Small and medium-sized enterprises must be part of the digital transformation, while simultaneously strengthening financial literacy, access to financing, institutional support and sustainable business practices, in order to achieve long-term development in the domestic and European markets, it was assessed at a conference in Podgorica.
The President of the Chamber of Commerce (PKCG), Nina Drakić, said at the conference Transformation and Sustainable Development of the SME Sector through Financial and Digital Tools that the latest research by the Chamber shows that the average rating of the business environment from the perspective of small and medium-sized enterprises is only 2.47, on a scale of five.
"This is a message that there is a need for improvement. Small and medium-sized enterprises expect a reduction in the shadow economy, fiscal relief, an accelerated digitalization process, the introduction of a stable legislative framework, the provision of accessible and affordable financing, education reform, and the empowerment of the domestic workforce through reformed education policies and youth retention programs," Drakić said at a conference organized by Addiko Bank in cooperation with PKCG, and in partnership with Mastercard.
According to her, improving financial literacy among small and medium-sized enterprises is an important factor in strengthening their competitive capabilities, helping them build resilience and unleash their potential for growth and profitability, especially in uncertain times, reports PR Center.
"That is why it is important to invest in the education of entrepreneurs, through training, mentoring, digital platforms and cooperation with financial institutions, because financial knowledge must be accessible and applicable in order to plan and invest well," Drakić stated.
In addition to financial literacy, she said, tax policy is another important factor in the growth of small and medium-sized enterprises.
"Transparency, simplicity and predictability of tax rules are essential for the further development of this sector. In this regard, we need to work on digitalization, reducing bureaucracy and introducing favorable tax incentives," said Drakić.
Member of the Board of Directors of Addiko Bank, Danijela Vuksanović, announced that the SME sector in Montenegro accounts for over 99 percent of all registered companies, employs around 75 percent of the total workforce and generates a significant portion of added value in the economy.
"SMEs are drivers of development, employment, innovation and international positioning of the domestic economy - not only in the Western Balkan markets, but also in the EU markets," said Vuksanović.
She emphasized that the further growth of small and medium-sized enterprises depends on several factors - access to financing, digitalization, environmental compliance, education, and institutional support.
"That is why the goal of this conference is to initiate dialogue, exchange knowledge, and together lay the foundations for the sustainable and stronger development of this sector," said Vuksanović.
She pointed out that access to finance remains one of the biggest challenges for SMEs.
"When it comes to digitalization and technological modernization, SMEs must be part of the digital transformation. Addiko has already implemented online lending platforms and mobile banking specifically designed for SMEs," said Vuksanović.
According to her, profit and growth are no longer the only criteria for success.
"Sustainability, community responsibility and transparent management are becoming key factors of competitiveness, especially in the European market," said Vuksanović.
She assessed that a constant and open dialogue between entrepreneurs, institutions and the financial sector is needed, stating that only through partnership can systemic changes be achieved.
"Our goal is to create a space for knowledge exchange, mentoring and support in the development of SME sector competencies through such events, workshops and cooperation with international partners," Vuksanović emphasized.
She said that their goal is to become the best specialized bank for small and medium-sized enterprises in Montenegro.
During the first panel, Financial Literacy and Tax Policy as the Foundations of SME Sector Growth, the Director of the Tax Administration, Sava Laketić, emphasized that the institution he heads is working intensively on transforming into a modern and efficient service, especially oriented towards micro, small and medium-sized enterprises.
"The Tax Administration has been undergoing a comprehensive reform process since 2018, thanks to a loan from the World Bank. So far, we have implemented an important pillar of this reform - electronic fiscalization. In the coming period, the focus is on the complete replacement of IT systems, which form the core of our work, and as of January 1 next year, we plan to introduce new, fully digitalized systems," Laketić emphasized.
He explained that there are four basic and one additional subsystems, through which the Tax Administration carries out complete communication with taxpayers, both legal entities and individuals.
"Our goal is to enable simpler, faster and more transparent settlement of tax obligations through this digital transformation, from the moment of registration to payment. We especially want to make it easier for businesses that are the most vulnerable - micro, small and medium-sized companies," said Laketić.
According to him, this reform has a dual goal - strengthening the service role of the Tax Administration and improving control mechanisms.
"The digital tools we are introducing will help us fight unfair competition more effectively, which is one of the key challenges for small businesses. We plan to introduce a new contact center, as well as form a special sector for taxpayer support and education. The new team will start operating no later than January 1st of next year," said Laketić.
He also pointed out the need to address the problem of hyperproduction of companies and agencies that often operate without basic control and accountability.
"The register of business entities is currently fragmented and does not provide a realistic picture of the market. We expect a systemic solution to this issue and the adoption of a new law that will enable digital registration and more efficient records," said Laketić.
Speaking about cooperation with the accounting profession, Laketić said that it is crucial for the state to open up to the profession, but also that the profession itself must be better regulated.
