Home topics news Image Credit: Tim Mossholder News News SME activity hits 7-year low amid payment defaults Yajush Gupta September 13, 2023 The August CreditorWatch Business Risk Index (BRI) unveiled a challenging business landscape for SMEs in Australia. The most concerning development was the significant decline in the average value of Business-to-Business (B2B) invoices, which nosedived by 36% year-on-year, hitting its lowest point since January 2017. These findings highlight a challenging landscape for Australian businesses. They are currently facing a dual challenge of decreasing orders and mounting cost pressures, all amid a backdrop of shrinking consumer demand. This combination is cascading through the supply chain, causing a dip in order values and impacting overall revenue. Furthermore, key indicators such as a 28% year-on-year increase in external administrations, the highest since October 2015, and a 30% year-on-year rise in trade payment defaults, are signaling the hurdles that businesses are navigating. While credit enquiries surged by 65% year-on-year, they have recently trended downwards, reflecting a decline in overall business activity. Court actions are on the rise, though still below pre-COVID levels. Furthermore, the national business failure rate is predicted to escalate from the current 4.54% to 5.76% over the next year, reflecting the tough economic climate. Notably, businesses in the food and beverage sector face the highest risk of payment defaults at 7%, followed by the transport and warehousing industry at 4.5%. The construction sector has experienced a consistent upward trend in external administrations since May 2021, surpassing pre-COVID levels. Despite these