1. Methodology and sources

This report draws on eight primary Australian data sources. All data was retrieved between 18 and 24 May 2026. Every figure cited can be traced to one of the source files listed in this section. Where a figure is computed from more than one source, the derivation is set out in the methodology box of the section in which it appears.

Primary government sources

• ASIC Insolvency Statistics, Series 1 and Series 2, published 18 May 2026. Provides monthly counts of (a) the first time a company enters external administration or has a controller appointed (Series 1), and (b) all subsequent appointments (Series 2). Data covers July 2019 to April 2026.
• ASIC Insolvency Statistics, Series 3.1, released December 2025 for the period 1 July 2024 to 30 June 2025. Provides industry by state breakdowns of initial External Administrator and Receiver reports (Form 5602).
• Australian Bureau of Statistics, 8165.0 Counts of Australian Businesses, including Entries and Exits, July 2021 – June 2025, released 26 August 2025 with revised Datacubes 2 to 11 published 16 December 2025. Provides the count of operating businesses by ANZSIC industry division, state, employment size, legal organisation type, and turnover band. Datacubes DC01, DC02 and DC03 were used.
• Payment Times Reports Register, full register downloaded 24 May 2026. Source file: 18052026-Payment-Times-Reports-Register.xlsx (22.6 MB). Contains entity-level Standard Reports filed by all large Australian businesses (turnover at or above $100 million) under the Payment Times Reporting Act 2020. 8,619 individual reports covering 3,175 unique reporting entities.
• AFSA: quarterly and monthly personal insolvency statistics, plus the State of the Personal Insolvency System 2024-25 report, released October to November 2025.
• Reserve Bank of Australia: Financial Stability Review (March 2026), Statistical Tables D1, D2 and B2 (latest releases up to March 2026), Chart Pack (6 May 2026), Bulletin (February 2026).
• ASBFEO: Quarterly Report Q2 April to June 2025, published July 2025, plus assistance-case category breakdowns and recent submissions.
• Federal Treasury: Budget 2026-27 small business measures and Payment Times Reporting Regulator's Update January 2026 (published 30 January 2026).

Secondary sources used for cross-validation

CreditorWatch Business Risk Index / Business Risk Monitor monthly commentary; Equifax Business Market Pulse; Atradius Payment Practices Barometer Australia 2025; Australian court annual reports (Federal Court, NSW Local Court, NCAT, VCAT, QCAT, Magistrates Court of Tasmania); ASIC RG 96 (April 2021); AFCA Annual Review 2024-25. These sources are cited only where the underlying data is not available in raw primary form.

Original derivations

The report contains three original analytical products: the Sydney Collect B2B Risk Index by industry (Section 5), the Sydney Collect Late Payer Index (Section 6), and the ATO Forbearance Shift estimate (Section 7). Each derivation is set out in a methodology box at the end of the relevant section. The intermediate data files are published as a downloadable archive alongside this report so any figure can be independently reproduced or challenged.

Limitations and caveats

Insolvency figures for the most recent month are typically revised upward in subsequent months as late filings are processed. Quarterly figures revise less. ASIC Series 1 (all first-time appointments) and ASIC Series 3 (subset where external administrators have lodged initial reports) are not directly comparable and are kept separate throughout. Industry is reported at ANZSIC division level where possible; where ASIC and ABS use slightly different division names, the reconciliation is documented in the relevant methodology box. All dollar figures are nominal Australian dollars unless otherwise stated.

This report is a synthesis and analysis of public data. It is not legal or financial advice. Sydney Collect is not a law firm and does not provide insolvency advice.

2. The post-COVID insolvency wave has plateaued

The headline corporate insolvency figure for Australia in FY24-25 was 14,722 companies entering external administration for the first time. That is the highest annual total since FY1999-2000, and approximately 79% above the pre-COVID baseline of 8,219 (the average across FY14-15 through FY18-19).

That single number has driven most of the public commentary on Australian corporate distress for the past 12 months. The figure is correct as reported. It is also, as of May 2026, an incomplete picture of the trend.

Table 2.1 — Companies entering external administration for the first time

ASIC Series 1, from the May 2026 release.

The annualised FY25-26 projection of 14,056 sits below the FY24-25 actual of 14,722. The decline is small (4.5%) and the projection is mechanical, assuming the average monthly pace of Jul-25 through Apr-26 continues for the remaining two months. The underlying monthly data tells the same story without requiring extrapolation: the first quarter of FY25-26 (Jul-Aug-Sep 2025) recorded 3,556 companies entering external administration, against 3,633 in the same quarter of FY24-25. A year-on-year decline of 2.1%. This is the first quarterly year-on-year decline since the post-COVID wave began.

The Reserve Bank's Financial Stability Review of March 2026 reached the same conclusion via a different methodology, observing that "company insolvencies have stabilised at around longer-run averages economy-wide." The RBA framing is more cautious than the ASIC data alone permits, because economy-wide insolvencies are still elevated against the 2010s average, but the directional point is the same.

What's behind the plateau

Four pressures drove the FY22-25 spike. Three of them have partly eased.

1. Pandemic-era support is no longer being unwound. JobKeeper, the cash flow boost, and state-level grants kept marginal businesses solvent into 2022 and in some cases beyond. Their withdrawal exposed underlying insolvency that had been masked. This is now historical.
2. The cash rate cycle of 2022-23 has partly reversed. The RBA cut from 4.35% to 3.60% during 2025 before hiking back to 4.35% in February to May 2026. Floating-rate borrowers got eight months of relief.
3. Construction input-cost inflation has moderated. The ABS producer price index for residential building construction grew by approximately 3% over calendar 2025, against a peak of 17.3% year-on-year in March 2022.

The exception is ATO recovery enforcement. ATO recovery action has intensified through 2025 and into 2026 rather than easing. CreditorWatch commentary published in April 2026 noted that three of the four highest monthly inflows of new ATO default registrations since post-COVID enforcement resumed have been recorded in the preceding four months.

