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Australian businesses are facing unrelenting financial pressures, with insolvencies showing no sign of easing and payment defaults surging to their highest level in nearly a year, according to the latest CreditorWatch Business Risk Monitor.
The September 2025 report paints a sobering picture for the nation’s business community, with the road transport sector and small businesses facing the most pain in the current market environment.
The latest Business Risk Monitor has revealed that despite a slight dip in recent months, insolvency rates are still running at near-record highs, with 1,101 businesses entering insolvency nationally in September alone.
While the construction sector has stabilised, it continues to lead in overall numbers with the pullback likely due to fewer corporate restructures rather than stronger fundamentals, says the report.
However, the latest data shows a spike in transport sector failures as trucking firms are hit hard by rising fuel costs, high interest rates and fierce competition from low-cost, foreign-backed rivals.
“Road transport operators are the backbone of Australia’s economy, yet right now many are doing it tougher than ever,” says CreditorWatch CEO Patrick Coghlan.
“This is a time for the broader business community, lenders and policymakers to recognise just how critical the transport sector is and to ensure these businesses have the support and flexibility they need to stay on the road.”
The report has also found a surge in business-to-business invoice defaults, which have risen 4.8 per cent from August to September, reaching their highest point since December 2024.
CreditorWatch says this is a clear sign that business finances are under sustained pressure, and a warning that insolvencies are likely to remain high in the months ahead.
Sydney has emerged as both the highlight and lowlight for the September report with Northern Sydney a national bright spot and among several regions entering Australia’s top 10 best-performing areas thanks to strong incomes, low insolvency rates and a high concentration of resilient, long-established businesses.
Ku-ring-gai, Pittwater, Chatswood–Lane Cove and Warringah all ranked among Australia’s top 10 best-performing regions.
In stark contrast, Western Sydney dominates the list of highest-risk regions, with below-average household incomes and a heavy concentration of vulnerable small businesses.
Apart from North-East Sydney, the 10 best performing regions in Australia are dominated by inner-city Adelaide, rural Victoria and North Queensland.
CreditorWatch says business failure rates nationally are now 15.1 per cent above the 10-year average, with the food and beverage, administrative support and transport sectors most at risk.
Insolvencies rose 1.6 per cent to 1,101, seasonally adjusted, between August and September after dropping 13.2 per cent between July and August.
Insolvencies in construction are down 4 per cent year on year, while accommodation and food service failures are down 19 per cent.
Some reports suggest this may be due to tighter eligibility criteria to qualify for small business restructuring rather than an improvement in economic conditions.
Ivan Colhoun, the chief economist at CreditorWatch, notes that while recent interest rate cuts may offer some relief, it’s too early to expect a turnaround.
“Businesses and consumers continue to be impacted by many large forces occurring simultaneously, with significant uncertainty related to US trade and tariff policy, geopolitics and the rise of AI,” says Colhoun.
“At the same time, higher costs, both of living and of doing business, present significant budgetary challenges, while it’s too early for the most recent interest rate reductions to be having much effect.”
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