Late payments at highest rate in 8.5 years, as payment defaults climb 26% over past year 

CreditorWatch’s September Business Risk Index results show Australian businesses are taking longer to get paid than at any point in the past year, with one in 10 invoices over the past three months now more than 60 days overdue. Trade payment defaults (where a business registers an invoice default against another business) have climbed 26% over the past 12 months.

This significant deterioration in business payment behaviour highlights growing cash flow pressure across the economy and increases risks for small and medium-sized enterprises already grappling with consistently rising costs and weaker consumer demand.

Just 48% of invoices are now paid by their due date, down from 58% a year ago. Meanwhile, the proportion of invoices outstanding for more than 60 days has doubled from 5.0% to 10.1%.

At the same time, the number of trade payment defaults has risen 26.1% year-on-year, indicating that an increasing number of overdue debts are progressing beyond late payment.

CreditorWatch CEO Patrick Coghlan says, "The September data shows a clear escalation in business cash flow pressure.

"Businesses are not just paying a few days later. We're seeing a growing share of invoices drift into serious delinquency, with one in 10 now more than 60 days overdue.

“That's a strong warning sign because payment delays are often the first indicator of emerging financial stress."

The sharpest deterioration in payment times has occurred in construction, where the proportion of invoices paid more than 60 days late has more than doubled from 6% a year ago to 13% today. Similar increases have been recorded in Transport, Postal and Warehousing (4% to 12%), Manufacturing (4% to 11%), Retail Trade (5% to 11%) and Mining (6% to 12%). Importantly, many of these industries have experienced a notable jump in just the past three months, indicating payment performance has deteriorated rapidly through the September quarter.

Food and Beverage Services remains the weakest-performing sector in this dataset, with almost one in five payments (19%) now more than 60 days overdue, up from 10% a year ago and 16% three months ago. Utilities (Electricity, Gas, Water and Waste Services) have also seen a substantial increase, rising from 7% to 13% over the year. While Health Care and Social Assistance continues to record the lowest level of severe payment delays at 7%, that figure has still more than doubled from 3% a year earlier.

CreditorWatch’s seasonally adjusted trade payment default index stood at 196 in September (February 2020 = 100), only slightly below the record set in recent months. The number of defaults registered over the past three months was 6.8% higher than the number registered in the three months to June.

The strain is also showing up in an increase in the number of businesses falling behind in their obligations to the tax office. The number of ATO tax debt defaults in effect reached 37,577 in September, up 20.7% from a year earlier and 5,289 higher than in January. New defaults continue to outpace removals. The 2,024 new tax defaults lodged in September are a significant increase on recent months.

CreditorWatch CEO Patrick Coghlan says, “Record ATO tax defaults show many businesses are falling behind on what they owe the tax office, not just their suppliers. Tax debt is often one of the first obligations to slip when cash flow tightens, and if it isn’t addressed it can escalate quickly. With interest rates at their highest level in 15 years and fuel costs remaining elevated, creditors should be keeping a close eye on their exposures.”

Company insolvencies remain volatile. Companies entering insolvency for the first time dropped to 934 in September, a sharp fall from the previous month’s record of more than 1,800, though this figure included more than 500 companies from the failed Bathla/Universal Property Group.

Our outlook:

CreditorWatch Chief Economist Ivan Colhoun says, “The pressures on Australian businesses continue to build. Official interest rates are now at the highest level for 15 years (though admittedly only 0.25% above the peaks recorded in 2025). High oil and diesel prices add to those pressures, building on the considerable increase in costs that businesses have already experienced over the past five years. The high minimum wage and award wage rises granted by the Fair Work Commission this year haven’t helped either.

“At the same time, the AI revolution continues to develop strongly. This is boosting demand for semi-conductors, memory and a number of commodities including copper, and the associated data centre build out is very favourable to parts of construction boosting construction wages and materials prices further.

“The overall result is an increasing divergence in economic performance by industry sector. The industries and businesses that win from this complex economic backdrop include, Technology; parts of Mining; parts of Construction; Defence, Renewables, and businesses providing services to these sectors.

“Conditions are likely to prove increasingly challenging for businesses (and consumers) with large debts; interest-sensitive sectors of the economy, including residential construction and real estate; businesses reliant on discretionary spending; and low-income earners. It is likely that insolvencies will begin to rise in coming months as a result.”

Michael Pollack

Head of Media & Communications

Michael joined CreditorWatch in July 2021. He has more than 20 years’ experience in business journalism, marketing and communications strategy, and digital content development. He is passionate about communicating to the business community how CreditorWatch’s products can help them identify risk earlier, and make smarter decisions. He has previously written for Newscorp, Nine publishing, ACP Magazines and the World Economic Forum. He holds Bachelor of Communications and Master of Journalism degrees from the University of Technology, Sydney.