June data shows insolvencies plateau, but uncertainty persists
Australian businesses saw a 6.5% drop in trade payment defaults in June 2025, reaching the lowest level since July 2024 and falling 25% from the December 2024 peak.
The figures, released in CreditorWatch’s latest Business Risk Index, signal further stabilisation in business conditions across the country..
Insolvency rates also remained steady in June, supporting CreditorWatch’s recent assessment that business failures have plateaued, albeit at relatively high levels. The company noted that if the downward trend in trade payment defaults continues, it could signal an eventual improvement in insolvency figures.
Data from the Australian Securities and Investments Commission (ASIC) for June showed insolvencies holding at levels about 10% below the highs seen in November 2024. CreditorWatch attributed the stabilisation to several factors, including mid-2024 income tax cuts, government cost-of-living support, a steadier rate of new companies with tax defaults, and slower cost growth in recent months.
The Reserve Bank of Australia’s first interest rate cut this year may be starting to have an effect, though CreditorWatch noted it is too soon for the May reduction to have a significant impact. A widely anticipated rate cut in July did not materialise, but another reduction is expected in August after higher-than-expected unemployment data for June.
“The decline in CreditorWatch trade payment defaults is a promising signal that business cash flow pressures may be easing, but with insolvencies still running 33% above FY24 levels, and particularly elevated in hospitality and construction, I’m not getting too excited just yet,” said Patrick Coghlan (pictured), chief executive officer at CreditorWatch.
“The sharp rise in closures across sectors traditionally seen as more stable – like healthcare and education – underlines the breadth of the economic strain. We’ll continue to monitor for early signs of sustained recovery, but the next six months will be critical for determining whether insolvency rates begin to fall or remain stubbornly high.”
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