What the plateau does not mean

The data does not support a strong reading of recovery. Annualised FY25-26 insolvencies of 14,056 remain about 71% above the pre-COVID baseline of 8,219. A 4.5% decline from a 25-year high is the high becoming the new floor, not a return to normal.

For a B2B creditor's purposes, the practical implication is that the prior probability of any given debtor entering insolvency in 2026 is not higher than it was in 2025. The first quarter of FY26 produced 77 fewer insolvent companies than the same period a year earlier. For credit-extension and recovery-timing decisions in 2026, the right base rate is the FY25 rate.

Appointment type mix: the rise of Small Business Restructuring

The composition of insolvency appointments has shifted substantially. In FY24-25, the breakdown was:

The Small Business Restructuring regime, introduced in 2021, is a debtor-in-possession workout mechanism for small companies with liabilities under $1 million. SBR appointments grew by more than 200% year-on-year through FY24-25 and now represent approximately one in five of all initial corporate insolvency appointments.

For creditors, the SBR shift has two important implications. First, a company entering SBR is not necessarily a company that will be liquidated. About 83% of SBR appointments to date have proceeded to creditor-approved plans (2,820 of 3,388 appointments per ASIC's REP 810, June 2025). The headline "14,722 insolvencies" therefore overstates the count of companies that will actually be wound up.

Second, SBR plans typically deliver creditors a cents-in-the-dollar outcome, often in the range of 10 to 30 cents, over a 12-month repayment period. A creditor who recognises an SBR-bound debtor early and accepts a moderate payment plan voluntarily will usually be no worse off, and is often materially better off, than one who waits for the formal SBR appointment.

What this means if you have a debtor signalling financial difficulty. A negotiated payment plan that returns 30 to 50 cents in the dollar over 12 months is usually a better outcome than forcing the debtor into formal proceedings, where unsecured creditor returns average under 5 cents. The threshold question is whether the debtor's distress is short-term cash flow (accept the plan) or structural insolvency (move to letter of demand, then formal proceedings). Sydney Collect provides a payment plan template and a $29 letter of demand service for either path.

State-level composition

ASIC's Series 3 data, covering the subset of insolvencies for which initial External Administrator reports have been lodged, provides a clean state-by-state breakdown for FY24-25:

NSW accounts for roughly 41% of national initial EXAD reports, which is broadly proportional to its share of the national business population (32.7%) but somewhat over-weighted. Victoria's 27.1% share is in line with its 27.0% share of the national business population. Queensland's 18.3% share of insolvencies is below its 18.8% share of national businesses. The full per-business analysis, including which state has the highest insolvency rate normalised for business population, is in Section 4.

Looking forward

The Q1 FY25-26 figure of 3,556 EXAD appointments compares with a 12-year average for the same quarter of approximately 2,500. The current pace is still elevated against historical norms but is no longer accelerating. The most likely scenario for the rest of FY25-26, based on the data through April 2026, is a full-year total of 13,500 to 14,500. Broadly flat against FY24-25.

The reasons that scenario could prove wrong are addressed in Section 10. The two most important risks are (a) a further significant intensification of ATO recovery action, and (b) a re-acceleration of the cash rate cycle if inflation pressure builds further. Either would re-stress marginal businesses and reactivate the insolvency wave.

3. Personal insolvency in Australia: sole traders and individuals

The personal insolvency picture in Australia in 2026 is materially less alarming than the corporate picture, and substantially less alarming than mainstream commentary suggests. AFSA recorded 12,257 new personal insolvencies in FY24-25, the third consecutive year of moderate increase, but 42% below the pre-COVID 10-year average of 21,252.

Table 3.1 — New personal insolvencies, Australia

Source: AFSA State of the Personal Insolvency System 2024-25; AFSA quarterly statistics.

The most recent quarterly figure, for the December quarter 2025, was 3,184 new personal insolvencies, up 14.0% year-on-year against the December quarter 2024 (2,794). The September quarter 2025 figure of 3,524 was up 6.6% on the prior year. The trajectory is real but moderate.

The personal-corporate divergence

The most striking pattern in the Australian insolvency data is that personal and corporate insolvency are running in opposite directions. Corporate insolvency in FY24-25 was approximately 79% above its pre-COVID baseline; personal insolvency was approximately 42% below. This is unusual. In most prior cycles, including the early 1990s recession and the post-GFC period, household and corporate distress have moved together.

Three factors most likely explain the divergence:

1. The composition of post-COVID corporate failures. A large share of FY24-25 corporate insolvencies were "zombie" companies that survived COVID on government support and ATO forbearance, and that lacked viable trading models when the support was withdrawn. Their failure does not necessarily indicate household-sector distress.
2. Personal bankruptcy stigma and accessible alternatives. Personal bankruptcy in Australia carries social and credit consequences. Many individuals who would have filed bankruptcy in prior cycles now file Part IX Debt Agreements or Part X Personal Insolvency Agreements instead. AFSA's data shows debt agreement share of new personal insolvencies has risen from approximately 30% pre-COVID to approximately 36% in FY24-25.
3. ATO recovery targeting. ATO recovery action since the resumption of enforcement has been directed primarily at company debts (through Director Penalty Notices issued to directors personally for unpaid PAYG, GST and Superannuation Guarantee Charge). Where the underlying company fails, the company enters external administration but the director may not personally enter bankruptcy if their assets are below recoverable thresholds.

Sole traders carry disproportionate liabilities

A material and rising share of personal insolvencies in Australia are business-related, meaning the debtor was operating as a sole trader, partner, or company director when the underlying debt was incurred. In the December quarter 2025, 993 of the 3,184 new personal insolvencies (31.2%) were classified as business-related, up from 837 (29.8%) in the same quarter a year earlier.

AFSA's State of the Personal Insolvency System 2024-25 report identifies the trend explicitly: business-related cases were 28.8% of total personal insolvencies in FY24-25 but represented 78.8% of new total liabilities. Sole traders and director-guarantors drive the dollar exposure even where they are a minority of cases by count. The industry mix is heavily weighted to Construction and Other Services. AFSA notes that Construction is the single largest industry contributor to business-related personal insolvencies, and has been throughout both the pre-COVID and post-COVID periods.

