Australian businesses are taking longer to get paid now than at any point in the last year, according to new research from CreditorWatch, with payment delays in retail doubling over the year.
The commercial credit bureau’s September Business Risk Index showed that one in 10 invoices across all industries over the past three months are now more than 60 days overdue.
Trade payment defaults – where a business registers an invoice default against another business – have climbed 26 per cent over the past 12 months.
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 per cent a year ago to 13 per cent today.
Similar increases have been recorded in transport, postal and warehousing (4 per cent to 12 per cent), manufacturing (4 per cent to 11 per cent), retail trade (5 per cent to 11 per cent) and mining (6 per cent to 12 per cent).
Notably, many of these industries have experienced a jump in just the past three months, indicating payment performance has deteriorated rapidly through the September quarter.
This comes as some fashion brands and retailers hit the wall this year, including Cue and Veronika Maine, which fell into voluntary administration, while other businesses navigate payment hurdles through 2026, such as David Jones. TVSN is also facing challenges amid cost pressures and payment delays, with that company aiming to sell off $30 million worth of stock to boost accounts.
According to CreditorWatch, 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.
The latest research from the firm also showed that just 48 per cent of invoices are now paid by their due date, down from 58 per cent a year ago. Meanwhile, the proportion of invoices outstanding for more than 60 days has doubled from 5.0 per cent to 10.1 per cent.
At the same time, the number of trade payment defaults has risen 26.1 per cent year-on-year, indicating that an increasing number of overdue debts are progressing beyond late payment.
CreditorWatch CEO Patrick Coghlan said the September data shows a clear escalation in business cash flow pressure.
"Businesses are not just paying a few days later,” Coghlan said. 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."
Food and beverage services remain the weakest-performing sector in this dataset, with almost one in five payments (19 per cent) now more than 60 days overdue, up from 10 per cent a year ago and 16 per cent three months ago.
Utilities (electricity, gas, water and waste Services) have also seen a substantial increase, rising from 7 per cent to 13 per cent over the year. While health care and social assistance continues to record the lowest level of severe payment delays at 7 per cent, that figure has still more than doubled from 3 per cent 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 per cent 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 per cent 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.
"Record ATO tax defaults show many businesses are falling behind on what they owe the tax office, not just their suppliers,” Coghlan said. “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."
Meanwhile, 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. However, that last figure included more than 500 companies from one major company collapse in the property space.
Colhoun said the pressures on Australian businesses continue to build. This includes rising oil and diesel prices, and growing wages.
"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 the coming months as a result."