Warning sign for Aussie businesses as overdue invoices hit highest level in years
Grim new figures reveal just how badly Australian businesses are hurting, raising fears of a fresh wave of insolvencies
Businesses are taking longer than ever to pay their bills, with one in 10 invoices at least two months overdue – the highest rate in eight-and-a-half years.
Businesses are failing to pay their bills on time at a level not seen for almost a decade. Dion Georgopoulos/SMH
“That’s a strong warning sign because payment delays are often the first indicator of emerging financial stress,” CreditorWatch chief executive Patrick Coghlan said.
CreditorWatch’s latest Business Risk Index found the number of invoices sitting unpaid for at least two months had doubled within a year, from 5 per cent to 10.1 per cent.
Just 48 per cent of invoices were paid by their due date in September, down from 58 per cent a year earlier.
“The September data shows a clear escalation in business cash flow pressure,” Coghlan said.
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“We’re seeing a growing share of invoices drift into serious delinquency, with one in 10 now more than 60 days overdue.”
Food and beverage businesses recorded the highest rate of serious late payments, with 19 per cent of invoices at least two months overdue.
That compares with 10 per cent a year ago and 16 per cent three months earlier.
Even health care and social assistance, which recorded the lowest rate of late payments, saw its figure climb from 3 per cent to 7 per cent over the year.
The strain is also showing up in the number of businesses experiencing tax debt.
Food and beverage businesses recorded the highest rate of serious late payments. Getty
The number of ATO tax debt defaults (when a taxpayer fails to pay a tax liability or lodge a return on time) reached 37,577 in September, up 20.7 per cent compared with a year earlier.
There have been 5289 additional defaults since January, while another 2024 new tax defaults were lodged in September alone.
“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,” Coghlan said.
The number of companies entering insolvency for the first time dropped to 934 in September, down from 1800 in August.
August’s figures accounted for the more than 500 companies linked to the Bathla/Universal Property Group collapse.
But CreditorWatch chief economist Ivan Colhoun said this is no cause for relief.
“It is likely that insolvencies will begin to rise in coming months,” he said, pointing to record-high interest rates, oil prices, and the increase in minimum wage.
He said construction, real estate and other interest-sensitive industries were among those most at risk.
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