76% of the companies in Israel are currently suffering from cash flow problems due to their customers not paying on time. That is what David Milgrom, CEO of ICIC, the Israel Credit Insurance Company, said yesterday at the annual Directors Conference of the Israel Management Center. Milgrom indicated that the scope of lost debts of Israeli companies is among the highest in the western world, and is larger than the world average.

According to ICIC data, the scope of lost debts of the companies in Israel is expected to reach 0.8% of turnover in 2008, compared with 0.9% lost debts in Japan, Germany, and England, 0.6% in Holland, 0.5% in the US, and 0.3% in Canada. Based on research by Euler Hermes, the largest credit insurer in the world, and one of the owners of ICIC, the worldwide average scope of lost debts is expected to stand at 0.65% in 2008.

In reference to bankruptcies in Israel, Milgrom said that the most recent examples of the collapse of the ClubMarket chain, HaMichraz Shel Hamedina, Heftzibah, and Rav Bariach are well-known in Israel, but there are hundreds of other companies in Israel that are collapsing, causing significant damage to their suppliers.

According to him, since January 2008, there has been a significant increase in the number of company bankruptcies, also overseas, and this is expected to harm Israeli exporters. Milgrom added that suppliers’ credit is more risky than banking credit, and advisable for company directors to realize the depth of these risks and act to contain them. ICIC insures credit in 115 countries, amounting to more than 12 billion dollars a year, in foreign trade transactions and in the local market.

Credit insurance ensures that the supplier will receive his money even if the customer does not pay as a result of insolvency, financial difficulties, or political events that prevent payment. Ownership of ICIC is currently held in equal parts by Harel Insurance Investments and Financial Services, Agricultural Insurance, and Euler Hermes.