Implications for B2B creditors

For a B2B creditor whose debtors are predominantly sole traders or director-guarantors (the typical pattern for SME-to-SME trade credit), the personal insolvency data is more relevant than the corporate data. Two practical implications follow.

First, the prior probability that an individual debtor will enter personal insolvency in any given year remains low by historical standards. Approximately 0.060% of the adult Australian population in FY24-25, against a pre-COVID-decade average of approximately 0.105%. Aggressive escalation to bankruptcy proceedings is unlikely to be necessary or productive in most B2B disputes. The default escalation path of letter of demand, then small claims court, then judgment, then enforcement is the right path in roughly 95% of cases.

Second, where a sole-trader debtor is in genuine distress, an SBR-equivalent informal payment plan is often a better outcome for the creditor than a forced bankruptcy. Returns to unsecured creditors in Australian bankruptcies average less than 5 cents in the dollar (AFSA data). A negotiated payment plan over 12 months returning 30 to 50 cents, even if it ultimately requires a discount, is materially better for cash recovery and considerably faster.

What this means if you're owed money by a sole trader. The sole-trader debtor profile differs from the company-debtor profile in two ways that affect recovery strategy. First, personal bankruptcy is meaningfully damaging to the debtor and remains rare (0.06% of adults per year). The threat of formal proceedings therefore carries weight even with debtors who would shrug off a company wind-up. Second, sole traders almost always have personal assets that survive bankruptcy (the equity in a family home, vehicles, superannuation), which limits the realistic recovery from a formal proceeding to single-digit cents in the dollar. A negotiated plan beats forced bankruptcy in almost every case. Sydney Collect's debt calculator computes the comparison.

4. Geography: which states have the highest business failure rates

The state-by-state breakdown of Australian corporate insolvencies has, since the post-COVID wave began, been dominated by two observations: NSW has the largest absolute count, and Victoria has had the fastest recent growth. Both observations remain correct in FY24-25. Neither, on its own, tells a creditor anything useful about per-business risk in any given state.

The same per-business framework used for the industry analysis in Section 5 can be applied to states. The numerator is ASIC Series 3 initial External Administrator reports for FY24-25 by state. The denominator is the ABS count of operating businesses by state at end of FY24-25.

Table 4.1 — Sydney Collect B2B Risk Index, by state, FY24-25

Note: total operating businesses in the state column (2.66 million) is below the ABS national total of 2.73 million because the ABS "Currently Unknown" and "Other Territories" categories are not assigned to a state and are omitted here. Their combined business count is approximately 65,000.

The four state-level findings

Victoria's "surge" is largely an artefact of its baseline. Victoria has been the most-cited state in 2024-25 insolvency commentary because the year-on-year growth in its corporate insolvency count was the highest of the major states. On a per-business basis though, Victoria sits essentially at the national average (3.53 vs. 3.42 per 1,000). The state's apparent surge reflects catch-up from a lower starting point. The headline that Victoria is "now the corporate insolvency capital" is misleading: NSW continues to have the highest per-business rate of the three major states, at 4.43 per 1,000.

The ACT is the highest-per-business-rate jurisdiction in the country. At 4.88 EXAD initial reports per 1,000 businesses, the ACT has materially the highest rate of any state or territory in FY24-25. This finding is fragile (the ACT business base is small and 180 EXAD reports is a small enough sample that the rate has wide statistical bounds) but it is consistently elevated across recent quarters. The likeliest explanation is the ACT's heavy concentration in Professional, Scientific & Technical Services (over 35% of ACT businesses) combined with reliance on federal-government procurement cycles that have shifted materially since the change of government.

Western Australia and South Australia are materially safer than the national average. WA's per-business insolvency rate is 0.67× the national figure; SA's is 0.72×. The likeliest driver is sectoral mix: WA's business population is overweighted in Mining (high revenue, low headcount, currently profitable) and Construction (resilient project pipelines through 2024-25), while SA has a relatively large agriculture share. Agriculture is one of the lowest-stress sectors nationally (see Section 5). For a creditor allocating credit limits geographically, an SME debtor in WA or SA has roughly half the prior probability of insolvency as a debtor in NSW or the ACT.

Tasmania is the lowest-risk Australian state by a meaningful margin. Tasmania's 1.52 per 1,000 rate is 45% of the national average. The driver is the state's industry mix: large agriculture share, no major construction-cycle exposure, low concentration in the highest-risk hospitality sub-sectors, combined with a relatively conservative business culture. Tasmania remains the smallest state by business count (47,310), so the rate has higher variance than the larger states, but the directional finding is consistent across recent years.

Where in NSW and Victoria

State-level data is the limit of what ASIC publishes in a clean format. For sub-state geographic analysis, the best public Australian source is CreditorWatch's monthly Business Risk Monitor, which publishes Statistical Area Level 4 (SA4) failure-rate forecasts.

As at the April 2026 Business Risk Monitor, the five highest-risk SA4 regions in Australia by 12-month forecast business failure rate were:

Four of the top five highest-risk SA4 regions in Australia are in Western Sydney. The pattern reflects a concentration of small construction businesses, small hospitality operators, and recent-arrival sole traders. All three are independently above-average risk categories (see Section 5), interacting with elevated household-debt loads and recent rapid commercial rent increases in Sydney's outer west.

The implication for a Sydney-based creditor is direct: a debtor in Merrylands–Guildford has approximately 2.7 times the prior insolvency probability of an average Australian business.

What this means if your debtors are in Western Sydney or South East Queensland. The 12-month forecast failure rates in these regions are roughly 2 to 3 times the national average. The practical adjustment is to shorten payment terms (15 days rather than 30), require deposits on first orders, and escalate to letter of demand at day 30 of arrears rather than day 60. The credit-policy cost of one bad debt in a high-risk postcode is materially higher than in a low-risk postcode, and the cost should be priced in upfront. Sydney Collect's $29 letter of demand service operates Australia-wide.

State-level industry intersection

The intersection of high-risk industries (Section 5) with high-risk states (this section) produces a useful concentration matrix. For each major state, the share of FY24-25 EXAD initial reports attributable to each high-risk industry is set out below.

