. This frees up internal teams to spend more time checking compliance requirements.

Industry-specific ERP solutions are designed to streamline business processes and adhere to specific industry standards and regulations.

4. Compliance across Multiple Companies

As small companies grow, it gets more complicated for multiple companies (or entities) to maintain compliance standards. ERP solutions are designed to scale according to business growth. Besides, ERP systems can provide consistent reporting with data across all entities for fast-growing companies.

Next, let’s discuss how to choose the right ERP solution for industry regulations.

How to Choose the Right ERP Solution for Compliance

For many industries, ERP compliance is a mandatory requirement. This includes industries like manufacturing, financial services, and transportation. How do organizations choose the right ERP solution for their compliance requirements?

When evaluating any ERP tool, it’s essential to understand your company’s needs, such as growth plans, available budget and resources, and long-term needs. Additionally, you need to understand your company’s compliance environment or which regulations apply to your industry.

Here are some of the compliance-related features to look for in any ERP solution:

● Customizable Workflows

With automated transactions, organizations can simplify their document management. Customizable workflows in ERP systems help in automatic approvals for every transaction and build a reliable audit trail (with date and time stamp of approval).

● Drill-through Feature in Dashboards

Compliance auditors and regulators need access to various business documents, including vendor receipts and bills. With the drill-down functionality in dashboards, they can quickly locate the data source, which may be an integrated third-party application.

● Audit Trail Reporting

Another essential ERP compliance feature is an audit trail that enables companies to track any data and transactional changes – along with who made the change and when. ERP tools must also provide reports for data tracking and transactional history. Additionally, real-time alerts can provide immediate notifications whenever any sensitive data is modified.

● Easy Customization

ERP solutions must enable companies to adapt to the specific compliance requirements of their industry easily. Customizable ERP tools can quickly keep pace with new & changing regulations. For instance, cloud-powered ERP solutions automatically push compliance-related updates to customers in a particular industry.

Now that you have understood the importance of ERP compliance, let’s see how to implement it in any small company.

How to Implement ERP for Compliance Purposes

Here are some of the best steps (or practices) that small companies can implement to meet compliance standards with ERP:

1. Define the Compliance Requirements

Compliance requirements can vary depending on business location and industry domain. For example, financial regulations are different from manufacturing regulations.

The first step is to define the compliance laws applicable to your company. Legal compliance experts can also provide consultation on your applicable regulations.

2. Choose the Right ERP Software for Compliance

The next step is to choose the ERP software that is best suited to meet your compliance requirements. If you have already invested in an ERP solution, evaluate if it is compliance-ready or requires an upgrade.

3. Partner with an ERP Solution Provider

ERP solution providers can help you choose the right ERP tool or consult you on the best practices to meet your industry’s compliance requirements. For the best results, partner with a solution provider with previous experience working with companies in your industry domain.


Besides integrating business functions in any company, ERP solutions effectively improve compliance with industry regulations and laws. Designed for small businesses, SAP Business One is one ERP solution that can help you comply with various regulations.

Praxis Info Solutions is an award-winning SAP-certified implementation partner that has delivered customized ERP for small businesses in India. Our ERP professionals can also consult you on using SAP Business One to adhere to your industry standards. Here is a complete guide on ERP software for small businesses.

If you want to know more about our ERP solutions, do not hesitate to reach out to us at any time.

Business Intelligence & Analytics..
Perfect enabler for insightful decision making. Call us on +91-88050 25521/18/19

Know More
contact us