The electrical appliances and electronics sector suffered the most bankruptcies in 2007. Year-end figures compiled by the company for 2007 reveal that in the past month ICIC (the Israeli Credit Insurance Company) paid some NIS 5 million to policyholders from this sector. The figures show that the electrical appliances sector typically grants longer than average credit terms - about 180 days, compared to the 120 days that is prevalent in all other sectors.
ICIC economists found two phenomena in the electrical appliances and electronics sector that combine to harm the financial strength of businesses in this sector: stiff competition between the players and price cutting. Price cutting makes inventory management more complicated and affects the companies’ financial strength. Credit insurance guarantees that suppliers receive their money even if a client does not pay due to financial difficulties or insolvency. Credit insurance for exporters guarantees they will receive their money even if a political event prevents their clients from transferring payments to the exporter.