Update

SME Update

 Cannot read this email? Open in your browser.June 2020 
 

SME Update

June

 
 
 
 

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Get the latest news on SME, tax, technology, audit and sustainable finance.

 
 
 
 
 

Equity: the key to unlocking a sustainable economic recovery

 
 
 

We have jointly issued key recommendations for EU member states to harness the potential of capital market integration in post-COVID recovery.

 
 
 
 

Highlights

 
 
 
 
  • European Commission launches new skills agenda with projects to promote skills in SMEs
  • EUIPO launches SME support hub with resources to support SMEs’ IP rights
  • MEP question: European Commission plans framework for resolution of SMEs’ cross-border tax issues
 
 
 
 
 

Message to readers

 
 
 
 

SME Updates going on summer holidays, back in September!

Dear readers,

Despite me greatly enjoying preparing these SME Updates just for you, I am sad to announce that they will be going on a much-deserved summer break.

But fear not! From September onward the Updates will be back in your inboxes, and the next edition will also cover any key SME developments that may occur in the summer months.

In the meanwhile, if you have any news, announcements or gossip related to SMEs, please don’t hesitate to get in touch through johan@accountancyeurope.eu

See you in the autumn!

With kindest regards,

Johan

 
 
 
 
 

EU Developments

 
 
 
 

European Commission


Coronavirus: Commission consults member states on extending scope of state aid exemptions

On 12 June, the Commission started consulting EU member states on the possibility of extending the scope of COVID exemptions to EU’s state aid rules. Under these exemptions, member states would be allowed to grant tax advantages, subsidised loans and more to support their businesses, including SMEs.

The Commission proposes to extend the exemptions’ scope to also cover:

  • Support for certain micro and small enterprises, including start-ups that were already in difficulty before 31 December 2019
  • Incentives for private investors to participate in coronavirus-related recapitalisation measures

Member states have now the possibility to provide comments on the Commission proposals. Read more

European Commission’s SME think tank calls for experts on standardisation

Small Business Standards (SBS) has been appointed by the European Commission to represent SMEs in the standardisation process, motivate them to get involved and raise their awareness about standardisation. In this context, SBS has launched a call for experts for 2021.

SBS is looking for candidates with technical expertise on any standardisation topic relevant for SMEs with a SME or craft-oriented background. The deadline for applications is 15 September. Read more

Commission publishes study on SMEs in public procurement

The European Commission has published a new study that measures the success rates of SMEs in public procurement and identifies policy initiatives to further support their participation. Although the study was conducted before COVID, it offers recommendations that can be especially useful in helping SMEs recover and build resilience in the aftermath of the crisis, according to the Commission.

The study shows that SME success rates in public procurement are significantly lower than their contribution to GDP. The share of contracts won by SMEs and their contract value have increased between 2011 and 2017. SMEs win more contracts in procurement related to works and services, as well as procurement in manufacturing and construction. Read more

Commission launches new skills agenda, including Pact for skills to support SMEs

On 1 July, the European Commission presented the European Skills Agenda, which sets objectives for upskilling and reskilling to be achieved within the next 5 years. It consists of 12 actions that focus on skills for jobs by partnering up with Member States, companies and social partners to work together for change, by empowering people to embark on lifelong learning, and by using the EU budget as a catalyst to unlock public and private investment in people’s skills.

The Skills Agenda includes several measures for SMEs, including support for ICT upskilling among SME workforce and for apprenticeships in SMEs. Read more

 
 
 
 
 

European Parliament


MEP calls for EU capital markets union (CMU) project to focus on SMEs

MEP Alfred Sant (S&D/Malta), member of the Parliament’s ECON Committee, has called on the Commission’s CMU project to focus more on small businesses’ real needs and on investment in the real world economy. This should include supporting digital transformation of SMEs, building their financial literacy and avoiding unnecessary risk taking, according to Mr. Sant.

The European Commission is currently expected to launch a new CMU Action Plan on 23 September, and it should contain alleviations and simplification measures to foster SME access to capital markets. Read more

ECON discusses COVID recovery with experts, 12% of EU SMEs at risk of failure

On 15 June, ECON Committee of the European Parliament held a hearing with experts to discuss post-COVID economic recovery.

