The Malta Business Bureau (MBB) has welcomed the proposals put forward by the European Commission in its new SME Relief Package, yet believes that more transparency needs to be provided.
The European Commission presented the long-awaited package earlier this week, through which a regulation on combating late payments has been introduced. This regulation revises a current directive setting binding maximum payment terms at 30 days for public authorities and business-to-business transactions. It will also make the payment of compensatory fees and interest legally automatic in case of late payments. The European Commission remarked that this will assist SMEs in improving their cash flow.
While the MBB agreed with the introduction of the package as it targets an increase in resilience and competitiveness within SMEs, it still highlighted that more clarity should be provided on how commitments will be implemented. This needs to be done to “truly help SMEs overcome the challenges currently faced and to thrive in the years to come”, the MBB added.
The package includes measures to reduce the regulatory burden, boost SMEs’ long-term competitiveness and strengthen fairness in the business environment. The MBB remarked that this is a “good step forward” in making it easier for SMEs to do business, yet “needs more ambition to help them to grow and thrive”.
Over the past years, SMEs have faced countless challenges, including the COVID-19 pandemic, high inflation, supply chain disruption, skills shortages, and increasing regulatory burden.
Commenting on the new regulation concerning the Late Payments Regulation, MBB CEO Joe Tanti stated that a “culture of on time payment is essential” and shorter payment terms in business-to-business transactions “helps the liquidity of SMEs”.
“However, the law should also preserve freedom of contract and provide the flexibility for businesses to agree on bilateral terms according to their own circumstances,” he added.
In the package, the European Commission also plans to create an enabling business environment by reducing the regulatory burden for SMEs and simplifying administrative procedures, together with reporting requirements. Additionally, it proposes to strengthen the SME test, appoint an EU SME Envoy, and improve access to finance for SMEs by increasing the financing guarantee under the InvestEU programme. It also seeks to provide specific tools to help SMEs develop sustainable competitiveness skill such as apprenticeship and training schemes.
“The SME Relief Package is a positive step in the right direction, but more needs to be done to support SMEs,” Mr Tanti said.
“The EU needs to build on this package by ensuring that financial support reaches SMEs, avoids introducing new regulatory burdens, increase access to markets, and invest in skills and training,” he added.
He concluded by saying that through these steps, the EU can “effectively help SMEs continue to recover from the current global economic challenges”.
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