New Equifax data on the growing divide between big and small in Australian retail right now.
What’s happening: New data from Equifax’s Business Market Pulse for May 2026 reveals a sharp deterioration in payment performance across the Australian retail sector. On-time payments fell from approximately 90% to 61% of overall debt in April, the lowest level since December 2024.
Why this matters: For small retailers and businesses supplying to the retail sector, the Equifax data signals a significant and rapid tightening of cash flow conditions. The deterioration in payment performance happened fast, within a single month, suggesting something specific is weighing on the sector.
Something shifted in Australian retail between March and April 2026, and the Equifax data captures it with unusual clarity.
In March, approximately 90% of retail debts were being paid within 30 days. By April that figure had fallen to 61%, a drop of nearly 30 percentage points in a single month. The last time on-time payments in the retail sector were this low was December 2024. At the same time, severe delinquencies, debts overdue by more than 91 days, spiked from 4.2% to 15% of overall debt. The last time that figure was in the 15% range was May 2024.
Brad Walters, General Manager of Commercial at Equifax, said the shift in payment performance is the most telling signal in the May data. “The most telling signal is the shift in payment performance. The proportion of retail debts being paid within 30 days dropped to 61% in April, 90% in March, a low we haven’t seen since late 2024. Simultaneously, we are seeing a spike in severe payment delinquencies, with debts overdue by more than 91 days now sitting at 15%, compared to 4.2% in March.”
The payment collapse
The speed of the deterioration is what makes this data significant. A gradual decline in payment performance across multiple quarters would suggest structural pressure building slowly. A near 30-percentage-point drop in on-time payments in a single month suggests something more acute.
The late payment data, debts in the 31 to 60 day range, also spiked to approximately 21% of overall debt in April. The last time late payments were at that level was December 2024. Taken together, the three payment categories, on-time, late, and severely delinquent, paint a picture of a sector where cash flow has tightened significantly and rapidly, with the pressure showing up across the full spectrum of payment behaviour rather than in a single category.
For businesses supplying goods or services to retail operators, the practical implication is direct. When retail cash flow tightens this sharply, payment terms tend to stretch, disputes over invoices increase, and the risk of non-payment rises. Suppliers to the retail sector should be reviewing their debtor exposure and payment terms in light of what the April data shows.
The big versus small divide
The credit demand data tells a separate but equally important story about who is borrowing and who is pulling back.
At the national level, overall retail business credit demand fell 1.7% year on year in May 2026. Business loans declined 0.3% year on year. But those headline figures mask a significant divergence between large and small retailers that Walters described as a divide in how retailers are adjusting their borrowing strategies.
In South Australia, large retailers expanded business loans by 17% year on year. SME business loan demand in the same state dropped by 29.3% year on year. In Western Australia, large business loan demand fell 9.38% year on year while SME business loan demand fell 15.9%. In Victoria, both large and SME business loan demand declined, at 5.8% and 7.4% respectively.
The asset finance picture shows the same divergence even more clearly. Asset finance is historically an indicator of future-proofing and equipment investment, reflecting confidence in the business’s outlook. National retail asset finance demand grew 3.3% year on year, but Walters said that positive momentum is being driven almost entirely by large-scale retailers. Large retailers in Western Australia grew asset finance demand by 22.7% year on year. Victoria was up 15.5% and New South Wales up 12.7%.
Small and medium retailers are moving in the opposite direction. SME asset finance demand contracted by 12.7% year on year in Queensland and 7.2% in Western Australia. “It appears that smaller retailers are prioritising cash preservation over long-term capital investments,” Walters said.
Tax defaults as a warning sign
New ATO tax defaults in retail rose 25.6% year on year in May 2026. Removals of ATO tax defaults, which can indicate resolution or payment of outstanding obligations, rose 26.7% year on year over the same period.
Walters said the spike in new defaults aligns with the broader pattern of tightening payment cycles visible across the sector. “The +25.6% YoY increase observed in new retail ATO tax defaults aligns with tightening payment cycles, and can indicate that some retailers are managing their day-to-day liquidity constraints by delaying their tax obligations.”
For small retailers, deferring tax obligations is a recognisable and short-term response to cash flow pressure. It buys time but creates a compounding liability. The simultaneous rise in default removals suggests some retailers are resolving prior obligations, but the net increase in new defaults points to fresh pressure entering the system.
What the data says overall
Company adverse rates in retail fell 8.5% year on year in May 2026, and company and director related entity adverse rates fell 5.1% year on year. Those figures suggest the sector is not yet in a generalised credit crisis, and that company-level stress indicators remain below the levels of prior stress periods.
But the payment data tells a more immediate story. The shift from 90% to 61% on-time payments in a single month, the simultaneous spike in severe delinquencies, the sharp pullback in SME borrowing and investment, and the rise in ATO tax defaults collectively describe a retail sector where cash flow conditions have tightened significantly and where smaller operators are bearing the greatest pressure.
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