During the hearing, Pierre-Olivier Gourinchas, Professor of Global Management at University of California and one of the panellists, warned that with COVID, many SMEs have seen their balance sheets and liquidity positions deteriorate significantly. Based on an analysis using firm level data for 17 countries, 14 of which were from the EU, the professor stated that up to 12% of the SMEs could fail by the end 2020, compared to about 4.5% in a normal year.

The high rate of SME failure could also negatively impact the financial sector, as banks are left with a massive increase of non-performing loans. Read more

MEPs discuss supply chain due diligence, including on SMEs, with experts

On 22 June, the European Parliament held a multi-Committee hearing with experts on mandatory due diligence requirements for companies in supply chains.

The debate revolved around proposals for mandatory due diligence at EU level, with MEPs notably asking what requirements might be imposed on SMEs.

During the hearing, Beata Faracik , President of the Board of Polish Institute for Human Rights and Business, addressed SME compliance related concerns by suggesting that there could be a phasing-in approach with some obligations being imposed only later and with the obligation to report being lifted. However, she also argued that when running a company, entrepreneurs should be aware of all risks and the context in which they operate. Therefore, what is needed is perhaps more guidance for SMEs, she concluded. Read more

 
 
 
 
 

MEP Questions & Answers

 
 
 
 

Commission gives snapshot of main SME COVID support measures undertaken so far

  • Question by MEP Ivan Štefanec (EPP/Slovakia)
  • Reply by Commissioner Schmit

Commission plans a framework for resolution of cross-border tax issues faced by SMEs

  • Question by MEP Marek Belka (S&D/Poland)
  • Reply by Commissioner Gentiloni

Commission re-iterates its commitment to sustainable and digital transformation of SMEs amid COVID

  • Question by MEP Vangelis Meimarakis (EPP/Greece)
  • Reply by Commissioner Breton
 
 
 
 
 

International Developments

 
 
 
 

EUIPO launches call for pro bono advisors to help SMEs with IP

The EU Intellectual Property Office (EUIPO) has issued a call for pro bono advisers and experts to help SMEs deal with IP related matters.

The EUIPO COVID-19 pro bono hub offers a tailor-made service to match SMEs with providers of free-of-charge IP legal representation and advice throughout the EU.

According to EUIPO, the service focuses on the needs of small businesses, ensuring that they get the IP-related legal advice they need to protect and maximise their rights, and the proper professional representation to defend those rights when challenged. Businesses will obtain practical guidance on how to handle their IP legal matters. Read more

OECD: Supporting businesses in financial distress to avoid insolvency during the COVID-19 crisis

OECD has published a policy note that provides an overview of policy measures for governments to mitigate liquidity shortages and avoid unnecessary bankruptcies that may follow from the COVID.

The policy note groups these measures into three categories:

  • Range of insolvency relief tools to delay insolvency proceedings and gain valuable time to facilitate restructuring and corporate workouts.
  • In case additional support is needed, there is the possibility for state intervention that indirectly strengthens corporate cash flow.
  • If private solutions prove insufficient, there are various tools to provide direct state cash flow support.

Although the policy note is not explicitly addressed for SMEs, many of the policy measures in it are relevant for them too. Read more

Webinar: accountants play key role in digital upskilling of SMEs

On 22 June, the European Small Business Alliance (ESBA) organised a webinar on digital skills for SMEs. Speaking at the webinar, Justina Bieliuskaite from Digital SME Alliance underlined the role that accountants can play in supporting SMEs’ digitalisation. She said that accountants, who are in regular contact with their SME clients, should help raise awareness among them about existing digital upskilling tools and resources. Moreover, accountants should link their SMEs with relevant other players in the broader SME ecosystem.

ACCA publishes recommendations for post-COVID economic recovery

Accountancy Europe’s member body ACCA has published a survey with recommendations on post-COVID economic recovery. The survey is based on 4500 responses, and reveals notably the following:

82% of business leaders have now performed a financial reforecast since the outbreak. In March, this raised red flags with only 53% having done so. Other global findings reveal:

  • 83% expect revenue to be down compared with the previous financial year.
  • 81% have now adopted flexible working from home strategies, with 50% adopting staff rotas to accommodate social distancing requirements.
  • 71% identify workplace transformation as the longest term Covid-19 impact.
  • 32% now see government interventions as effective, compared to 17% in March 2020.

