Small and medium-sized enterprises (SMEs) must engage in digital transformation while enhancing financial literacy, securing access to funding, institutional backing, and adopting sustainable business practices to foster long-term growth in both domestic and European markets, as noted during a conference in Podgorica.

Nina Drakić, President of the Chamber of Commerce (PKCG), remarked at the conference titled “Transformation and Sustainable Development of the SME Sector through Financial and Digital Tools” that recent findings from the Chamber reveal that SMEs rate the business environment at a mere 2.47 out of five.

“This serves as a clear indication that improvements are necessary. Small and medium-sized enterprises anticipate a reduction in the shadow economy, tax benefits, an expedited digitalization process, a reliable legislative framework, and accessible, affordable financing. They also seek educational reforms and initiatives to retain young talent through revamped educational policies,” Drakić asserted, speaking at the event organized in collaboration with Addiko Bank and Mastercard.

As per Drakić, boosting financial literacy among SMEs is crucial for reinforcing their competitive edge, helping them build resilience, and unlocking their growth and profitability potential, particularly during uncertain periods, according to PR Center.

“Investing in entrepreneurs’ education via training, mentoring, digital platforms, and collaboration with financial institutions is vital, as financial knowledge needs to be both accessible and applicable for effective planning and investment,” Drakić emphasized.

Beyond financial literacy, she highlighted tax policy as another significant factor influencing the growth of SMEs.

“Clarity, simplicity, and predictability in tax regulations are paramount for further advancement in this sector. We must prioritize digitalization, minimize bureaucracy, and introduce favorable tax incentives,” Drakić stated.

Danijela Vuksanović, a member of Addiko Bank’s Board of Directors, informed attendees that the SME sector in Montenegro comprises over 99 percent of all registered companies, employs around 75 percent of the total workforce, and contributes significantly to the economy’s added value.

“SMEs are pivotal for development, job creation, innovation, and enhancing the international standing of our domestic economy—not just within the Western Balkans, but also in EU markets,” Vuksanović added.

She emphasized that the future growth of SMEs is contingent upon multiple factors: access to financing, digitalization, environmental compliance, education, and institutional support.

“Thus, the conference aims to spark dialogue, facilitate knowledge exchange, and collaboratively establish the groundwork for sustainable and enhanced development within this sector,” Vuksanović elaborated.

She underscored that obtaining financing remains one of the most daunting challenges for SMEs.

“Regarding digitalization and technological advancement, it is vital for SMEs to partake in the digital transformation. Addiko has already launched online lending platforms and mobile banking tailored for SMEs,” Vuksanović stated.

According to her, profit and growth are no longer the sole indicators of success.

“Sustainability, community responsibility, and transparent governance are becoming key competitive factors, especially in the European market,” she explained.

Vuksanović advocated for constant, open dialogue between entrepreneurs, institutions, and the financial sector, stressing that systemic changes can only be achieved through partnership.

“Our objective is to create a space for knowledge sharing, mentoring, and supporting the development of SME sector competencies through such events, workshops, and collaboration with international partners,” she emphasized.

The aim is to become the premier specialized bank for SMEs in Montenegro.

During the first panel discussion, “Financial Literacy and Tax Policy as Foundations for SME Sector Growth,” Sava Laketić, Director of the Tax Administration, highlighted that the institution he leads is undergoing a transformation into a modern and efficient service, especially focused on micro, small, and medium-sized enterprises.

“Since 2018, the Tax Administration has been undergoing significant reforms aided by a loan from the World Bank. We have implemented a crucial aspect of this reform—electronic fiscalization. Our upcoming focus includes completely overhauling IT systems, which are essential to our operations, with plans to introduce new, fully digital systems by January 1 next year,” Laketić stated.

He noted that there are four primary and one supplementary subsystem through which the Tax Administration communicates with taxpayers, both businesses and individuals.

“Our objective is to enable a simpler, quicker, and more transparent process for settling tax obligations through this digital transformation, starting from registration to payment, especially aiding the most vulnerable businesses—micro, small, and medium-sized firms,” Laketić mentioned.

This reform aims to enhance the Tax Administration’s service function while improving control mechanisms.

“The digital tools we’re introducing will enable us to combat unfair competition more effectively, which is a significant challenge for small businesses. We aim to launch a new contact center and create a dedicated sector for taxpayer support and education. This new unit will commence operations no later than January 1 next year,” Laketić outlined.

He also underscored the necessity to tackle the issue of excessive numbers of companies and agencies that often operate without sufficient oversight and accountability.

“Currently, the register of business entities is fragmented and does not accurately reflect the market. We seek a systemic solution for this issue and the enactment of new legislation that will allow for digital registration and more efficient record-keeping,” Laketić added.

Regarding collaboration with the accounting profession, Laketić emphasized the necessity for the state to engage with the profession, asserting that the profession itself also requires better regulation.