Table 4.2 — Industry concentration of corporate insolvencies, by major state, FY24-25

Share of state's total Series 3 initial EXAD reports.

The mix is broadly similar across NSW, VIC and WA: Construction is the largest single contributor, followed by Hospitality. Queensland is the exception. Hospitality and Construction are essentially tied as the top contributors. This is consistent with Queensland's tourism-economy weighting and supports CreditorWatch's separate finding that South East Queensland is a secondary geographic risk cluster after Western Sydney.

Methodology and caveats: See Appendix A: B2B Risk Index by state →

5. Which industries have the highest insolvency rate

The standard answer to that question is "construction." It is repeated in every CreditorWatch press release, every Master Builders submission, every quarterly insolvency commentary from the trustees and the Big 4 advisory firms. It is also, on the most useful definition of the question, wrong.

The reason it is wrong is that "highest insolvency rate" is being measured by total count, not by per-business rate. Construction has the highest count because Australia has more construction businesses than almost any other industry: 462,939 of them as at June 2025 per the Australian Bureau of Statistics. When 2,361 of those entered external administration in FY24-25 and lodged initial External Administrator's Reports, that produced the largest single industry slice in the ASIC data: 24.6% of all reports. The headline writes itself.

For a creditor deciding which industries to extend trade credit to, the count is the wrong number. The right number is the rate per business: out of every 1,000 businesses in a given industry, how many enter external administration in a year? That is the figure that maps directly onto the question every credit manager actually has to answer, which is "what is the prior probability that any individual debtor in this sector will fail before they pay me?"

To compute that figure, we combine two primary government datasets that, despite both being public and free, are not normally crossed:

• Numerator: ASIC Insolvency Statistics Series 3, Table 3.1.1 ("Initial external administrators' and receivers' reports — Region by industry"), covering 1 July 2024 to 30 June 2025.
• Denominator: ABS publication 8165.0 Counts of Australian Businesses, including Entries and Exits, July 2021 – June 2025, Table 1 of Datacube DC01 ("Businesses by Industry Division"), giving the count of operating businesses at end of FY24-25.

The resulting metric is the Sydney Collect B2B Risk Index, reported in Table 5.1.

Table 5.1 — Sydney Collect B2B Risk Index, FY24-25

ANZSIC division, ranked by insolvencies per 1,000 operating businesses.

The picture is significantly different from the standard narrative.

The four findings that matter

Hospitality, not construction, is the sector under the greatest sustained pressure. Australian hospitality operators (Accommodation & Food Services) are entering external administration at a rate of 14.06 per 1,000 businesses per year. That is 4.1 times the national average and 2.8 times the rate of construction. The CreditorWatch Business Risk Index has been pointing to this for several monthly reports, but headline insolvency commentary in trade press continues to lead with construction because the construction count is larger. On a per-business basis, the ranking is not close: a hospitality operator is, prior probability, almost three times as likely to fail in a given year as a construction operator. Creditors who treat construction as "the risky sector" and food service as a normal-risk sector are underwriting the wrong end of the distribution.

Construction is barely above the national average. At 5.10 insolvencies per 1,000 businesses, construction is only 1.5 times the all-industry rate. It dominates absolute counts because it has 462,939 businesses, about 17% of the entire Australian business population. The risk attached to any individual construction debtor is meaningful but not extreme. This matters for how a B2B creditor sizes their construction-sector trade credit limits relative to limits in (say) hospitality, where the prior is genuinely elevated.

Health Care and Professional Services are unusually safe. Per 1,000 operating businesses, these sectors enter external administration at rates of 1.24 and 1.34 respectively, less than half the national average and roughly a tenth of the hospitality rate. For credit managers, this is a quantitative justification for trade-credit policies that distinguish between professional services debtors (extend on standard terms) and hospitality debtors (require deposit, shorten terms, or refuse credit). It is not a justification for assuming health-care receivables are riskless, but the prior is significantly more forgiving than the average.

The Electricity/Gas/Water number is statistically noisy and should be treated with caution. The sector has the highest measured stress rate (26.83 per 1,000) but the smallest business base of any division (8,870 operating businesses). Twenty-three EXAD reports more or fewer in FY25 would have moved the rate from 26.83 to anywhere between roughly 24.2 and 29.4. By contrast, the hospitality figure (14.06 per 1,000) is computed off 1,588 EXAD reports and 112,940 businesses, and is materially more stable to small data changes. The Mining, Public Administration & Safety, and Education & Training rates should be treated similarly: they are accurate as published, but conclusions drawn from them about industry-wide stress should be qualified by sample size.

What this means if you supply hospitality or construction debtors. Treat the credit limit and the payment terms differently for each. For hospitality (4.1× national failure rate), the right baseline is short terms (7 to 14 days), low credit limits, and personal guarantees from directors where the entity is a small Pty Ltd. For construction (1.5× national rate), standard 30-day terms are defensible for established operators, but the Security of Payment Act regime in your state gives you faster recovery rights than a generic letter of demand. Use both when available. Sydney Collect's letter of demand service covers the standard recovery path; the hospitality and construction guides cover industry-specific options.

Methodology and caveats: See Appendix A: B2B Risk Index, FY24-25 →

6. Australia's 40 slowest invoice payers

The Payment Times Reporting Scheme, established by the Payment Times Reporting Act 2020, requires every Australian business with annual turnover at or above $100 million to file twice-yearly Standard Reports disclosing how quickly they pay their small business suppliers. As at 18 May 2026, the Payment Times Reports Register contained 8,619 individual reports filed by 3,175 unique reporting entities, covering reporting periods up to 31 December 2025.

The Register is publicly accessible. Every figure in this section is computed from the Register's raw data file directly, taking the most recent Standard Report filed by each entity.

The system-wide picture

Across all 3,174 reporting entities included in the ranking (one entity excluded for a data error documented in the methodology), the median 95th-percentile payment time to small business suppliers is 54 days. Put plainly: at the typical large Australian payer, one in twenty small business invoices takes 54 days or longer to be paid. At the 90th percentile of payers (the 10% slowest), the equivalent figure rises to 86 days. The mean across the population is 55.4 days.

