SME Update

November 2022

  • Accountancy Europe publishes new paper on SMEs’ cyber risks 
  • Timelines for Late Payments Directive and VAT in the digital age proposals clarified 
  • European Parliament approves agreement on sustainability reporting, with implications for SMEs 

Accountancy Europe highlights accountants’ key role in supporting SME access to IP

The European Union’s Intellectual Property Office (EUIPO) organised a 2-day meeting of its SME Network in Alicante, on 27-28 October. Paul Gisby and Johan Barros attended to represent Accountancy Europe. 

At the event, Paul spoke on current SMEs’ growth challenges. He emphasised that accountants, serving as ‘general practitioners’ for SMEs’ businesses, are crucial in helping SMEs navigate through difficult times and manage their risks. He underlined the potential that intellectual property (IP) registration can play in helping to build overall business resilience in SMEs. 

For more information on how IP can benefit SMEs and accountants’ role in facilitating SME access to IP, see the joint paper co-published by Accountancy Europe and EUIPO in March 2022.

European Commission

Late Payments Directive revision scheduled for the third quarter of 2023

European Commission (EC) published its work programme 2023 on 18 October. The previously announced revision to the EU’s Late Payments Directive has been confirmed for the third quarter of 2023. This measure is aimed at helping SMEs with cash flow by mandating time limits for when their business partners should pay them. This is particularly needed in such turbulent times.

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SME barometer results published

EC published on 25 October the results of its SME barometer survey. 77% of respondents think competition among their suppliers is high, and 72% believe the same about competition with their direct competitors. 69% think effective competition among their main customers is extensive. 66% of respondents agree that a regulation preventing unfair market behaviour for market sectors with systemic competition problems is an effective solution. Such regulation is the Digital Markets Act.

43% of respondents have experienced an issue caused by a lack of competition when carrying out their business: the most common specific difficulties experienced are high prices and powerful suppliers being able to impose unfair selling conditions (both 57%).

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VAT in the digital age proposal postponed

EC has postponed the publication of its VAT in the digital age proposal to 7 December. It was initially scheduled for 16 November. 

The proposal might suggest steps towards pan-European digital VAT reporting and single EU VAT registration. These measures would significantly benefit smoother compliance procedures for Europe’s SMEs. 

EC provides information about the export of accounting services to the UK

European Commission provided new information regarding the provision of accounting and related services by EU persons to the UK on 7 November. This information was added to EC’s Access2Markets portal, which generally aims to provide relevant information to EU exporters towards third countries.

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European Parliament

European Parliament adopts CSRD with implications for SMEs

European Parliament (EP) adopted the sustainability reporting Directive’s final text on 10 November, with 525 votes in favour, 60 against and 28 abstentions. Council will follow with its own approval in the coming days, after which EC will publish the text in the EU Official Journal, making it formally EU law. 

For SMEs, CSRD entails several implications, namely: 

  • Listed SMEs fall under the rules’ scope from 1 January 2026 (first reports from 2027), using a ‘proportionate’ SME reporting standard 
  • There is a possibility to opt-out for the first two years if the SME provides a statement explaining why their management does not capture sustainability information 
  • The proportionate standard for listed SMEs will be proposed by EC by 30 June 2024 
  • Non-listed SMEs that fall outside CSRD’s scope may still be affected through ‘trickle-down’ effects. European Financial Reporting Advisory Group (EFRAG) will work on a separate voluntary standard for these non-listed SMEs 

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SME Envoy Network shares report on SMEs’ condition to EU competitiveness ministers 

EU’s SME Envoy Network is a group of nationally appointed SME envoys chaired by an EU Envoy appointed by the EC. It promotes SME-friendly regulation and policymaking in all EU countries. The Network has prepared the latest annual report of its activities and observed trends for the attention of EU ministers in charge of competitiveness. 

The report provides an overview of how EU SMEs “are doing”, an assessment of SMEs’ regulatory burdens, recommendations to help SMEs deal with the consequences of the war in Ukraine, an SME outlook for 2023 and much more.

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EC outlines its actions to support SMEs’ internationalisation

  • Question by MEP Gianantonio Da Re (ID/Italy) 
  • Reply by Commissioner Breton 

Accountancy Europe comments on Forced Labour Directive

Accountancy Europe published a statement on EC’s new regulation on 28 October. It aims to ban products made with forced labour from the EU Single Market. 

Accountancy Europe welcomes the regulation and maintains it is a milestone in the fight against modern-day slavery worldwide. Professional accountants contribute to preventing human rights risks by monitoring if companies have the appropriate business processes and internal controls. In addition to carrying out due diligence, accountants help to provide transparency on companies’ environmental and social impacts. 

Accountancy Europe underlines that SMEs will rely on the partners in their ecosystem – such as accountants – to make them aware of and help fulfil their obligations. Their role in assisting SMEs to assess risks and map their supply chains should be explicitly recognised and encouraged. 

Accountancy Europe publishes SME cyber risks paper

Accountancy Europe published the latest paper in its SME risk management series on 10 November. The publication focuses on SMEs’ cyber risks and resilience. 

Cyber incidents can have a significant impact on an SME’s ability to do business and cause major financial loss. It is crucial that SMEs identify and mitigate those risks in a context where our economies are increasingly digitalised. SMEs’ accountants are their trusted advisors and can play a key role in mitigating SMEs’ cyber risk. 

This paper explains why and how SMEs should consider and mitigate cyber risks and how the SME’s accountant can best support them. The paper includes a checklist for accountants to improve SMEs’ cyber resilience. This checklist can serve as a basis for a discussion or initial assessment of the client’s cyber resilience. Accounting practices themselves can also use this tool to assess their own cyber resilience.

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Accountancy Europe publishes FAQs on sustainability reporting, including SME impact

Accountancy Europe has published FAQs on the new sustainability reporting rules that will come into force by the end of 2022. 

The new rules will also impact SMEs. The FAQs include an overview of how and when the SME-related provisions will come into force. SMEs’ accountants should be aware of these timelines and support their SMEs’ transition, if necessary.

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SME Assembly 2022 focuses on supporting SMEs through crises

The annual SME Assembly took place on 28-30 November in Prague. The event brought together 450 delegates, including legislators, SMEs and SME ecosystem representatives. The assembly revolved around the massive and simultaneous crises that SMEs are currently going through and how SMEs’ immediate survival can be coupled with ambitious digital and sustainable transition objectives. 

Johan Barros represented Accountancy Europe at the SME Assembly. Accountants are crucial in supporting and advising SMEs navigate through these difficult times.

Read more This curated content was brought to you by Johan Barros, Accountancy Europe policy manager since 2015. You can send him tips by email, follow him on Twitter and connect with him on LinkedIn.