• While the revision of Late Payment directive is a good start, it is not enough to build future-proof businesses and secure Europe´s prosperity in a global economy
• A more ambitious course of action targeting digital SMEs is needed to complement the SME Relief Package with a forward-looking perspective
• It is time for a Green and Digital Package to: (i) pool together public and private resources in digital and green transformation of SMEs; (ii) promote up- and re-skilling of the SMEs workforce; (iii) update public procurement rules to foster innovation and sustainability

The SME Relief Package proposed by the European Commission is a first, needed step to support SMEs operating in a challenging economic environment. Stricter payment terms and increased competitiveness are essential for small businesses to flourish. Thus, DIGITAL SME welcomes this initiative to relieve administrative and economic burdens of European SMEs: by freeing up liquidity for SMEs, they are better placed to invest it to build up resilience in the face of recent multiple crises.

While the revision of the Late Payment Directive and the other measures in the SME Relief Package are a good start, more ambition is needed to put SMEs at the heart of industrial strategies and live up to the twin transition. The SME Relief Package contains helpful measures to address challenging economic contingencies and long-standing obstacles for SMEs competitiveness, such as often exhausting administrative burdens and red-tape; yet, crisis management mode is not what we need to build a robust and future-proof businesses that secures Europe´s prosperity and global leverage.

That is why DIGITAL SME is asking for a more ambitious Green and Digital Package for SMEs. The European Commission should follow-up with a course of action targeting the digitalisation of SMEs to (i) pool together public and private resources in digital and green transformation of SMEs, including via targeted economic incentives; (ii) promote tax credits for up-skilling and re-skilling of the SMEs workforce; (iii) update public procurement rules to promote innovation and sustainability.

Digital and green transitions are instrumental to each other because accelerating the digital transformation of our societies can help to reduce the overall carbon footprint and decouple economic growth from non-renewable natural resources´ use. A course of action supporting SMEs in the twin transition would be aligned with the European Commission´s Communication on ´Long-Term Competitiveness of the EU: looking beyond 2030´.

A Green and Digital SME Package should leverage public and private resources in digital and green transformations of SMEs, for instance by jointly aligning demand and supply of digital solutions through matchmaking platform and by coordinating activities of Member States to disseminate best practices and strengthen SMEs in global markets. It could also put forth targeted incentives, such as a scheme for Green-Digital Transition vouchers. Such tool would help SMEs to adopt digital solutions maximising energy efficiency across their business operations and minimize their energy expenditures.

To make the digital and green transition happen, the need for upskilling and reskilling of the European workforce is clear. Large companies can afford in-house training and resources, while smaller companies usually diverge their limited resources to more strategic activities for their business, such as product development. Therefore, it is positive that the SME Relief Package already foresees forms of SME compensation for vocational training investments.  More targeted and effective support should be foreseen for digital skills development in the SME workforce, including specific instruments such as reduction of tax rates to those SMEs undertaking investments in this area, as well as direct grants. To make sure these measures are effective, they should be linked to certain conditions, such as contracting an external certified training provider, or highly specialised competence centres within European Digital Innovation Hubs (EDIHs).

In addition, the role of public procurement rules can be crucial in fostering sustainability and digitalisation criteria in the provision of innovative services. However, several barriers make it difficult for SMEs to participate in and win tenders, thus hindering the innovation and transformation opportunities for businesses, citizens, and public bodies. Harmonised Green Public Procurement rules would support SMEs in accessing public procurement opportunities across Europe by providing their sustainable services and products. The same goes with the procurement of digital innovations. Procurement of GovTech applications can help innovative companies, in particular SMEs, find initial customers for their products and services.

Furthermore, to support the European Commission´s efforts to implement the ´Think Small First´ principle in the SME Relief Package, a new Green and Digital SME Package could propose a SME  Helpdesk. This could be a way to provide free-of-charge support to help European SMEs spot funding opportunities that are relevant to their business operations and help them navigate the process. Since access to funding is a significant barrier to the survival and development of Europe’s SMEs, a first-line support service to SMEs on funding opportunities could help overcome these challenges.

The above issues make it clear that to increase EU´s competitiveness and achieve its digital sovereignty, a more comprehensive approach addressing the needs of European SMEs in the twin transition needs to be deployed. That is why DIGITAL SME calls for a Green and Digital SME Package and looks forward to discussing this plan in detail with the EU Institutions.