"We are witnessing agencies opening, closing and continuing to operate under other names, without a clear obligation to keep and make documentation available. That is why we are working on legal amendments that will address this practice," Laketić said.
He emphasized the importance of connecting the banking system with the Tax Administration systems.
"This will enable full functionality of e-credit and easier detection of those who evade tax obligations. Access to relevant data, in accordance with the law, is key to better understanding and supporting the business community," said Laketić.
He said that he is aware that reforms are a long-term process and that the results will not be immediately visible, saying that a systemic approach is the only correct way to reach sustainable solutions.
The founder and owner of RACC Bar, Anita Radulović, pointed out the key role of accounting services in the life cycle of small and medium-sized enterprises, stating that they are often the first, and often the only, support that entrepreneurs have in developing their business.
"Certainly over 80 percent of the clients we serve are small and medium-sized enterprises. Accounting services are their first support, from the very beginning to the eventual closure of the company. Unfortunately, the barriers start at the very beginning, many enter entrepreneurship with an idea, but without a clear vision and information on how to put it into practice," said Radulović.
According to her, a large number of companies make serious mistakes in the first few months - from not registering directors to missing the first tax returns.
"These mistakes are most often not the result of a conscious violation of the law, but rather a consequence of lack of information. That is why education is key, from the very beginning of business, and throughout the entire life of the company. Last year, as many as 35 percent of companies did not submit financial reports, and this year the number is approaching 40 percent. Many companies simply do not know what to do: how to liquidate, what the obligations are, what is the correct path," Radulović stated.
She pointed out the problem of the existence of a large number of inactive companies that were founded, registered, but never started operating.
"They did not get informed in time. They did not know what was needed to start their story. That is why it is of utmost importance for all actors in the system to work together, in order to convey accurate and complete information and prevent further errors," said Radulović.
She also pointed out the lack of resources in small and medium-sized enterprises, especially staff-limited teams that cannot keep up with all legal changes.
Another major challenge, he believes, is financial illiteracy among entrepreneurs.
"We have situations where owners of medium-sized businesses do not understand the basic parameters of their business. They often ask us, 'How can I have a profit when I have no money in my account?' Misunderstanding the relationship between cash flows, capital, and liabilities is an everyday situation," said Radulović.
She finds it worrying that a large number of smaller companies are recording negative results.
"In these cases, accounting is involved at the very end, when taxes are already being calculated and returns are being filed, and not at the beginning, when it could help in planning and directing the business. We see the gray area, we see how much room there is for improvement, but at the same time we also encounter healthy business stories that can serve as examples," Radulović pointed out.
The CEO of UNIQA Life Insurance, Boris Đurović, said that small and medium-sized enterprises are still underutilizing the potential that insurance offers.
"Unfortunately, statistics show that small and medium-sized enterprises in our region still do not recognize insurance as a support and benefit in business, but often perceive it as an administrative obstacle or expense. This is a wrong perception. In reality, insurance is a mechanism that enables stability, risk resistance and long-term sustainability of business," emphasized Đurović.
He explained that for the SME sector, insurance is not only a form of protection, but also a tool for improving competitiveness.
"Buying insurance means buying security. SMEs are exposed to numerous risks - from natural disasters, fires, theft, to loss of inventory and business disruptions. We have witnessed cases where the lack of adequate insurance led to the complete destruction of businesses. On the other hand, companies that were insured managed to overcome crises and rebuild their businesses," said Đurović.
According to him, adequately insured companies have better access to loans, because banks recognize lower risk.
Đurović assessed that there is a need to make insurance more accessible and understandable for small and medium-sized entrepreneurs.
"Our industry must simplify processes and speak a language that SMEs understand. We must not create additional barriers, but must be partners and support in growth. It is crucial that we all work together to raise awareness, both through events like this and through education in the field," believes Đurović.
He emphasized that insurance must be an indispensable part of the business strategy for a sustainable and resilient SME sector.
The Director of Credit Risk Management at Addiko Bank, Nikola Bošković, explained that banks do not want to make it difficult for companies to do business, but rather to help them understand where their real opportunities lie.
"We have a parental attitude towards companies, we don't want to overexert them. We use the parameters from the balance sheet specifically for training: what can and cannot be financed," said Bošković.
He pointed out the importance of quality accountants.
"Accountants are key. 80 percent of the factors that decide on a loan come from the quality of financial statements. When accountants explain what is on the balance sheet and why, it has a huge impact. A credit analyst sees not just the numbers, but the logic behind them," said Bošković.
He said that many SMEs do not have the capacity to hire a person who will deal exclusively with communication with banks and monitoring financial indicators.
"In small companies, everyone does everything. And yet, balance sheets are expected to be clear and precise," added Bošković.
He called for harmonization of perceptions between the banking sector and the real economy.
"We need to know what the bank expects to see in the balance sheets, but also understand what clients can realistically show. Only in this way can we achieve a common goal together," concluded Bošković.
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