B2B payment defaults jumped to their highest level in nearly a year. Transport, food & beverage, and admin support sectors are most at risk.
What’s happening: Australian businesses are facing unrelenting financial pressures, with insolvencies showing no sign of easing and payment defaults surging to their highest level in nearly a year, according to the latest CreditorWatch Business Risk Monitor.
Why this matters: Business-to-business payment defaults are signalling ongoing financial stress and are likely a warning that insolvencies are likely to remain high in the months ahead. The food and beverage, administrative support and transport sectors are now most at risk, with business failure rates nationally running 15.1 per cent above the 10-year average.
The Australian business landscape is tightening. Despite recent interest rate cuts and tentative signs of economic improvement, the September 2025 CreditorWatch Business Risk Monitor reveals that most sectors and regions remain trapped in a cycle of financial distress, with no clear pathway to recovery in sight.
The latest data shows a spike in transport sector failures as trucking firms are hit hard by rising fuel costs, high interest rates and fierce competition from low-cost, foreign-backed rivals. For operators who have spent decades building their businesses, the current environment feels uniquely hostile.
Patrick Coghlan, Chief Executive of CreditorWatch, describes the moment as a critical juncture. “Road transport operators are the backbone of Australia’s economy, yet right now many are doing it tougher than ever. This is a time for the broader business community, lenders and policymakers to recognise just how critical the transport sector is and to ensure these businesses have the support and flexibility they need to stay on the road.”
Insolvencies refuse to ease
Despite a slight dip in recent months, insolvency rates are still running at near-record highs, with 1,101 businesses entering insolvency nationally in September alone. The uptick marks a reversal from August, when numbers dipped temporarily, though CreditorWatch warns this reprieve may have been driven by administrative factors rather than genuine economic improvement.
The construction sector has stabilised and continues to lead in overall numbers, but the pullback is likely due to fewer corporate restructures rather than stronger fundamentals. What’s changed is the composition of failure. Transport now stands out as a sector in acute distress.
The supply chain is fragmenting under stress. Business-to-business invoice defaults jumped 4.8 per cent from August to September, reaching their highest point since December 2024. When businesses cannot pay each other on time, the cascading effect spreads risk quickly through the economy.
Truckies buckle under pressure
Road transport operators face a collision of costs that show no sign of abating. Rising fuel prices, coupled with elevated interest rates on finance for vehicles and equipment, have compressed margins beyond sustainable levels. Many operators report that fuel costs alone have consumed profit margins that were already thin before the current cycle began.
The problem is structural, not cyclical. Businesses in the transport and logistics sector reported the lowest confidence, with only 43 per cent rating their performance positively. This stands in sharp contrast to finance and insurance firms, where 74 per cent report positive performance ratings.
Small transport operators face particular vulnerability. Business failure rates nationally are now 15.1 per cent above the 10-year average, with the food and beverage, administrative support and transport sectors most at risk. For independent trucking businesses operating at the margins, this environment can be the difference between survival and closure.
Geographic divide widens
Sydney encapsulates the divergence reshaping Australian business risk. Northern Sydney has emerged as a national bright spot, with several regions entering Australia’s top 10 best-performing areas thanks to strong incomes, low insolvency rates, and a high concentration of resilient, long-established businesses. Postcodes such as Ku-ring-gai, Pittwater and Warringah enjoy steady economic health.
Yet travel west, and the picture reverses sharply. In stark contrast, Western Sydney dominates the list of highest-risk regions, with below-average household incomes and a heavy concentration of vulnerable small businesses. This geographic split reflects deeper inequalities in economic resilience across the nation.
The pattern extends beyond Sydney. Apart from North-East Sydney, the 10 best performing regions in Australia are dominated by inner-city Adelaide, rural Victoria and North Queensland. Regions with established professional workforces and stable large employers tend to weather economic volatility. Regions dependent on small business and transport services face greater downside risk.
Headwinds persist
The outlook remains guarded. Ivan Colhoun, Chief Economist at CreditorWatch, cautions against premature optimism. “Businesses and consumers continue to be impacted by many large forces occurring simultaneously, with significant uncertainty related to US trade and tariff policy, geopolitics and the rise of AI. At the same time, higher costs – both of living and of doing business – present significant budgetary challenges, while it’s too early for the most recent interest rate reductions to be having much effect.”
The recent RBA rate cuts, whilst welcome, have not yet moved through to businesses or consumers. Many firms took on debt during higher-rate periods; lower rates provide relief, but not rescue. For trucking operators carrying long-term finance on vehicle fleets, the lag between rate cuts and reduced repayment burdens can stretch months.
Meanwhile, the external landscape carries fresh uncertainties. Trade tensions, geopolitical instability and the disruption posed by artificial intelligence all loom as potential pressure points on the horizon. For business leaders trying to plan forward, clarity remains elusive.
You can view the full release below and this month’s report here.
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