“We observe agencies opening and closing, continuing to operate under alternative names, often without sufficient documentation. Hence, we are drafting legal amendments to address this practice,” Laketić remarked.

He highlighted the need to connect the banking system with the Tax Administration systems.

“This connection will enable us to fully operationalize e-credit and improve the detection of tax evasion. Access to relevant data, in line with the law, is crucial for better understanding and supporting the business community,” Laketić stressed.

He acknowledged that reforms are a long-term endeavor and that results won’t be immediate, asserting that a systematic approach is essential for achieving sustainable solutions.

Anita Radulović, founder and owner of RACC Bar, pointed out the crucial role accounting services play throughout the lifecycle of small and medium-sized enterprises, noting they are often the first—and sometimes the only—support entrepreneurs receive in business development.

“Over 80 percent of our clients are small and medium-sized enterprises. Accounting services serve them from inception to potential closure. Unfortunately, many start their entrepreneurial journey with mere ideas, lacking a clear vision or the information needed to implement it effectively,” said Radulović.

She indicated that many companies make significant mistakes in their initial months—ranging from failing to register directors to neglecting their first tax returns.

“These errors are typically not a result of intentional lawbreaking but stem from a lack of information. Therefore, education is paramount from the outset of a business and throughout its life. Last year, 35 percent of companies failed to submit financial reports; this year, the figure is nearing 40 percent. Many businesses do not know their obligations, how to liquidate, or the correct procedures,” Radulović stated.

She raised concerns about the growing number of inactive companies that were founded, registered, yet never commenced operations.

“Their lack of timely information created knowledge gaps regarding what is necessary to initiate their ventures. Thus, collaboration among all system actors is essential to convey accurate and comprehensive information to prevent further mistakes,” Radulović emphasized.

She also pointed out the resource limitations faced by SMEs, particularly small teams that cannot keep pace with legal changes.

Another critical issue, according to her, is the prevalent financial illiteracy among entrepreneurs.

“We often encounter situations where medium-sized business owners do not grasp the basic parameters of their business. They frequently ask, ‘How can I be profitable if my account has no funds?’ Misunderstanding the relationship between cash flow, capital, and liabilities is a common scenario,” Radulović explained.

She expressed concerns about the growing number of smaller companies reporting negative results.

“In many instances, accounting involvement comes too late, just when taxes need calculating, and not early enough to aid in business planning. While we recognize the gray areas and opportunities for improvement, we also encounter successful business stories that can serve as models,” Radulović highlighted.

Boris Đurović, CEO of UNIQA Life Insurance, noted that many SMEs are yet to harness the potential benefits of insurance.

“Unfortunately, statistics indicate that SMEs in our region do not view insurance as a support tool but often see it as an administrative obstacle or cost. This perception is misguided. Insurance is, in fact, a mechanism that fosters stability, resilience against risks, and long-term business sustainability,” Đurović emphasized.

He explained that for SMEs, insurance not only serves as protection but also as a means to enhance competitiveness.

“Purchasing insurance equates to securing peace of mind. SMEs face numerous risks—from natural disasters, fires, and theft to inventory losses and operational disruptions. Cases abound where lack of adequate insurance has led to total business failure. In contrast, those with coverage managed to withstand crises and rebuild their operations,” Đurović added.

According to him, well-insured firms have improved access to loans, as banks view them as lower risk.

Đurović asserted the need to make insurance more accessible and understandable for small and medium entrepreneurs.

“Our industry must streamline procedures and communicate in a manner that SMEs can grasp. We must eliminate additional barriers and serve as partners supporting their growth. Raising awareness through events like this and educational initiatives is vital,” Đurović affirmed.

He concluded that insurance must become a fundamental element of the business strategies aimed at fostering a sustainable and resilient SME sector.

Nikola Bošković, Director of Credit Risk Management at Addiko Bank, conveyed that banks aim not to complicate business operations, but rather to assist firms in identifying their genuine opportunities.

“We adopt a supportive stance toward companies; our objective is to avoid overwhelming them. We utilize balance sheet parameters as a training tool to clarify what can and cannot be financed,” Bošković explained.

He underscored the importance of having proficient accountants.

“Accountants play a pivotal role—80 percent of the factors influencing loan decisions stem from the quality of financial statements. When accountants clarify balance sheet entries and their implications, it significantly impacts the assessment. Credit analysts then perceive not only the figures but the rationale behind them,” Bošković noted.

He acknowledged that many SMEs lack the capacity to hire dedicated personnel for managing interactions with banks and monitoring financial metrics.

“In smaller companies, individuals assume multiple roles. Yet, precise and clear balance sheets are still expected,” added Bošković.

He called for alignment of expectations between the banking sector and the real economy.

“We need to understand what the bank seeks to see in balance sheets while also recognizing what clients can realistically present. Only through this understanding can we achieve our common goals,” Bošković concluded.

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