The number of days of credit between businesses (agreed credit plus the arrears period) in Israel is among the highest in the world, according to an annual summary of payment ethics in Israel published today by Business Data Israel (BDI).
The average number of agreed-upon credit days in Israel was 88, compared with an aggregate average of 60 in developed countries.
At the same time, payment ethics improved in Israel in 2005, compared with 2004. The average number of actual credit days fell from 104 in 2004 to 97 in 2005, and the average number of days in arrears dropped from 17 in 2004 to nine in 2005. The number of agreed credit days in 2004 was also 88. However, the situation worsened in the second half of 2005, compared with the first half.
BDI general manager Tehila Tamir-Yanay said that the real test for the economy is reducing the number of agreed credit days, while further reducing the number of days in arrears.
She added, “Only when the number of agreed credit days falls below the global average of 60, while the number of days in arrears remains below 10, can we declare that the economy is stable.”
In December 2005, the number of actual credit days rose from 98 to 99, compared with 95 in December 2004. The number of agreed credit days rose from 88 in November 2005 to 89 in December 2005, the same number as in December 2004. The number of days in arrears in December was 10, the same as in November, compared with six in December 2004.
Tamir-Yanay noted that after a long period of improvement, the state of payment ethics in Israel in 2005 showed increasing pressure by customers to increase the number of credit days and increased use of low-cost credit from suppliers.
Published by Globes [online] - www.globes.co.il - on January 10, 2006