Compliance is nothing but following rules and regulations made by several legal authorities. Sometimes, it is very difficult to follow each law and act according to it but not obeying those laws may also result in missing various opportunities that come along. Simple examples of compliance include obtaining a business license in your town and paying your taxes on time.
External Compliance refers to following the rules, laws and standards set by the governmental authorities to avoid any negative impact on the goodwill of the organization. These laws are made to help an organisation build public relations, trust and bring transparency to the business it does. Complying with all the laws ensures any unnecessary duplication of efforts of resources.
Internal compliance refers to an internally designed set of rules and regulations which the owners, employees, traders, customers follow to maintain the quality of the services or products provided by the organization. An organization will comply with external requirements only when it is working in line with the internal rules and regulations.