The Payment Times Reporting Regulator's update of January 2026 provided the aggregate figure that has been most-cited in commentary: across all reporting entities for the 1 January to 30 June 2025 reporting cycle, the 95th-percentile payment time was 64 days, deteriorated from 58 days in the prior cycle. This is the slowest decile of payments getting still slower. The bulk of payments, the median, the mean, moved only marginally. The deterioration is in the tail.

Only 2.3% of all reporting entities meet the "Fast Small Business Payer" benchmark of paying 95% of small business invoices within 20 days, sustained over two consecutive reporting periods. 97.7% do not. Australia's payment-times regulatory regime has been running for five years, and the headline benchmark has gone backwards.

The Sydney Collect Late Payer Index

The PTRR data permits a specific question to be answered for the first time: which named large Australian businesses have the slowest 95th-percentile payment time to their small business suppliers? Table 6.1 sets out the top 40 worst performers, taking the most recent Standard Report filed by each entity. The full top 100 is published as a downloadable CSV alongside this report.

The methodology, including the exclusion of one apparent data-entry error and the criteria for entity selection, is set out in the methodology box at the end of this section.

Table 6.1 — The Sydney Collect Late Payer Index: Top 40 slowest-paying large Australian businesses, 2026

Ranked by 95th-percentile payment time to small business suppliers, most recent Standard Report. Source: Payment Times Reports Register, 18 May 2026.

Three findings from the Late Payer Index

The top decile is a small group of repeat offenders, not a cross-section of large Australian business. Of the 40 entities in Table 6.1, 11 (27.5%) are in Professional, Scientific & Technical Services, primarily law firms, technology vendors and consulting groups. A further 10 (25.0%) are in Manufacturing or Mining (heavy industrial supply chains). Construction accounts for 5 entities. The Top 40 is over-represented in industries where supplier relationships are project-based, long-tail, or contract-disputed, and under-represented in industries that pay on simple recurring terms.

Average payment time and 95th percentile payment time are decoupled. Of the Top 40, 14 entities have an average payment time of 50 days or less, close to or below industry-standard 60-day terms. Their 95th percentile is over 120 days though. This is the structural pattern the Payment Times Reporting Regulator was set up to expose: large payers who comfortably hit headline averages while routinely letting a meaningful minority of supplier invoices age into the months. A median can be entirely well-behaved while the slowest 5% destroys supplier cash flow.

Hewlett-Packard Australia is the standout. The reported 95th percentile of 986 days (just under 2.7 years) on a Standard Report for the six-month period ending 31 October 2025 is, on the face of the data, the worst single 95th-percentile figure in the entire Register. The reported average payment time for the same entity in the same period was 79.2 days, with 95.2% of all payments to small business suppliers exceeding 60 days. The combination is unusual: a long tail on the 95th-percentile combined with a very high overall share of slow payments. The data is reported by Hewlett-Packard Australia itself under statutory obligation and has not been redacted by the Regulator.

What this means if you're owed money by any entity in Table 6.1. Cite the entity's own PTRR disclosure in your follow-up correspondence. Wording like "your most recent Payment Times Report on the Commonwealth Register shows a 95th-percentile payment time of [X] days, which is materially longer than the [X]-day terms agreed for invoice [number]" puts the debtor on notice that their reported behaviour is being measured against the specific overdue invoice. The disclosure is theirs, filed under federal statutory obligation, so they cannot dispute the source. This costs nothing and is one of the cheaper escalation levers available.

What the Top 40 means for creditors generally

A reasonable expectation, on simple-contract terms, is that an invoice with no agreed extended payment term will be paid within 30 days. The PTRS data shows that even at the top of corporate Australia (turnover above $100 million, reporting obligations under federal law, brand reputations to defend) that expectation is not met for the slowest 5% of payments in most cases. The median large payer's 95th-percentile payment time is 54 days. Roughly one in twenty supplier invoices ages past the eighth week.

The practical implication for B2B credit policy is that the relevant question is not whether a debtor will eventually pay (most large-payer debtors do) but how long they will take. For an SME supplier operating on thin working capital, the difference between being paid in 30 days and being paid in 90 days is the difference between funding the next payroll from receivables and funding it from a credit line.

Industry-level payment behaviour

The PTRR data also permits a clean breakdown of payment behaviour by ANZSIC industry division, looking at the industry of the payer rather than the receiving small business. The table below sets out the median 95th-percentile payment time by payer industry, ranked from worst (slowest) to best (fastest).

Construction emerges as the slowest-paying industry on its own median: large construction firms typically have a 95th-percentile payment time of 67 days to their small business suppliers. This is consistent with the structural payment-chain problem in the construction industry, where head contractors pay subcontractors only when they themselves have been paid by the principal, propagating delay down the chain. Section 5's finding that hospitality has the highest insolvency rate per business does not contradict this. Hospitality operators tend not to be large payers under the PTRS (most are under the $100 million threshold), while construction firms more frequently are. The two findings describe different ends of the B2B relationship: hospitality is most likely to fail, construction is most likely to pay slowly.

Methodology and caveats: See Appendix A: Late Payer Index →

7. The ATO debt problem: $105 billion and growing

The Australian Taxation Office is the single largest unsecured creditor in the Australian economy. As at the most recent ATO Annual Report (FY24-25), the total collectable tax debt outstanding to the ATO was approximately $105 billion, up from $34 billion pre-COVID. Approximately 65% of that debt, around $68 billion, is owed by small business taxpayers.

For private-sector creditors, the trajectory of ATO debt and the ATO's enforcement posture is one of the two or three most consequential variables affecting B2B collection outcomes in 2026. The reason is structural: when the ATO is aggressive about recovery, marginal businesses fail, and private-sector trade creditors of those businesses crystallise losses on receivables. When the ATO is patient, marginal businesses keep trading and continue to accumulate B2B debt. This means private creditors carry the burden of the stress that ATO forbearance is masking.

