The main solution to improve the quality of short-term loans for small and medium-sized enterprises at Bank for Investment and Development

TABLE OF CONTENTS

PART I: BACKGROUND ……………………………………………………………………… ……………………………………… first

1. Urgency of the topic …………………………………………………………….. ……………………………….. first

2. Research objectives ……………………………………………………………………………………. …………………………………… 2

3. Research object …………………………………………………………….. …………………………………. 2

4. Research scope …………………………………………………………………………………… ………………………. 3

5. Research methods …………………………………………………………………….. ………………………… 3

5.1. Quantitative method …………………………………………………………………………… …………….. 3

5.2. Quantitative methods………………………………………. ………… 3

PART II: RESEARCH CONTENTS AND RESULTS …………………………………………………………………….. 4

1. CHAPTER 1: SCIENTIFIC BASIS OF RESEARCH PROBLEM ………………….. 4

1.1.A few general issues about bank credit …………………………………………………………………………. ……. 4

1.1.1. Concept………………………………………… ………………………. 4

1.1.2. Bank credit classification …………………………………………………………………………… ………… 4

1.1.3. Credit processes ………………………………………. …………………………… 4

1.1.4. Credit guarantee …………………………………………………………………………… ………………………… 5

1.2. Loans to corporate customers and short-term loans to enterprises ………………………………………………………… …………………………… ………… 5

1.2.1. Loan activities for corporate customers ………………………………………………. 5

1.2.1.1. The concept……………………………………….. …………….. 5

1.2.1.2. Borrowing principles …………………………………………………………………………… ………… 6

1.2.1.3. Loan conditions …………………………………………………………………………………… …………………………… 6

1.2.1.4. Types of loans for corporate customers ………………………………………………………. 7

1.2.2. Methods of short-term loans to enterprises ………………………………………………………. 7

1.3.Some issues about small and medium enterprises ………………………………………………. ………. 8

1.3.1. Concept………………………………………… ……………………………………… 8

1.3.2. Characteristics ………………………………………… ………………………… 9

1.3.3. The role of SMEs …………………………………………………………………………… ………… 11

1.4.Quality of short-term loans for SMEs ………………………. 12

1.4.1. Concept of short-term loan quality .. twelfth

1.4.2. The system of criteria for assessing the quality of short-term loans to SMEs… 13

1.4.2.1. Loan sales ………………………………………. ………… 13

1.4.2.2. Debt collection turnover …………………………………………………………………………………… ………… 13

1.4.2.3. Odd debt ………………………………………. …………. 13

1.4.2.4. Overdue debt, bad debt; ratio of overdue debt, bad debt ………………………. 14

1.4.2.5. Total loan profit on average total outstanding balance ………………………………… 15

1.4.2.6. Ratio of outstanding loans to total mobilized capital ………… 15

1.4.2.7. Credit cycle …………………………………………………………………………… …………….. 16

1.4.3. Factors affecting the quality of short-term loans ………………………………… 16

1.4.3.1. Group of factors from the Bank’s side ………………………………………………………… …. 16

1.4.3.2. Group of factors belonging to borrowers ………………………………… 21

1.4.3.3. Group of factors belonging to objective conditions ………………………………………………………. 22

1.4.4. The need to improve the quality of short-term SME lending ……………………… 23

2. CHAPTER 2: ASSESSMENT OF QUALITY OF SHORT-TERM LIVING ACTIVITIES FOR SMALL AND SME ENTERPRISE AT BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM – QUANG TRI BRANCH………. ………… 26

2.1. Introduction about Bank for Investment and Development of Vietnam- Quang Tri Branch ………………………………………………………… …………………………… ……………… 26

2.1.1. The process of formation and development ……………………………………. ……… 26

2.1.2. Head office and transaction office system …………………………………………………………………….. 27

2.1.3. Organizational structure………………………………………. ………………………. 28

2.1.3.1. Functions and duties of the Board of Directors …………………………………………………… 28

2.1.3.2. Functions and duties of departments……………………………………………………….. 29

2.1.4. Labor situation …………………………………………………………………………… ………… 34

2.1.5. Credit process for corporate customers at Bank for Investment and Development – Quang Tri Branch………………………………………………………. …………………………… ……… 35

2.1.6. Short-term corporate loan products at Bank for Investment and Development – Quang Tri Branch ………………………….. ………………………… 36

