Business early warning system
About this good practice
The early warning system is designed to assist small and medium-sized enterprises (SMEs) facing financial challenges in avoiding insolvency, sustaining viability, and preserving jobs. Companies deemed at risk are identified through the analysis of profit tax, value-added tax (VAT) declarations, financial statements, and data from third parties submitted to the State Tax Inspection (VMI).
The system assesses company risk by comparing economic indicators with those of firms already undergoing insolvency proceedings. Statistical evaluations occur quarterly. Identified at-risk companies receive electronic notifications from the tax administrator, offering an opportunity for self-review and access to information from state authorities on available assistance measures to prevent insolvency.
SMEs can seek help from the Innovation Agency. Registered businesses receive:
- Personalized information on potential business development paths.
- Details on free assistance tools to avert insolvency.
- Guidance on initiating restructuring and bankruptcy procedures based on their business status.
Resources needed
The operation of the system requires technological solutions that ensure smooth data availability and sharing between different institutions. The operation of the system also requires human intervention, directly advising companies on various issues.
Evidence of success
According to the available data, during the first year of the system's operation, more than 700 companies at risk were identified, of which more than 40 registered for assistance.
Potential for learning or transfer
The early warning system for SMEs presents a comprehensive and proactive approach to addressing financial challenges. Its data-driven, comparative analysis and collaborative elements make it a potentially valuable practice for other regions in Europe seeking effective measures to support and sustain their SME sectors. This good practice also indicated the importance of cooperation between different public sector institutions involved in interactions with the private sector and how the centralization of resources can promote proactivity in the area of SME support.
Further information
Good practice owner
You can contact the good practice owner below for more detailed information.
Public Institution Lithuanian Innovation Centre