CreditorWatch Report Unveils Financial Distress Among Aussie SMEs: Actionable Solutions for Economic Survival

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Australian SMEs are encountering significant financial obstacles, as revealed by the latest insights from CreditorWatch. With payment defaults soaring and financial strains intensifying, SMEs must proactively address these challenges to safeguard their stability and growth prospects.

Insights from CreditorWatch Data

The recent data from CreditorWatch reveals tough times for SMEs across Australia. Payment defaults are at worrying levels, and shrinking invoice values are making cash flow problems worse.

Regional Trends

Some regions are faring better than others. For example, Ballarat in Victoria is forecasted to have significantly fewer defaults compared to Merrylands-Guildford in Western Sydney. However, both areas are seeing a slight increase in default rates from last year.

CreditorWatch best performing index table
Best Performing Regions. Source: CreditorWatch
CreditorWatch worst performing index table

Worst Performing Regions. Source: CreditorWatch

Industry Trends

Certain industries face higher risks of business failure in the coming months. Food and beverage services top the list, followed by public administration and support services. On the other hand, industries like agriculture and health care show more stability.

Industries with the highest probability of business failure over the next 12 months are:
Food and Beverage Services: 7.08%
Public Administration and Safety: 5.39%
Administrative and Support Services: 5.16%

The industries with the lowest probability of default over the next 12 months are:
Agriculture, Forestry and Fishing: 3.28%
Health Care and Social Assistance: 3.53%
Financial and Insurance Services: 3.67%

Source: CreditorWatch risk score credit rating average probability of default by industry. Default defined as external administration, strike-off or deregistration in the next 12 months

What This Means for Businesses

Commenting on the concerning trends, Patrick Coghlan, CEO of CreditorWatch, emphasises the urgent need for SMEs to fortify their financial resilience. “An increasing number of businesses have less cash coming in, which means they are then finding it more difficult to pay their own suppliers and as such we are seeing a steep increase in payment defaults being registered on the CreditorWatch database.”

“Trade payment defaults going up while invoice values decline is a real worry. This indicates that cash reserves are being depleted and margins are being squeezed.”

Wayne Morris, CEO of Fifo Capital, Wayne Morris, CEO of Fifo Capital, urges SMEs to take proactive steps to avoid worsening financial situations. “Now is the time for SMEs to rethink their finance strategies,” advises Morris. “By transitioning to finance solutions tailored to their needs, SMEs can regain control of their cash flow and leverage their trading assets for increased liquidity and control.”

“At Fifo, we pride ourselves on providing expert guidance and partnering with businesses to help them mitigate financial challenges and overcome cash flow obstacles, positioning themselves for sustained success.”

Tips to Boost Your Financial Resilience

  • Prioritise Cash Flow Management: Vigilantly monitor cash flows and explore financing options like invoice financing to alleviate immediate cash flow pressures.
  • Diversify Revenue Streams: Expand market reach, diversify product offerings, and forge strategic partnerships to reduce dependence on any single revenue source.
  • Optimise Working Capital Efficiency: Streamline operations, negotiate favorable payment terms with suppliers, and leverage technology to improve working capital management.
  • Harness Smart Technology: Embrace digital tools for financial planning, accounting, and performance analysis to gain actionable insights and streamline operations. Integrate accounting software such as Xero and MYOB with cash flow management tools like Fifopay to create an efficient operational stack for your business.
  • Strengthen Customer Relationships: Foster strong ties with customers through exceptional service and personalised offerings to enhance loyalty and retention.
  • Invest in Financial Literacy: Equip business owners and employees with the knowledge and skills necessary to make informed financial decisions and navigate challenges effectively.
  • Seek Expert Guidance: Collaborate with financial advisors and industry experts to develop tailored solutions and navigate complex financial landscapes.


The most recent insights from CreditorWatch underscore the urgent call for Australian SMEs to tackle their financial challenges head-on. By proactively implementing strategies and collaborating with trusted financial partners to address cash flow and working capital issues, businesses can navigate current hurdles and emerge stronger and more resilient amidst the ongoing uncertainty.

Fifo Capital: Your Cash Flow Solutions Expert

As experts in cash flow solutions, Fifo is here to help you navigate through these challenges and keep your business on track. Our tailored financial solutions are designed to address your specific needs and ensure a steady cash flow.

Invoice Finance: Convert your unpaid invoices into immediate cash flow.

Trade Finance: Secure funding to cover the cost of goods and bridge payment gaps.

Supply Chain Finance: Optimise your supply chain and streamline payments to suppliers.

Business Loans: Access short-term business loans of up to $350K using your available working capital.

Minimum requirements:

  • $750K annual turnover
  • More than 1 year in trading

Take the Next Step

For SMEs eager to unleash their full potential, we offer a complimentary 30-minute strategy call. Simply submit your details to get started.

Brokers and partners, connect directly with a dedicated BDM for a free assessment of your current client scenarios. Let’s chart a course towards financial prosperity together.

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