2.1.7. Number of Small and Medium Enterprises …………………………………………………………….. …. 37

2.1.8. Business results of Bank for Investment and Development – Quang Tri Branch………………………………………………………. …………………………… ……… 38

2.2. Current status of short-term lending quality for SMEs at Bank for Investment and Development of Vietnam – Quang Tri Branch………………………………………… 41

2.2.1. Funding situation …………………………………………………………………………… ………… 41

2.2.2. General analysis of short-term lending to SMEs ……………………… 43

2.2.3. Analysis of short-term SME loan sales by quarter.. 45

2.2.4. Analysis of the situation of short-term loans to SMEs by lending method ………………………………………………………… …………………………… ………… 47

2.2.5. Analysis of short-term lending to SMEs by collateral……………………………… …………………………… …….. 49

2.2.6. Analysis of overdue debt and bad debt ………………………………………………. …………51

2.2.7. Analysis of total loan profit on average total outstanding balance ………… 54

2.2.8. Analysis of the ratio of outstanding loans to total mobilized capital ………… 55

2.2.9. Credit cycle analysis …………………………………………………………………………… ……….. 56

2.3. Evaluation of the quality of short-term lending activities for small and medium-sized enterprises at Bank for Investment and Development of Vietnam – Quang Tri Branch…. 57

3. CHAPTER 3: MAJOR SOLUTIONS TO IMPROVE THE QUALITY OF SHORT-TERM LOANS FOR SMALL AND SME ENTERPRISE AT BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM – ADVERTISEMENT BRANCH………. …………………………… ………………………………….. sixty one

3.1.Solutions to promote strengths to seize opportunities…………………………………………. 61

3.2.Solutions to promote strengths and reduce risks …………………………………………………………………………. ….. sixty one

3.3.Solutions to overcome weaknesses to take advantage of opportunities…………………………………………. 62

3.4.Solutions to overcome weaknesses to prevent threats ………………………………… 63

PART III: CONCLUSIONS AND RECOMMENDATIONS …………………………………………………… ……………. sixty seven

1. CONCLUSION ……………………………………………………………………… …………………………… .. sixty seven

1.1.Achievement of the topic ……………………………………………………………………………………….. ………………………… sixty seven

1.2. Limitations and directions of the topic development …………………………………………………………… ………………. sixty seven

2. RECOMMENDATIONS……………………………………………………………………… …………………………… .. 68

LIST OF TABLES

Table 1.1: Definition of SME by size and field of activity………………………………………………………. 8

Table 2.1: Introduction to the Bank for Investment and Development of Vietnam …………………………………….. 26

Table 2.2: Headquarters and 3 transaction offices of BIDV Quang Tri ………… 28

Table 2.3: Labor situation at BIDV Quang Tri, classified by qualifications (2009 – 2011)………………………………………………………. …………………………… ………… 34

Table 2.4 : Percentage of SMEs with short-term lending relationships to SMEs related to BIDV Quang Tri (2009 – 2011) ………………………….. ………………………. 38

Table 2.5: Business situation of BIDV Quang Tri (2009 – 2011) ………………….. 39

Table 2.6: Fund mobilization of BIDV Quang Tri (2009 – 2011)……………………………………………………………………… …………………………… ………… 41

Table 2.7: SME lending situation (2009 – 2011) ………………………………………………………… 44

Table 2.8: Sales of short-term SME loans by quarter (2009 – 2011)……. 45

Table 2.9 : Short-term lending to SMEs by lending method (2009 – 2011) ………………………….. …………………………… ………… 47

Table 2.10 : Short-term lending to SMEs by collateral (2009 – 2011)………………………………………………………. …………………………… ………… 49

Table 2.11 : Classification of outstanding loans (2009 – 2011) …………………………………………………………………………. .. 51

Table 2.12 : Profit of short-term SME loans on average total short-term loans to SMEs (2009 – 2011) …………………………………………………………… ………… 54

Table 2.13 : Outstanding short-term loans to SMEs on mobilized capital (2009 – 2011)……………………………………………………….. …………………………… ………… 55

Table 2.14: Credit turnover (2009 – 2011) ………………………………………………………… … 56

Table 2.15 : Short-term credit turnover of SMEs (2009 – 2011) ……… 56

LIST OF CHARTS, DIAGRAMS

Chart category: 

