New monthly tracking from CreditorWatch shows one in four businesses with ATO tax debts over $100,000 went insolvent within 12 months
What’s happening: CreditorWatch has launched the Business Risk Monitor, a monthly report tracking Australian business health. August data shows B2B payment defaults surged 19% in July and remained elevated, whilst small business failure rates sit 12% above the 10-year average.
Why this matters: The new tracking system provides early warning signs of business distress before official statistics, with one in four businesses holding ATO tax debts over $100,000 going insolvent within 12 months. This forward visibility helps businesses and policymakers spot turning points earlier.
Australian businesses remain under significant financial pressure despite recent economic improvements, according to new monthly tracking data that provides unprecedented visibility into business health across the country.
Leading credit reporting agency CreditorWatch has launched the Business Risk Monitor, a monthly report that delivers what the company describes as the clearest, most accurate view yet of the health of Australian businesses.
The Business Risk Monitor represents the next generation of CreditorWatch’s successful Business Risk Index, retaining key metrics such as the Payment Defaults Index and Geo-Risk Index whilst adding new data insights including a Credit Rating Barometer, Small Business Failure Rate tracker and Economic Conditions Tracker.
Defaults surge higher
The August Business Risk Monitor reveals concerning trends. B2B payment defaults surged 19% in July and held at that higher level in August, signalling ongoing financial stress and likely future insolvencies.
Insolvencies eased in August, but CreditorWatch warns this reflects temporary factors such as ATO enforcement actions, not an improvement in the credit cycle.
Patrick Coghlan, CEO of CreditorWatch, says the new system provides critical early warning capabilities.
“The Business Risk Monitor is a game-changer for the Australian market. For the first time, businesses, policymakers and the media have access to a single monthly report that combines unique data on the health of businesses with expert economic analysis. It gives unparalleled visibility into the stress levels of businesses across industries and regions, helping decision-makers spot turning points before they show up in the official statistics. We’re incredibly proud to launch a product that sets a new standard for transparency and insight into the Australian economy,” Coghlan says.
Small business failure rates are 12% above the 10-year average, with the weakest-rated businesses (E grade) experiencing closure rates of more than 40% in the past year.
ATO tax debt defaults remain a critical warning sign. One in four businesses with tax debts over $100,000 went insolvent within 12 months, according to the data.
Regional differences stark
Regional divergence is stark across Australia. Inner-metro Adelaide, regional Victoria and North Queensland are performing best, while Western Sydney and South-East Queensland top the list of highest-risk regions.
Economic conditions are stabilising but risks persist. Interest rate cuts and low unemployment are helping, but global trade tensions and potential rises in unemployment pose ongoing threats.
Ivan Colhoun, Chief Economist at CreditorWatch, explains the comprehensive approach.
“The Business Risk Monitor builds on the insights introduced in the Business Risk Index. It focuses on the interaction between the economic variables impacting the credit cycle, CreditorWatch’s unique payments default and ratings trend data, ATO tax default trends and the monthly insolvency statistics released by ASIC to produce a comprehensive overview of the factors affecting credit in Australian businesses,” Colhoun says.
The Business Risk Monitor combines CreditorWatch’s RiskScore rating system, which categorises businesses according to main credit rating bands used by lenders from Premium to Sub-Prime, with time-series data showing the rate of business failure among Australian businesses.
The Small Business Failure Rate specifically tracks mid-tier small businesses, providing what CreditorWatch describes as a key forward indicator as SMEs typically experience financial difficulty well ahead of large businesses.
CreditorWatch is a leading data and technology company offering credit risk management solutions. The company covers all commercial entities, including sole traders, trusts and partnerships, and operates with data hosted in Australian data centres.
Find out more at creditorwatch.com.au.
Keep up to date with our stories on LinkedIn, Twitter, Facebook and Instagram.
