Latest Accountancy Europe’s Insight from SME accountants article available
The article features Gordon Naughton, an Irish chartered accountant with a corporate finance and strategy background. His business supports smaller companies’ business and funding strategies.
Gordon makes sharp observations about the sustainability grants made available by governments and others. He calls for adapting the funding application processes to business realities. Government support is also needed to help businesses price their more sustainable products at competitive rates compared to less sustainable alternatives.
Gordon issues a strong message for SMEs: many SMEs stick to their business models and fear that transitioning to a more sustainable model is too complicated or comes with the risk of accusations of greenwashing. He urges SMEs to get on with it, start small and build the confidence, knowledge, and momentum they need for bigger projects. Even a failed project can generate valuable learning insights and experience.
If you encounter challenges or don’t know where to start, talk to your accountant, Gordon advises!
Commission consults on future of COSME programme
European Commission (EC) launched a public consultation to evaluate the EU’s programme for the Competitiveness of Enterprises and Small and Medium-sized Enterprises (COSME) on 15 June. The programme ran from 2014 to 2020 with a budget of €2.3 billion. EC seeks to learn from what worked and what less to draw lessons for future initiatives. Stakeholders have until 18 September to provide their feedback.
Commission publishes new SME Performance Review report
EC published its Annual report on European SMEs on 10 July. Despite the challenging circumstances, the SME Performance Review indicates some noteworthy observations. In 2022, EU-27 SMEs grew in terms of value added in the non-financial business sector (NFBS) by 6.7% in current prices. However, when adjusting for inflation, the value-added declined by 2.3%. Although SME employment increased by 2.4% in 2022, it did not fully recover from the pandemic-induced losses, lagging behind the pre-pandemic performance in 2019.
The projections for 2023 paint a challenging picture for SMEs in the EU. Inflation-adjusted SME value added in the NFBS is expected to decrease by 1.2%. In comparison, SME employment is projected to fall by 0.2%. These forecasts reflect a challenging environment for SMEs, with anticipated performance similar to that of large enterprises.
European Parliament publishes guidance on all EU funding opportunities
The EU offers financial support to regional and local authorities, NGOs, businesses, professionals and citizens through various funds. European Parliament’s (EP) Research Service published a guidance document providing easily accessible information on the full range of EU funding sources, conveniently grouped by area of action on 16 June. The guide’s main funding themes are divided in subsections to facilitate research. Several hyperlinks have been included in the text to make access to the source of funding information easier. A list of major potential beneficiaries is mentioned at the end of each guide section to facilitate the reader.
JURI hearing on insolvency proposals
EP’s JURI Committee held a hearing on Harmonising certain aspects of insolvency law based on an EC proposal on 26 June. A key theme which emerged during the hearing concerned the impact that Title 6 of the EC proposal would have in the Member States where there was a well-functioning regime for microenterprises engaged in insolvency proceedings. In this regard, MEPs heard setting a threshold of 10 employees or a turnover of two million euro per year would effectively mean the majority of insolvency proceedings would no longer be carried out by an insolvency practitioner, which could thus lead to increased cases of fraud, for example. As such, calls were heard to either delete this part of the text or to amend it drastically.
MEP Pascal Arimont (EPP/Belgium) leads EP’s work on the file. His draft report should become available in the coming weeks.
Plenary adopts resolution on state of the SME Union
EP Plenary adopted a Motion for a Resolution on the State of the SME Union on 13 July. The Resolution aims to set out MEPs’ priorities and key SME-related concerns. MEPs highlight, for example, that late payments remain a crucial concern for SMEs and call for ambitious measures in the upcoming (12 September) Late Payments Directive revision. MEPs welcome the Business in Europe: Framework for Income Taxation (BEFIT) initiative’s potential to support SMEs but underline it should be optional for them.
The Resolution also calls for “the establishment of a single digital gateway serving as a one-stop shop, consolidating all relevant financial and non-financial support, forms and information” for SMEs, and “the inclusion of all reporting requirements under EU legislation (…) in a single reporting instrument which can be designed with specific requirements and ready-to-use key performance indicators for companies on a flexible basis”. Such gateways and single reporting instruments for SMEs are long-standing proposals of Accountancy Europe, which have been shared with MEPs on several occasions.
OECD publishes SME and Entrepreneurship Outlook 2023
The OECD published its SME Entrepreneurship Outlook 2023 on 27 June. The Outlook 2023 contains 38 individual country profiles, providing insights on SME performance and entrepreneurial trends in OECD countries and presenting national SME and entrepreneurship policy frameworks and recent policy initiatives to stimulate a more productive and dynamic SME economy.
OECD: strengthening SMEs and entrepreneurs key to a strong, resilient economy
Government ministers responsible for SMEs and entrepreneurship have endorsed a new OECD Declaration aimed at boosting policies for new and small businesses, empowering them to reach their full potential as part of broader efforts to build a more resilient, green and digital world economy.
SMEs remain under pressure due to the combined effects of economic uncertainty stemming from Russia’s continuing war of aggression against Ukraine, the lingering effects of the COVID-19 pandemic and other geopolitical tensions. These have weighed heavily on SMEs and entrepreneurs, which account for a critical 99% of all firms and employ two-thirds of private-sector workers. Large-scale, temporary government support played a critical role in protecting the livelihoods of entrepreneurs and SME workers. However, as monetary conditions tighten and fiscal support unwinds, firm bankruptcies rise, and SMEs again find themselves at risk.
French SMEs asked to decarbonise, want regulatory certainty
Access to financing and lack of regulatory certainty, including at the EU level, remain key concerns for French SMEs on their green transition path. However, fears could be quelled as the government hopes to encourage collaboration between small and big businesses. To finance the green transition in France to the estimated tune of €60 billion a year from 2030, it has become clear that SMEs – which in France generate between 20-30% of greenhouse gas emissions – cannot be left behind.
Showcasing the importance of SMEs in this green shift, France’s SME and Trade Minister, Olivia Grégoire, unveiled a new “SME Pact” on 13 July, partnering small firms with large industry players so the former can learn from the latter’s decarbonisation efforts.