7.1 The recent trajectory of ATO debt

During the COVID period (calendar years 2020 through mid-2022), the ATO suspended virtually all active recovery of tax debt. The policy reflected legitimate public-health and economic-stabilisation reasoning, but it produced an accumulation of unpaid tax that compounded across three years. From mid-2022, the ATO began progressively reactivating recovery action. Through 2023, 2024 and into 2025, the volume of Director Penalty Notices issued, statutory demands served, and wind-up applications filed by the ATO rose materially.

The Commissioner of Taxation's evidence to Senate Estimates in February 2026 indicated that the ATO issued approximately 84,500 Director Penalty Notices in FY24-25, a 136% year-on-year increase against FY23-24. DPNs personally hold company directors liable for unpaid PAYG withholding, GST, and Superannuation Guarantee Charge, and are the ATO's most aggressive routine recovery instrument. The DPN volume in FY24-25 is the highest in the post-DPN-regime history (the regime was introduced in 1993 and expanded to GST in 2020).

ASIC court-driven liquidations, the closest public proxy for ATO-initiated wind-up activity, accounted for 19.4% of all initial corporate insolvency appointments in FY24-25 (see Section 2). This is consistent with an elevated level of ATO recovery activity.

7.2 Budget 2026-27: a partial reversal

The Federal Budget delivered in May 2026 announced a material softening of ATO recovery posture toward small businesses. The package included:

• An additional $8 million from 1 July 2026 to extend the Small Business Debt Helpline and NewAccess for Small Business Owners programs through FY26-27 and FY27-28.
• More generous payment-plan terms for businesses unable to pay tax debts in full, including extended interest remission and the ability to vary PAYG instalment amounts where current-year taxable income has fallen.
• New ATO powers to pause recovery of tax debts owed by fraud victims, including the ability to waive debts and recover from intermediaries.
• A permanent $20,000 instant asset write-off for businesses with turnover under $10 million from 1 July 2026 (previously legislated only as an annual measure).
• Reintroduction of the Tax Loss Carry-Back scheme for FY26-27, allowing companies with current-year losses to claim refunds against tax paid in the prior two years, benefiting up to 85,000 small companies.

The Treasury costing for the loss carry-back component alone is approximately $1.1 billion over the forward estimates. The combined package, on the Treasury Budget Paper's own estimate, represents a delayed-recovery / reduced-revenue impact on collectable tax debt of approximately $3.2 billion to $4.5 billion over FY26-27 and FY27-28.

7.3 The mechanism: how ATO leniency shifts risk to private creditors

The risk transfer mechanism works in three steps.

Step 1. The ATO defers recovery action against a marginal business that owes (say) $200,000 in unpaid tax. The business continues to trade.

Step 2. The business continues to accumulate trade debts to private-sector suppliers. Some of those suppliers extend credit on standard 30-day terms; others extend longer terms in response to apparent demand. The business's total outstanding payables grow.

Step 3. The business eventually fails. The total liability at failure is materially larger than it would have been had the ATO acted earlier. The ATO, as a (now-larger) unsecured creditor, recovers cents in the dollar against its $200,000. Private-sector trade creditors who extended additional credit during the deferred-recovery period recover cents in the dollar against the additional debt the business accumulated during the deferral.

In aggregate, the policy that delays the ATO's loss recognition also enlarges the loss to private trade creditors. The transfer is not one-for-one (some marginal businesses, given more time, do trade out of distress) but on the empirical evidence of FY22 through FY25 (when ATO forbearance was at its maximum and B2B trade defaults rose 42% year-on-year per CreditorWatch), a substantial fraction does not. The forbearance saves the business and the jobs in the short run, at a partial cost to private creditors.

7.4 Estimating the magnitude of the FY26-27 transfer

The estimate below is deliberately rough and is set out as a range. The methodology box at the end of this section explains the construction in detail.

Assumptions:

• Treasury estimates $3.2 billion to $4.5 billion of collectable tax debt will be deferred or reduced under the FY26-27 package.
• Approximately 70% of small businesses that have ATO debt also have private-sector trade creditors at the date of any insolvency (consistent with ASIC Series 3 Table 3.1.9 unsecured creditor data).
• For businesses that ultimately fail despite ATO forbearance, the average B2B trade-debt accumulation during the deferral period is approximately 0.35× to 0.55× the deferred ATO amount, based on the historical pattern observed in FY22-24 insolvency data (where unsecured trade creditor liabilities in average small-business EXAD reports were approximately 35-55% of unpaid ATO liabilities).
• Approximately 60% of marginal businesses receiving ATO forbearance ultimately fail despite the assistance. A conservative estimate based on the FY22-25 outcomes for businesses that took the equivalent COVID-era ATO concessions.

The resulting range:

Implied transfer of bad-debt risk from the ATO to private-sector creditors in FY26-27: $470 million to $1.04 billion.

The midpoint estimate is approximately $750 million of additional private-sector trade-credit losses that would not have occurred had the ATO maintained the pre-Budget recovery posture. This estimate is rough; the methodology box sets out what would be required to refine it.

7.5 Implications for creditors

The practical implication for any business extending B2B trade credit in FY26-27 is that an increased proportion of debtor failures will be ATO-driven in cause but private-creditor-borne in outcome. Three behavioural responses are reasonable:

• Where a debtor's ATO position is disclosed or discoverable (some debtors disclose ATO debt in financial statements; the ATO Tax Debt Disclosure scheme also publishes specific large debts on credit files), it should be treated as a material risk factor in credit-extension decisions. A debtor with disclosed ATO debt and a recent ATO payment-plan arrangement is, on the analysis above, a higher-risk creditor exposure than the same debtor without ATO debt.
• Escalation to formal recovery action should be earlier rather than later where a debtor is showing payment-delay signals consistent with cash-flow constraint. The longer a creditor waits, the more likely they are to be in the second wave of trade creditors caught when the debtor eventually fails.
• Statutory demands under section 459E of the Corporations Act remain available for debts of $4,000 or more owed by registered companies. They are particularly effective where the debtor has multiple unsecured creditors competing for the same cash flow. Being early in the queue is materially more valuable than being late.

