Trading conditions for many businesses are declining and likely to worsen while consumer sentiment and retail trade are so flat, CreditorWatch concludes in its latest Business Risk Index.

The average value of invoices held by businesses has dropped 52 per cent over the year to July 2024, “indicating that businesses are ordering significantly less from suppliers as consumer demand falls away” CreditorWatch said.

Business insolvencies, which have been rising, may well escalate as creditors escalate via the courts.

Court actions have surged to above pre-COVID levels as creditors ramp up actions to collect outstanding debt. 

“Actions dropped dramatically during the pandemic but have now jumped as more businesses come under pressure and debts owed to large creditors such as the ATO and financial institutions increase” CreditorWatch said.

B2B payment defaults dipped in June but surged in July and are now up 42 per cent year-on-year.

Credit enquiries are largely flat across 2024, reflecting the subdued trading conditions in the Australian economy.

“We maintain that the operating environment for businesses in Australia will remain very challenging until at least the first quarter of 2025” CreditorWatch said.