Figure 2.1: Labor situation at BIDV Quang Tri classified by gender

(2009 – 2011) ……………………………………………………………….. …………………………… …. 34

Figure 2.2 : Number of SMEs with short-term lending relationship with BIDV Quang

Tri (2009 – 2011) ……………………………………………………………………… ………………………. 37

Figure 2.3: Structure of mobilized capital of BIDV Quang Tri (2009 – 2011)

…………………………… …………………………… ………… 42

Figure 2.4 : Current status of short-term loans to SMEs by lending method (2009 – 2011) ………………………….. …………………………… …. 47

Figure 2.5: NPL ratio structure for short-term loans to SMEs (2009 – 2011).. 53

Figure 2.6: Profit structure of BIDV Quang Tri (2009 – 2011) ………… 54

List of diagrams: 

Figure 2.1: Organizational chart of operational apparatus at BIDV – Quang Tri

…………………………… …………………………… ………… 33

LIST OF SIGNS AND ARRIVALS

ATM : Automatic Telling Machines – Automatic Telling Machines

BIDV : Bank for Investment and Development of Vietnam

Employees : Officials and employees

Sun : Branch

CP : Government

DN : Enterprise

DNQD : Non-state enterprise

SMEs : Small and Medium Enterprises

GD : Transaction

Business customers: Corporate customers

NH : Bank

SBV: State Bank

Commercial Bank: Commercial Bank

PGD : Transaction office

QHKH: Customer Relations

ROA : Return on Assets – Return on total assets

ROE : Return on Equity – Return on Equity

SIBS : Silverlake Integrated Banking Solutions – Integrated Banking Solutions

Credit institution: Credit institution

Special Assets: Secured Assets

RESEARCH SUMMARY

Research topic on “Main solutions to improve the quality of short-term loans for SMEs at Bank for Investment and Development of Vietnam – Quang Tri Branch” analyzes the current situation of short-term loan quality. for Small and Medium Enterprises of Bank for Investment and Development of Vietnam – Quang Tri Branch in the period of 2009 – 2011, identify the causes and shortcomings affecting the quality of short-term lending for small and medium-sized enterprises. with Small and Medium Enterprises. From there, propose solutions and recommendations to contribute to improving the quality, safety and efficiency of short-term lending activities for small and medium enterprises of the Bank for Investment and Development of Vietnam. – Quang Tri branch. To achieve this goal, the author conducted research on the following issues:

Research on theories to evaluate short-term loan quality for small and medium enterprises.

Based on the data provided by BIDV Quang Tri Bank and information on the economic – political situation in the province in particular and in Vietnam and the world in general, to conduct analysis and evaluation from there. some key solutions to improve the quality of short-term loans for SMEs at Bank for Investment and Development of Vietnam – Quang Tri Branch.

Analysis results:

Credit process: the branch’s business customer credit process is strict. Clearly define the responsibilities and functions of each department in each step. However, there is no specific process for short-term lending to SMEs.
About the package of short-term loans for enterprises: short-term loan products for enterprises are quite diverse, including normal loan products and new products according to market demand.
Up to now, Bank for Investment and Development of Vietnam – Quang Tri Branch has its head office at 24 Hung Vuong – Dong Ha and 3 transaction offices. The number of transaction offices as above is relatively small for a province with many potential areas for exploitation like Quang Tri.
In the period 2009 – 2011, the employment situation of Bank for Investment and Development of Vietnam – Quang Tri Branch was constantly increasing in quantity and quality. The branch has focused on creating conditions for staff to go to school to improve their professional skills, as well as enhance the quality of input recruitment.
The ratio of short-term loans for SMEs to mobilized capital is too high, affecting the branch’s investment diversification, as well as the appropriate capital mobilization for lending.
Profitability of short-term loans to SMEs accounts for a large proportion of profits and increases over the years. The ratio of short-term SME lending to SME’s short-term loan balance tends to increase.
SME’s short-term credit turnover is increasing over the years from 2009 to 2011 showing that short-term lending efficiency has gradually increased, but it is still low compared to SME’s credit turnover, so it is necessary to take measures to further increase the speed of short-term loan capital turnover.
The rate of overdue debt for short-term loans to SMEs is always small and tends to decrease over the years. The bad debt ratio of short-term SME lending activities in the period 2009 – 2011 was always low and less than 0.6%, however, this ratio tends to increase over the years. Group 5 debt, which is likely to lose capital, tends to increase and gradually accounts for a large proportion of the bad debt ratio.
Sales of short-term loans to SMEs in the fourth quarter and first quarter accounted for a large proportion and increased over the years. It shows that the Branch has well grasped the situation of short-term capital needs in the area to promptly meet the needs of SMEs.
The proportion of SMEs with short-term lending relationships compared to SMEs with branch relationships tends to increase. This proves that the SME short-term lending business is operating more and more effectively.
BIDV Quang Tri has flexibly implemented two methods of short-term lending for SMEs: line of credit and loan by item. However, lending by operating limit can mainly affect the creation of passive capital in the business, low interest income. Overdue debt under the method of installment loans is still high.
The situation of short-term loans to SMEs of BIDV Quang Tri in 2009 – 2011 according to collateral was relatively good. Overdue debts are concentrated in loans with collateral, so bad debts will be able to recover capital by liquidating collateral.

