A 15% increase over 2005  * Milgrom: “Some of the companies are not protected against credit risks and are vulnerable to suits by investors.”

The supplier credit that publicly traded companies in Israel grant to their clients now exceeds NIS 100 billion. This according to figures compiled by ICIC, the Israeli Credit Insurance Company, and presented at the fifth annual risk management conference, held in Tel Aviv.

Sources at ICIC note this is 15% more than the credit granted by Israeli publicly traded companies in 2005. The sources explained that this increase is due to sales growth and a certain extension of credit terms.
ICIC CEO David Milgrom warned conference participants that in addition to the financial damage that could be caused to companies if their customers do not meet their payments, publicly traded companies are exposed to harm to their share value.

Milgrom presented the convention with the results of a new study conducted by Leeds University for insurance giant Euler Hermes. The study, which examined 2,000 companies from all over Europe, discovered that the average bad debts of companies that are not covered by credit insurance is twice that of companies that do have credit insurance. The bad debts suffered by companies not covered by credit insurance were 0.74% of sales, compared to just 0.38% for insured companies. Milgrom noted that this difference stems from the sources of information at the disposal of credit insurance companies. Thanks to this information, companies can both reduce the extent of their bad debts and cover the damage from the bad debts that cannot be prevented.