Australian business invoice delays hit highest since 2018

CreditorWatch says one in 10 Australian business invoices is now more than 60 days overdue, the highest level since April 2018.

Its September Business Risk Index also showed trade payment defaults rose 26.1% from a year earlier, while fewer than half of invoices were paid on time. The share paid by the due date fell to 48% from 58% a year earlier.

The figures point to broader pressure on company cash flow as higher borrowing costs and weaker demand weigh on trading conditions. The proportion of invoices outstanding for more than 60 days doubled over the past year, rising from 5.0% to 10.1%.

Trade payment defaults, which occur when one business registers an invoice default against another, also rose 5.6% from August. On a seasonally adjusted basis, CreditorWatch's trade payment default index stood at 196 in September, using February 2020 as a base of 100, and remained close to recent record levels.

Patrick Coghlan, Chief Executive Officer of CreditorWatch, said the shift in payment patterns pointed to worsening strain.

"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," Coghlan said.

Sector pressure

Construction recorded one of the sharpest deteriorations in payment times, with the proportion of invoices paid more than 60 days late rising to 13% from 6% a year earlier.

Other industries also posted marked increases. Transport, Postal and Warehousing rose to 12% from 4%, Manufacturing to 11% from 4%, Retail Trade to 11% from 5%, and Mining to 12% from 6%.

Manufacturing recorded the steepest annual rise among the sectors highlighted in the report, with its 60-day arrears rate up 81% year on year. Many industries also saw a notable jump over the past three months, pointing to rapid deterioration through the September quarter.

Food and Beverage Services remained the weakest-performing sector in the dataset. Almost one in five payments in the industry, or 19%, were more than 60 days overdue, up from 10% a year earlier and 16% three months earlier.

Utilities also worsened, with the share of invoices more than 60 days overdue rising to 13% from 7% over the year. Health Care and Social Assistance recorded the lowest level of severe payment delays at 7%, though that was still more than double the 3% recorded a year earlier.

Tax defaults

Pressure is also evident in tax debts. 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.

CreditorWatch said 2,024 new tax defaults were lodged in September, with new defaults continuing to outpace removals. The increase suggests more businesses are falling behind not only with suppliers but also with the tax office.

"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," Coghlan said.

Insolvency trend

Company insolvencies remained volatile. Businesses entering insolvency for the first time fell to 934 in September from more than 1,800 in August, although the earlier figure included more than 500 companies linked to the failed Bathla/Universal Property Group.

Ivan Colhoun, Chief Economist at CreditorWatch, said several pressures were converging across the economy, including high interest rates, elevated oil and diesel prices, and wage increases.

"The pressures on Australian businesses continue to build. Official interest rates are now at their highest level in 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 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 semiconductors, memory and a number of commodities including copper, while the associated data centre buildout is favourable to parts of construction, further lifting construction wages and materials prices.

The overall result is an increasing divergence in economic performance by industry sector. The industries and businesses that stand to benefit from this complex backdrop include technology, parts of mining and construction, defence, renewables, and businesses providing services to these sectors.

Conditions are likely to become increasingly challenging for businesses and consumers with large debts, interest-sensitive sectors including residential construction and real estate, businesses reliant on discretionary spending, and low-income earners. As a result, insolvencies are likely to rise in coming months," Colhoun said.