On the basis of analysis, the author proposes some key solutions to improve the quality of short-term loans for SMEs at BIDV Quang Tri.

Improve the lending process to shorten the loan period and improve the quality of customer service.
Finalize•Establish and develop Marketing department. credit policy, suitable to the current situation of small and medium enterprises.
Branch needs to expand PGD.
Strengthening measures to prevent risks (especially for Group 5 debt).
Constantly improving •Strengthening internal control. high quality staff.

PART I: ASKING THE PROBLEM

1. Urgency of the topic

Vietnam’s economy is increasingly integrated into the region and the world, creating opportunities and challenges for all economic sectors in general and for the banking and finance industry in particular. Integration is considered an important turning point to clear the deadlock and break down barriers to help Vietnam’s economy make further leaps in the future. However, the challenge will also be not small when the world economy is plunging into the whirlpool of the European public debt crisis and economic recession. Also according to business and financial news site VnEconomy, on February 6, 2012, credit rating agency Moody’s Investors Service announced in a report that Vietnam’s banking system was a group vulnerable to negative impacts. in the Asia-Pacific region in case the European public debt crisis continues to worsen.

To be able to stand and develop in the future, the banking industry in the whole country needs to have a good preparation, improve its operational capacity, improve the professionalism and quality of the products and services being provided. supply to the market. With the characteristics of Vietnamese commercial banks, short-term lending still accounts for a large proportion of the income structure and is also the activity that bears the most potential risks. Therefore, this is a business that needs to be prioritized to correct and improve quality before we go out into the world.

However, in general, the activities of enterprises in our country, in addition to state-owned enterprises, most non-state enterprises are small and medium-sized. SMEs are diverse in types of industries and play an important role in the economy. With the conditions of a constantly developing economy, it always requires the subject to be sensitive to opportunities. Therefore, for SMEs, the demand for capital in general and short-term capital in particular is increasing. In addition to self-mobilized short-term capital, short-term loans from commercial banks are also indispensable for SMEs in a competitive market.

Through the fact that the situation of short-term loans for small and medium-sized enterprises of commercial banks in recent years, we see some encouraging things, but it also has many shortcomings that need to be resolved and improved. effectiveness of this work.

The research topic on “Main solutions to improve the quality of short-term loans for SMEs at Bank for Investment and Development of Vietnam – Quang Tri Branch” will analyze the current situation of short-term loan quality. Term for Small and Medium Enterprises of Bank for Investment and Development of Vietnam – Quang Tri Branch in the past time, identify the causes and shortcomings affecting the quality of short-term lending to customers. Small and medium enterprises. From there, propose solutions and recommendations to contribute to improving the quality, safety and efficiency of short-term lending activities for small and medium enterprises of the Bank for Investment and Development of Vietnam. – Quang Tri branch.

2. Research objective

Objective 1: To clarify the theoretical basis given

Objective 2: Analyze and assess the current situation of short-term lending to SMEs at Bank for Investment and Development of Vietnam – Quang Tri Branch.

Objective 3: On the basis of the analysis, propose a few key solutions to improve the efficiency of short-term lending to SMEs at Bank for Investment and Development of Vietnam – Quang Tri Branch.

3. Research object

The object of the research is short-term lending activities for small and medium-sized enterprises at Bank for Investment and Development of Vietnam – Quang Tri Branch.

4. Research scope

About time: secondary data from Bank for Investment and Development of Vietnam – Quang Tri Branch for the period 2009 – 2011.

