SMEs: Small and Powerful

Medium, small, micro.... and powerful.

In Switzerland, 99,7% of all enterprises employ on average less than 250 employees and are classified as Small- or Medium Enterprises (SMEs). The most significant growth in the past 13 years was recorded among SMEs active in the health industry. *

What makes SME so powerful? They are:

• Small, and therefore more agile,

• Have local roots and are well connected to local communities,

• (in many cases) Family offices with strong ownership culture,

• Employ more than two thirds of all jobs in the economy,

• Foster knowledge sharing and innovation by cooperation and networking with each other.

Simply put, SMEs keep Swiss economy competitive, create healthy industrial mix and foster growth.

The IASB acknowledges SME`s limited resources [for preparation of financial records] by allowing SMEs without a public accountability to use a simplified form of IFRS named IFRS for SMEs Accounting Standard.

IFRS for SMEs Accounting Standard is less complex in many ways:

• Topics not relevant for SMEs such as earnings per share, interim financial reporting and segment reporting are omitted.

• Numerous recognition and measurement principles are simplified. For example, SMEs are allowed to amortize goodwill, instead of testing it for impairment annually.

• SMEs are also allowed to recognize all borrowing and development costs as expenses instead of capitalizing them as (in)tangible assets.

☑ SMEs are allowed to not consolidate associates at equity but and use cost method instead.

☑ SME are required to prepare significantly fewer (ca 90 per cent less) disclosures.

And finally, IFRS for SMEs are written in clear, easily translatable language for use by non-native English speakers.

• Sources: "Kleine und mittlere Unternehmen" | Bundesamt für Statistik (admin.ch); Statistik der Unternehmensstruktur (STATENT) Struktur der kleinen und mittleren Unternehmen (KMU) in der Schweiz im Jahr 2021 | Bundesamt für Statistik (admin.ch)