SYDNEY, Apr 16 (NNN-AAP) – Australian businesses across a number of key sectors have been suffering from elevated payment defaults, driven by ongoing cost hikes.
Australia’s commercial credit agency, CreditorWatch, released its March results for the Business Risk Index yesterday, which revealed that, invoice payment defaults in March were 42 percent higher than in March, 2024.
Meanwhile, insolvencies of businesses bounced back, after dropping at the end of 2024, rising 17 percent year-on-year in March, well above pre-COVID rates.
The impact of cost-of-living and cost-of-doing business increased, and accumulated taxes owed to the Australian Taxation Office appeared to be the dominant drivers of elevated insolvencies, at the current time.
CreditorWatch data showed that, six of the top seven ranked industries for business closures in the 12 months to March, 2025, are dependent on the discretionary spending choices of Australian households.
These industries included food and beverage and services/hospitality, administrative and support services, arts and recreation services, retail trade, construction and accommodation, with their closure rates all above the industry average of 5.3 percent.
Among them, the food and beverage and services/hospitality industry registered the highest closure rate of 9.4 percent, also the record high for the sector, due to increased cost pressure and low demand.
Ivan Colhoun, CreditorWatch chief economist, said that, U.S. tariff changes are already having significant effects on financial markets, with significant volatility in share prices and the Australian dollar.
“All of the above are immediately damaging to consumer and business confidence, and to the extent, these uncertainties cause either consumers or businesses to delay purchases, hiring or investment decisions, the impact is a slowdown in economic activity, which will pressure weaker businesses.”
Cost increases are likely to keep payment defaults and insolvencies elevated in the months ahead, said Colhoun, predicting that, the Australian central bank is more likely to reduce interest rates at its mid-May board meeting, which may be a helpful aspect.– NNN-AAP