About space: at Customer Relations Department, Bank for Investment and Development of Vietnam – Quang Tri Branch.

5. Research Methods

5.1. Qualitative method

Read, synthesize and analyze information from textbooks, books and professional newspapers, legal documents, relevant professional documents at the internship unit or the Internet…

5.2. Quantitative methods

Primary data processing method: after being provided with secondary data by the Bank, conduct data processing using Excel software.

Methods of comparison and data analysis: consider the dynamics of the research problem and compare them between periods. From there, find out what has been achieved, not achieved, experience and draw lessons for the future.

PART II: RESEARCH CONTENTS AND RESULTS

1. CHAPTER 1: SCIENTIFIC BASIS OF RESEARCH ISSUES

1.1. A few general problems about bank credit

1.1.1. Concept

Bank credit is a relationship of transferring the right to use capital from a bank to a customer for a certain period of time with a certain cost. Like other credit relations, bank credit contains three contents:

There is a transfer of the right to use capital from the owner to the user.

Is this transfer temporary or temporary

This transfer is accompanied by costs

1.1.2. Bank credit classification

Based on credit period:

Short-term loans: These are loans with a term of less than one year. The purpose of this type of loan is usually to finance an investment in liquid assets.

Medium-term loan: This is a type of loan with a term of 1 to  5 years. The purpose of this type of loan is to finance an investment in fixed assets.

Long-term loan: This is a type of loan with a term of more than 5 years. The lending purpose of this type of loan is usually to finance investment in investment projects.

1.1.3. Credit processes

The credit process is a summary table describing the specific steps from receiving the customer’s loan demand until the bank makes a decision to lend, disburse and liquidate the credit contract.

In terms of efficiency, a reasonable credit process contributes to improving quality and minimizing credit risks. In terms of governance, the credit process has the following effects:

The credit process is the basis for the division of responsibilities and powers of each relevant department in credit activities.

The credit process serves as the basis for establishing administrative loan documents and procedures.

The credit process shows the relationship between the various parts involved in the credit operation. (Diagram describing the credit process is in APPENDIX 1)

1.1.4. Credit guarantee

Credit guarantee, also known as loan security, is a credit institution that applies measures to prevent risks, create an economic and legal basis to recover debts already lent to customers. Types of credit guarantee:

Secured credit by collateral: means the borrower  mortgages its assets to the lender to ensure the ability to repay the loan. Mortgage matters are governed by civil and land law. According to these two types of mortgages, there are two types: mortgage of real estate and mortgage of land use right value.

Credit security by collateral: is the delivery of assets by the borrower which is movable property under his/her ownership to the lender to secure the performance of debt repayment obligations. 1.2. Lending to corporate customers and short-term lending to businesses

1.2.1. Loan activities for corporate customers

1.2.1.1. The concept

Lending is a form of credit extension, whereby a credit institution assigns a customer a sum of money to use for a certain purpose and term according to an agreement on the principle of repayment of both principal and interest.

The specified term is the loan term

Loan term is the period from when the customer begins to receive the loan until the end of the time to repay the loan principal and interest as agreed in the credit contract between the credit institution and the customer.

1.2.1.2. Borrowing principles

Borrowers must ensure two principles:

Use capital for the right purposes as agreed in the credit contract

Refund the loan principal and interest on time as agreed in the credit contract

1.2.1.3. Loan conditions

According to the regulations on customer loans issued by the State Bank of Vietnam, the requirements for customer loans include:

Having civil legal capacity, civil act capacity  and taking civil responsibility in accordance with law;

Have a legitimate loan purpose;

Having the financial ability to pay the debt within the commitment period.

Having a feasible and effective production, business and service plan;

Implement regulations on loan security in accordance with the Government’s regulations and guidelines of the State Bank of Vietnam. However, when applying, commercial banks can specify and set their own conditions

1.2.1.4. Types of loans for corporate customers

Short-term loans: 

Loan by item (Loan by installment).

Loans according to credit lines (rotating loans).

Medium and long-term loans:

Loan for investment projects.

1.2.2. Methods of short-term loans for businesses

Loan by item (Lending in installments)

Characteristics: One-time lending is a relatively common lending method of the Bank, each time a customer borrows a loan, a loan application must be made.

Credit line loans (revolving loans)

Characteristics: A lending method by which a bank and a customer determine and agree on a credit limit, maintained for a certain period of time. Usually, lending by line only applies to short-term loans.