What this means if you supply small businesses with known tax debts. Treat ATO-disclosed tax debt as a leading indicator of insolvency risk that justifies tightening credit policy on that debtor, not loosening it. The order of effective actions, from cheapest to most aggressive: (1) shorten payment terms going forward; (2) require deposits on new orders; (3) issue a letter of demand on the first overdue invoice rather than the third; (4) for debts over $4,000 owed by a Pty Ltd, prepare for a statutory demand. The compounding insight is that ATO-recovery deferral does not reduce the debtor's probability of failure, it just delays it, which means you have less time than the deferred timetable suggests.

Methodology and caveats: See Appendix A: ATO Forbearance Shift estimate, FY26-27 →

8. How long does debt recovery take in Australia

The standard B2B debt recovery sequence in Australia runs in four steps: (1) internal collections / payment reminders, (2) formal letter of demand, (3) escalation to a debt collection agency or to a solicitor's letter, and (4) court proceedings. The expected duration of each step, and the typical outcome at each step, are summarised below.

Table 8.1 — Australian B2B debt recovery sequence: timeline, cost and success rate

Why the recovery rates fall step by step

The headline pattern (recovery rates declining at each escalation step) is a survivorship effect, rather than evidence that the recovery method itself becomes less effective. The debts that survive stages 1 to 3 and reach court are systematically the harder cases: disputed in substance, owed by debtors who are absent or unrecoverable, owed by companies that are technically insolvent and unable to pay regardless of legal compulsion.

CreditorWatch's published default-to-insolvency probability ladder is the clearest measure of this effect:

• A debtor with 1 trade payment default registered against them has approximately a 20 to 24% probability of entering insolvency within the following 12 months.
• A debtor with 2 defaults has a 42% probability.
• A debtor with 3 defaults has a 62% probability.

The implication for creditor strategy is that the speed of progression through the recovery sequence matters more than the aggressiveness of any individual step. A creditor who moves from invoice to letter of demand at day 30 (rather than day 90) is statistically more likely to recover, because the debtor has had less time to accumulate parallel defaults and slide further down the insolvency probability ladder.

Recovery channel comparison

The choice between Stage 3a (debt collection agency) and Stage 3b (solicitor) is the most consequential strategic decision in the standard sequence. The relevant factors are amount, dispute status, and downstream escalation intent.

A practical heuristic: if the debt is under $15,000, undisputed, and the debtor is contactable and solvent, an agency is usually the right next step. If the debt is over $15,000, or the debtor is disputing, or the debtor is a registered company that may need to be wound up, a solicitor is the right next step. A letter of demand is the appropriate first step in either case.

What this means if you're picking an escalation path. The right path depends on three variables only: amount, dispute status, and whether the debtor is a company (Pty Ltd) or an individual. For undisputed debts under $15,000 against a contactable solvent debtor, an agency is the cheapest next step. For amounts over $15,000, disputed claims, or debts against a Pty Ltd where you may need to wind it up, a solicitor is the right next step because they can act in court and an agency cannot. The single biggest mistake creditors make is engaging an agency when the next required step is a statutory demand, then having to re-engage a solicitor anyway and paying twice.

Court system capacity

The small claims and minor civil dispute jurisdictions of the Australian state courts and tribunals handle the bulk of B2B debt recovery litigation. Annual report data for FY24-25, where available:

• NSW Local Court (Small Claims Division): more than 42,000 small claims proceedings filed; 78% resolved within three months; 65% of parties self-represented.
• QCAT (Queensland Civil and Administrative Tribunal) Minor Civil Disputes: 12,569 applications statewide; combined with Magistrates Court MCD filings, statewide MCD total was 17,668 (+1% YoY).
• Magistrates Court of Tasmania: 2,711 new civil claims, of which the majority are debt recovery proceedings.

National data on the total volume of B2B debt-related small claims and magistrate-court proceedings is not consolidated by any single agency. The component publications above suggest a national B2B small-claims volume of approximately 80,000 to 100,000 proceedings per year, of which roughly two-thirds are filed by SMEs as plaintiff-creditors.

The high self-representation rate in NSW Local Court (65%) indicates that the small claims system is functioning, broadly, as designed: as an accessible forum for SME creditors who cannot or will not engage solicitors for routine debt recovery. The 78% three-month resolution rate is materially faster than the 6 to 18 month timelines that apply in District and Supreme Courts. For most B2B disputes under the small claims threshold ($20,000 in NSW, $25,000 in QLD, up to $100,000 in VIC), small claims is the right venue.

9. The legal framework

The legal framework for B2B debt recovery in Australia is jurisdictional. Each state and territory has its own limitation statute, its own small-claims threshold, and its own intermediate courts. The Corporations Act 2001 (Cth) provides a national framework for company-debtor recovery (statutory demands and wind-up). The ACCC/ASIC RG 96 Debt collection guideline for collectors and creditors applies nationally to debt collection conduct.

For any creditor, three pieces of legal information determine the practical options: (a) how long they have to act, (b) which court has jurisdiction, and (c) what conduct rules apply to their collection activity.

9.1 Limitation periods: how long you have to act

The limitation period is the deadline by which a creditor must commence proceedings to enforce a simple contract debt. Missing it permanently extinguishes the right to sue.

Table 9.1 — Limitation periods for simple contract debts, by jurisdiction

The Northern Territory is the single material outlier in the Australian limitation framework. NT creditors have half the time to act compared to every other Australian jurisdiction, and the NT statute does not allow the limitation clock to reset after expiry, even on subsequent written acknowledgement or part-payment by the debtor. The combination makes the NT the highest-risk jurisdiction in Australia for a creditor to leave a debt unactioned. A creditor with NT-based debtors should treat 30 months from invoice due date as a practical deadline for formal recovery action, leaving a 6-month margin against the 3-year statutory cap.

Court-judgment enforcement periods are longer than the simple-contract limitation: 12 years generally, with 15 years in SA and VIC. A judgment obtained before the limitation period expires can therefore be enforced well beyond the underlying contract's limitation window.

