Australian small businesses are facing intensifying cash-flow pressure, with serious payment arrears reaching their highest level in more than eight years as higher interest rates, fuel costs and regulatory changes squeeze margins.
CreditorWatch data show more than half of business invoices are not being paid on time, while around one in 10 invoices were more than 60 days overdue in September.
That represents the highest level of serious arrears since April 2018 and comes as insolvencies remain close to record levels.
The deterioration is occurring just as businesses are being required to absorb a series of regulatory and cost changes.
These include payday superannuation, increases in award wages, changes to trust taxation and the recent ban on debit and credit card surcharges.
Another RBA hike looms
The timing could become even more difficult for businesses.
The Reserve Bank meets next week, with markets increasingly expecting another interest rate increase after inflation and labour-market data remained stronger than policymakers would prefer.
Fuel and transport costs are also placing renewed pressure on margins as elevated oil prices filter through supply chains.
Separate small business surveys indicate 38% of firms experienced lower revenue than a year earlier, while 65% are concerned about cash flow during the coming 12 months.
The result is a widening gap between businesses facing higher operating costs and customers becoming increasingly cautious about spending.
For Australia’s small business sector, the problem is no longer simply higher inflation.
The combination of slower payments, rising financing costs and additional compliance requirements is creating a cumulative squeeze that could push insolvencies higher into 2027.l
