If you’ve been asked for a SOC report more than once, it’s a sign.
As organizations mature, their vendor risk management processes and service providers are expected to demonstrate control over security, data handling and critical systems. For many businesses, that expectation shows up in (and can slow or even derail) the sales process. That’s where a SOC report comes in.
A SOC report provides independent assurance that your organization has controls in place and are operating effectively. Depending on your services, clients may request a SOC 1 report (financial reporting controls) or a SOC 2 report (security, availability, processing integrity, confidentiality and privacy).
So how do you know when it may be time to consider one? Here are 10 signs.
1. Clients Are Asking for a SOC Report
Clients requesting a SOC report during vendor due diligence stems from risk analysis and third-party risk management requirements. Organizations with formal procurement and risk review processes typically require SOC reports before approving vendors, especially when sensitive data or critical systems are involved.
Clients’ financial auditors could also be leading the charge for SOC-compliant vendors to analyze and prevent business risks.
2. You Handle Sensitive Customer Data
Organizations that store, process or transmit personal, financial, healthcare, government or confidential business information are often expected to demonstrate that strong controls are in place to protect that data.
Strong access controls and cybersecurity risk management practices can help demonstrate that commitment to clients and stakeholders.
3. Your Services Impact Clients’ Financial Reporting
Work that affects your clients’ financial statements or financial processes often requires a SOC 1 report. This often applies to payroll providers, transaction processors, benefit administrators and other financial service providers.
SOC 1 reports focus on controls relevant to internal control over financial reporting (ICFR), helping clients and their auditors gain confidence in the reliability of outsourced processes.
4. You Sell to Larger or Regulated Organizations
Large companies, financial institutions, healthcare organizations and other regulated entities often have more formal vendor risk management requirements. A SOC report can help satisfy those expectations.
Many regulated organizations also face regulatory compliance requirements that extend to the vendors they work with.
5. Security Questionnaires Are Slowing Down Sales
If your team is repeatedly answering lengthy security or compliance questionnaires during active deals, you’re likely losing time in procurement.
A SOC report replaces many of those one-off responses with a standardized, third-party review of your controls.
6. You Use Cloud Systems or Outsourced Technology
Cloud platforms and third-party tools are common, but they also add complexity. A SOC examination can help clarify which systems, processes and controls are owned by you vs. your third party provider.
7. Clients Are Asking About Security, Privacy or System Availability
Questions about access controls, incident response, uptime, data protection and monitoring may point toward the need for a SOC 2 report.
8. You Are Preparing for Growth, Investment or Acquisition
Investors, buyers and strategic partners may want to understand whether your organization has reliable controls in place. A SOC report can support due diligence and future growth.
9. Your Policies Exist, But You Are Not Sure They Are Followed Consistently
Having policies is a good start, but clients may want assurance that controls are operating as intended.
A SOC examination can help evaluate the operating effectiveness of those controls and validate that they are functioning consistently.
10. You Want to Prepare Before a Client Request Becomes Urgent
Waiting until a client requires a SOC report can create unnecessary pressure.
A SOC readiness assessment can help identify gaps, evaluate your control environment and prepare your organization before the formal examination begins.
SOC 1 or SOC 2: Which One Applies to You?
Whether you need an SOC 1 or SOC 2 report depends on how your services impact your clients. Depending on the nature of your business and services, you may need both.
SOC 1 applies when your work affects a client’s financial reporting (e.g., payroll, transaction processing, benefit administration).
SOC 2 applies when clients need assurance over security, availability, processing integrity, confidentiality and privacy.
Is It Time to Start the SOC Conversation?
If SOC requests are coming up in sales discussions, vendor onboarding or security reviews, it’s unlikely those expectations will go away.
Starting early gives your organization time to define scope, strengthen controls and avoid delays when a deal or client requirement depends on it.
Not sure where to start? If SOC requests are starting to impact your sales process—or you expect them soon—Anders can help you assess readiness, define the scope and move forward with confidence.
SOC reports are just one component of our broader Audit & Assurance services. Whether you need a SOC report, employee benefit plan audit, 401(k) audit, peer review or other assurance services, our team can help you meet stakeholder expectations while strengthening trust in your organization.