Terayon Communication Systems (Nasdaq:TERN) and ECI Telecom (Nasdaq:ECIL) who began their business connections back in 1999, are in Tel Aviv District Court today, as Terayon sues ECI for NIS 3.9 million in back invoices.

Terayon claims to have provided ECI with systems and components, and never to have been paid for the merchandise.

According to the plaintiff, ECI, traded on the Nasdaq according at $460 million market cap, marketed Terayon's merchandise to its overseas clients. The lawsuit refers to a $1 million (NIS 4.4 million) order Terayon received in November of 2001 from an ECI subsidiary.

Terayon claims to having filled the order on time, and to have presented ECI with four different invoices totaling the amount owed. ECI, says Terayon, paid for only one NIS 622,000 ($149,000) invoice, but never for the other three.

Terayon claims that "Despite our repeated requests to ECI to pay its debt, ECI never bothered with an answer."

Nor has ECI responded to the suit. Analysts are estimating ECI is currently attempting to delay all payments to suppliers and to extend the due dates on its debts. ECI is also being aggressive towards its customers, who it has been pressing to make payment, or as ECI CEO, Doron Inbar, puts it "We put a lot of pressure on our clients to pay, in order to diminish our accounts payable column."

Deferring payment to suppliers and pressuring customers into paying up, along with reducing operating costs and other measures ECI has taken, helped ECI report a positive cash flow in the previous quarter, after seven consecutive quarters of being in the red.