Holidays pressure small businesses

Research company Dun & Bradstreet Israel said Sunday that 13.7% of companies paid suppliers late in September marking a continuation of the downward trend seen in previous months.

By AVI KRAWITZ
October 9, 2006 08:56
1 minute read.
food biz 88 298

food biz 88 298. (photo credit: Ariel Jerozolimski)

 
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Small businesses, particularly in the tourism industry, are finding it increasingly difficult to pay suppliers on time given increased needs over the holiday period and poor cash flows resulting from the war in Lebanon and limitations on their available credit. Research company Dun & Bradstreet Israel said Sunday that 13.7 percent of companies paid suppliers late in September marking a continuation of the downward trend seen in previous months. In August, 13.33% of companies failed to make their payments on time compared to 12.41% in July and 11.5% in pre-war June. D&B economists singled out the hotel and food industries as being significant contributors to the deterioration. "The worsening of payment reliability in the tourism industry resulted from the freezing of operations of small- and medium-sized businesses in the sector for approximately a month during the war," D&B said. "This closure caused [these businesses] cash hardships and a delay in paying suppliers." D&B added that the holidays also decisively influenced companies' payment reliability for the worse due to the increase in demand for food products causing businesses in the food sector to increase their operations above regular levels, which brought about a deviation from the regular cash flow and a delay in their payments, D&B said. While D&B noted that the holiday period was traditionally associated with the negative payment trend businesses this year also were still contending with the limitations of their overdraft facilities introduced by the Bank of Israel in July as well as the war. "This amendment interrupted the stable trend in payments and increased the number of businesses that were delaying their settlements," D&B said. Meanwhile, a survey carried out by the Israel Small and Medium Enterprises Authority, via research company Teleseker, showed that approximately one-third of small businesses had applied for bank loans in recent months. Around half of those, it said, had difficulty in receiving the loan. The survey noted that the banking system was not able to satisfy all loan requests and the data showed it was helping those small businesses that were seeking assistance to expand their businesses rather than those needing the financing to provide their basic services.

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