Businesses improve their ability to pay off credit in '06

The amount of time needed by Israeli companies to pay off their credit still far exceeds the European average two months-plus time.

Credit reliability for local businesses finished 2006 on a high-note compared to initial levels at the beginning of last year, a Business Data Israel study revealed. Yet, despite an average three-day improvement in businesses' ability to pay off their credit between January and December of last year, overall figures from 2006 indicate lower credit reliability than in 2005. In 2006, there was an 11-day average delay in making payments over the agreed upon credit period of 88 days. Companies in 2005, however, managed to pay their bills on average two days earlier. Last year's first and third quarters created the most difficulty for businesses, as a result of increased risk factors and the summer war with Lebanon, said BDI co-CEO Eyal Yanai. A fourth quarter rebound, however, helped to improve credit reliability by the end of the year. "Generally companies enjoyed a higher income, and this has an immediate effect both on their ability and willingness to pay on time," Yanai told The Jerusalem Post. The amount of time needed by Israeli companies to pay off their credit still far exceeds the average two months-plus time European companies take to resolve their debt, so maintaining an overall downward trend is important for Israel to achieve, Yanai noted. Those businesses in the worst shape hailed from the transportation, shipping and media sectors with average payment delays topping 30 days in some areas. Pharmaceutical companies and wholesale exporters in the chemical, textile and ceramic industries had the best track records paying an average of four days late. Despite the end-of-year improvements noted by the study, indications were that businesses in the North were still struggling to recover from the war. Liora Birnhack-Marcus, chairman of the Manufacturers Association of Israel's northern branch, requested this week that the Israel Tax Authority extend special tax benefits to northern factories into 2007. The benefits had initially been granted last year after the war to help companies in their recovery.