Even more bankruptcies in 2008

Although the total amount of liabilities in commerce is substantially higher than credit liabilities in the banking sector totalling HUF 6,500 billion, relatively few companies use the services offered by credit insurance providers. However, default in payment will remain a common phenomenon and the total of payments by credit insurance companies is expected to be higher this year than it was in 2007. According to regular surveys by Coface Hungary, payment morale is continuously deteriorating in Hungary. While the average time required for the settling of an invoice in 2003 was 38 days, companies have to wait 85-100 days for payment in 2008. Most SME-s suffer from the lack of adequate financing and have no reserves to compensate for delays in payment by customers. 70 percent of invoices are settled late and 2.4 percent are not settled at all. According to an analysis by Euler Hermes Magyar Hitelbiztosító Rt , Hungarian companies need to develop in order for credit insurance services to become more frequently used. Most clients are local subsidiaries of multinational companies. The number of liquidation procedures was 20 per cent higher in the first quarter of 2008, than in 2007 and there is no sign of any change in this trend. The total number of liquidations is expected to exceed 11500 by the end of the year, whereas only 400 liquidations are expected in Poland. Food retail and the construction industry are the sectors where the risk of liquidation is highest.