Read more

Accountancy Europe organises webinar on COVID economic recovery and SMEs

On 30 June, Accountancy Europe organised a webinar on post-COVID economic recovery, needs of SMEs and the role of the accountancy profession. The webinar brought together EU policy makers as well as representatives of finance providers, accountants and SMEs.

During the webinar, Veronique Willems, Secretary General of SME United, outlined the expectations of SMEs towards their accountants during the COVID crisis:

  • Help SMEs identify the right COVID support measures
  • Guide them through the complex application processes to access the aid schemes
  • Help them re-structure their balance sheets
  • Help find creative methods to do business, for example as seen during the lockdown when many restaurants converted into a food delivery business model

Read more

EUIPO publishes 2025 strategy with SME component and launches SME support hub

On 1 July, the EU Intellectual Property Office (EUIPO) has published its 2025 strategy, including a new SME programme.

The SME programme will include a number of initiatives to increase the successful use of IP by SMEs and raise awareness among SMEs about the use and added value of IP rights.

On the same day, EUIPO also launched the Ideas Powered for Business hub, with a range of initiatives to support small businesses through the COVID-19 crisis. The hub has information on trade marks and designs geared toward businesses, as well as personalized free intellectual property support, and e-learning courses tailored for SMEs. Read more

Accountancy Europe, FESE, CFA Institute and EBRD issue recommendations on capital markets and COVID

On 2 July, Accountancy Europe, Federation of European Securities Exchanges (FESE), CFA Institute and the European Bank for Reconstruction and Development (EBRD) issued joint recommendations on the role of capital markets in supporting post-COVID recovery.

Of relevance for SMEs, the joint statement for example recommends:

  • The various COVID stimulus packages should include specific bridge financing for viable SMEs and growth companies that were planning IPOs when the crisis hit
  • Introduce a temporary tax alleviation for small businesses that do an IPO

The statement was published ahead of the European Commission’s Capital Markets Union (CMU) Action Plan, which is currently expected to be published on 23 September and should contain a number of measures to foster SME access to equity financing. Read more

Lack of liquidity and insolvency main concerns for SMEs

According to a SME survey conducted by SME United, 40% of SMEs report liquidity problems due to the COVID crisis. In the most affected sectors like hospitality, retail and construction, 50% of SMEs have liquidity shortage.

The survey also shows that a vast majority (90%) of European SMEs have claimed turnover losses during the economic lockdown, whereas up to 20% of SMEs lost even 100% of their turnover for several weeks. At the same time, 2/3 of SMEs report that they have delayed investment decision or downsized investments. Read more

 
 
 
 
 

National Developments

 
 
 
 

ICAEW calls for support for SME audits with new standard for less complex entities

On 15 June, Accountancy Europe’s member body ICAEW published a letter to International Auditing and Assurance Standards Board (IAASB), calling for a separate auditing standard for ‘less complex’ entities. It calls on IAASB to make such a move as quickly as possible, and argues that a separate standard, far from weakening the ISA brand as some may fear, will strengthen it and consolidate the IAASB’s position as the global standard setter. Read more

Survey: SMEs saw accountants as their go-to advisors during COVID

According to a survey of 1000 SME owners, accountants have been more helpful, more available, and more proactive in supporting SMEs through COVID, in comparison to other key business service providers.

The poll asked SMEs to rate the performance of banks, accountants, landlords, enterprise software, payment providers and communications providers. The results show 59% rate the level of support received from their accountant as quite or very good, compared to an average of 52%. Half (53%) agreed that their accountant proactively helped with cost cutting / cashflow measures to help their business survive in response to Covid-19, compared to an average of 40%.

The research also revealed that accountants outperform other business support services as the key go to advisor. For example, 82% of SMEs had contacted their accountant since the start of COVID compared to 67% for banks. Read more

 
 
 
 
 

Other news

 
 
National
 
Brands, fans and influencers: why social media for small business is about more than sales
 
National
 
‘Being online has helped us survive’: how e-commerce can kickstart your small business in lockdown – and beyond
 
International
 
10 Tips for Adjusting Your Small Business as You Prepare to Reopen After Coronavirus
 

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.

 
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