Compliance gaps hold back global business expansion

By Milan Rojan

More than half of businesses have said compliance challenges are preventing them from expanding overseas, highlighting the growing operational impact of tax and invoicing requirements, according to a new report.

It has found that 56% of companies have been unable to expand internationally because of missed invoicing or tax compliance deadlines.

The report has also found that 36% of businesses have incurred fines after submitting incorrect tax audits, while 39% have experienced invoice rejections linked to tax or invoicing compliance errors.

The report’s analysis of 272 million invoices processed last year has found that 57% have still arrived as PDF or paper documents rather than compliant electronic invoices. The company has estimated that this has represented $783 billion worth of non-compliant invoices across global businesses.

The findings have highlighted the operational risks associated with fragmented finance systems and manual processes, as companies have faced increasingly complex tax and e-invoicing requirements across markets.

Finance leaders have recognised the risks but have continued to face challenges in improving compliance. According to the report, 91% of CFOs have viewed limited visibility into compliance processes as a major operational risk, while 32% of organisations have frequently breached financial compliance by submitting incorrect tax audits.

Markus Hornburg, Head of Compliance at Basware, has said: “If you can’t be compliant, you can’t grow.”

He has added that businesses have lost potential revenue because their systems have struggled to keep pace with global tax and invoicing requirements, while AI-driven automation could help finance teams process invoices more accurately and manage changing regulations.

Only 29% of organisations surveyed have established comprehensive platforms to manage compliance, while 11% have created cross-functional teams. However, 92% of finance leaders have planned to establish such teams with C-suite support.

The report has suggested that companies embedding compliance into broader finance operations have been better protected. Among organisations with embedded compliance systems, 83% have reported rarely receiving fines, reinforcing the potential link between automated compliance processes and business resilience.