Coface Bulgaria: Firms demand upfront payments

Firms are growing less inclined to tolerate long postponements of due payments and often demand part of the money in advance, Milena Videnova, director of the Bulgarian branch of the international company for credit risk management Coface, told journalists on Thursday, cited by expert.bg.

Videnova singled out construction, more specifically the supply of construction materials, along with the chemical industry as the most troubled sectors in terms of payments in default. Liabilities in the food industry are cleared at the most rapid pace. The crisis has made businesses less trusting.

Intercompany indebtedness in Bulgaria continues to grow. There are no available official figures at the moment, but various estimates put this indicator in the range of BGN 100 bn to BGN 200 bn. The number of bankruptcy filings and company failures is also on the rise. While, as of last June, there were 152 bankruptcy proceedings, at the end of the same month this year the number was 158, Videnova said. For the first half of 2012 firms declared insolvent were 117, with 98 for the same period last year.

Despite these disturbing figures insurances against credit risk remain an exotic product on the Bulgarian market, with only 3% of domestic firms opting for one. This type of insurance policy is preferred mostly by large stable businesses, according to Videnova, who attributed the prevailing skepticism to the mentality of Bulgarians, who are still suspicious of the need for insurance.

Coface Bulgaria cut its economic growth forecast for 2012 to 0,5%, from the previous 1%. The situation in the Eurozone remains uncertain and further shocks are still a real possibility, including for Bulgaria's economy.

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