Credit limit is the maximum loan balance to be maintained for a certain period of time that the bank and the customer have agreed upon in the credit contract.

The Bank shall base itself on the business plan, production and business plan, loan demand of the customer, the maximum loan ratio against the collateral, the bank’s capital capacity to calculate and negotiate. a credit line maintained for a certain period or according to the production and business cycle. Within the remaining credit limit, the customer can withdraw the loan to purchase reserve goods or finance other business expenses. (Applicable subjects, scale, principal and interest are in APPENDIX 2)

1.3. Some problems about small and medium enterprises

1.3.1. Concept

According to Decree 56/2009/ND-CP on supporting the development of small and medium enterprises, SMEs are defined by size and field of operation. Small and medium-sized enterprises are business establishments that have registered their business in accordance with the law and are divided into three levels: micro, small, and medium according to the size of their total capital (total capital is equivalent to the total assets determined). specified in the balance sheet of the enterprise) or the average number of employees per year (total capital is the priority criterion), specifically as follows:

Table 1.1: Definition of SME by size and sector of activity

Scale	Micro business	Small Business		Medium Enterprise
Area	Number of employees	Total capital	Number of employees	Total capital	Number of employees
I. Agriculture and forestry Karma and Water product	ten return down	20 billion dong return down	are from over 10 people to 200 people	are from over 20 billion copper to 100 Billion copper	are from over 200 people up to 300 people
II. Public Karma and build build	ten return down	20 billion dong return down	are from over 10 people to 200 people	are from over 20 billion copper to 100 Billion copper	are from over 200 people up to 300 people
III. Love trade and translate service	ten return down	ten billion dong return down	are from over 10 people to 50 people	are from over 10 billion copper up to 50 Billion copper	are from over 50 people to 100 people

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1.3.2. Characteristics

In addition to the inherent characteristics of enterprises, SMEs also have their own characteristics:

SMEs are small in terms of both capital and labor, so they have the following characteristics:

Due to the small initial capital size, high efficiency, quick capital recovery, short production cycle, and fast capital turnover, that creates an attractiveness in attracting investment in production and business.

Dynamic, flexible, responsive to market changes. Ability to redirect business and business type as well as product structure. This is an advantage of SMEs compared to large enterprises.

Stable jobs for workers than large enterprises, especially in the economic downturn. Organizational management, business lightweight, management decisions implemented quickly. Thereby contributing to saving costs of business management, monitoring administrative procedures and being able to easily transform business forms.

SMEs participate in business in all forms of businesses and industries, so they can serve all needs arising in a flexible economy, filling the gaps of large enterprises.

In addition, there are characteristics that show the disadvantages of  SME:

Limited financial capital, especially self-capital as well as additional capital to carry out the process of accumulation and concentration in order to maintain or expand production and business. While large enterprises have the ability to attract capital in many different ways: raising capital on the stock market by issuing stocks and bonds, borrowing capital from banks, etc., SMEs mainly use capital. owners because there are difficulties in accessing loans and are not eligible to participate in the issue of shares on the stock market.

The physical and technical facilities, the level of technology and technology are often weak and outdated. A common situation in Vietnam’s SMEs is that the machinery and equipment system is on average about 15-20 years old in the electronics industry, 20 years in the mechanical industry… Outdated technology makes the consumption cost Consumption of enterprises increased higher than the standard norm of the world.

It is the small scale of production that has led to the high production costs of SMEs, monotonous product designs, low product quality and a lack of distribution and marketing networks, making it difficult for SMEs to directly access them. to foreign markets.

Lack of transparency in determining personal and legal assets. Many limited liability companies, legal assets and personal assets lack transparency, causing a lot of difficulties for the Bank’s credit officers in the process of appraisal and assessment of real capacity. of the enterprise. The cause of this phenomenon is the low level of knowledge and low education level of business managers.

The team of workers is unqualified. Currently, SMEs lack a team of qualified and capable workers to meet development requirements in the context of economic integration.

The financial reporting system did not comply with the provisions of the current accounting regime. SMEs often sell goods without using economic contracts and do not comply with the sales invoice issuance regime. The system of accounting books, contents and accounting methods of enterprises are incomplete, inaccurate and not transparent. Financial statements are often built to deal with tax authorities or when businesses need a loan from a bank.