9.2 Court jurisdiction by amount

Table 9.2 — Small claims and minor civil dispute thresholds

For B2B creditors, the practical question is whether the disputed debt falls below the relevant small-claims threshold (in which case self-representation is the norm and filing fees are modest) or above it (in which case representation by a solicitor is usually advisable and total cost rises by an order of magnitude). The threshold varies materially: a $15,000 debt is a small-claim matter in NSW, ACT, NT and QLD, but is above the small-claims jurisdiction in WA, SA and TAS.

9.3 Statutory demands under section 459E of the Corporations Act

For company debtors (Pty Ltd, Limited), an alternative to court proceedings is the statutory demand under section 459E of the Corporations Act 2001 (Cth). The mechanism is national, not state-based, and is one of the most leverage-rich tools available to a creditor.

The mechanics:

• The debt must be at least $4,000 (raised permanently from $2,000 in 2021).
• The debt must not be the subject of a genuine dispute. The High Court and intermediate appeal courts have repeatedly emphasised that a "genuine dispute" requires plausible contrary evidence, not merely a debtor's bald assertion of disagreement. Recent guidance: In the matter of One GC MQ Park Pty Ltd [2024] NSWSC 820; Re BRC Group [2024] VSC 563. The test is whether the dispute has some substance, not whether the debtor would win at trial.
• Once served, the debtor has 21 days to comply (pay the debt) or to apply to the court to set the demand aside.
• Failure to do either creates a presumption of insolvency under the Act, which entitles the creditor to file a winding-up application.

The statutory demand is, in practical terms, a powerful escalation tool because of the 21-day clock and the insolvency presumption. Many company debtors who would otherwise stall on a routine debt settle within the 21-day window when faced with a properly drafted statutory demand. The instrument is, however, technical: defects in the drafting (incorrect debt particulars, inadequate supporting affidavit, service errors) routinely result in set-aside applications succeeding. Statutory demands should be drafted by solicitors with relevant practice experience.

9.4 Conduct rules: RG 96

ACCC/ASIC Regulatory Guide 96 Debt collection guideline for collectors and creditors (April 2021) is the national standard for permitted debt-collection conduct in Australia. The current version (April 2021) has not been updated since release, despite a 2024 consultation on a revised draft. The 2021 guideline remains in force.

Key prohibitions and limits, in summary:

• Frequency of contact: maximum 3 phone attempts per week per matter, or 10 phone attempts per month. SMS, email, and social-media contact aggregated separately.
• Hours: 7:30am to 9:00pm weekdays; 9:00am to 9:00pm weekends; no public holidays.
• Third-party contact: tightly restricted; contact with the debtor's friends, family or co-workers without the debtor's consent is generally prohibited.
• Misleading conduct: no representations about legal action that the creditor or collector does not intend to take or is not lawfully able to take.
• Threats: prohibited.
• Documentation: complaint-handling processes mandatory.

Enforcement under RG 96 has produced material penalties. The largest recent example is Panthera Finance Pty Ltd, ordered to pay $500,000 in penalties and $100,000 in costs in March 2020 for unduly harassing three consumers in relation to debts they did not owe. Consumer Affairs Victoria pursued additional proceedings against Panthera in 2024 for breaching state fair-trading laws by continuing to collect in Victoria after being prohibited from doing so.

For B2B creditors, RG 96 applies to the creditor's own collection conduct and to the conduct of any agency or collector engaged. Letter of demand templates (including Sydney Collect's) are drafted to comply with the misleading-conduct, threats, and language provisions of the Guideline.

9.5 Recent law reform

Three reform developments since 2023 warrant noting:

• Unfair Contract Terms reforms (in force 9 November 2023): under the Treasury Laws Amendment (More Competition, Better Prices) Act 2022, the small-business definition for UCT purposes was widened (employee threshold raised from 20 to 100, OR annual turnover under $10 million; the upfront-price threshold was removed). Civil pecuniary penalties now apply to unfair terms in standard-form contracts. The first ACCC enforcement under the expanded regime was against Mable Technologies Pty Ltd in June 2025.
• Statutory demand minimum permanently $4,000: the temporary COVID-era increase from $2,000 was made permanent.
• QLD Property Law Act 2023: commenced 1 August 2025, reducing the limitation period on new deeds in Queensland from 12 years to 6 years (aligning deeds with simple contracts).

9.6 Productivity Commission inquiry (live)

As at May 2026, the Productivity Commission has an active inquiry examining "regulatory barriers to business dynamism in Australia," including the design and operation of corporate and personal insolvency frameworks, and considering whether greater harmonisation between the two regimes (currently administered by different agencies, ASIC for corporate, AFSA for personal) would deliver net benefits, particularly for small business owners. The inquiry's report is expected in late 2026 or early 2027. Any recommendations adopted could materially change the procedural framework that B2B creditors operate within.

What this means if you're checking your timing. The limitation period runs from the date the debt fell due, not the date of the original invoice or contract. A debtor's written acknowledgement or part-payment generally restarts the clock in five states (VIC, QLD, WA, SA, TAS), and does not in three (NSW, ACT, NT). If you are in NSW or the ACT and approaching the 6-year mark, a payment received from the debtor will not extend your right to sue, so do not delay action on that basis. If you are in NT, the 3-year limit halves the runway and there is no restart even on part-payment, so treat 30 months from due date as the practical deadline. Sydney Collect's limitation checker computes the exact deadline for your jurisdiction.

10. Outlook for FY26-27

The base case on the data through May 2026 is that corporate insolvencies in FY25-26 will land between 13,500 and 14,500, broadly flat against the FY24-25 figure of 14,722, after the Q1 −2.1% YoY decline observed in the ASIC data. Personal insolvencies will likely rise modestly to 13,000 to 14,000, remaining well below pre-COVID levels.

This is the most likely outcome but not the only one. The four most consequential variables that could move the outcome up or down are:

1. The RBA cash rate path. The cash rate stood at 4.35% as at May 2026 after three consecutive hikes (Feb, Mar, May 2026) reversed the easing cycle of 2025. The RBA's reasoning was that inflation had picked up materially in H2 2025 and that capacity pressures were stronger than previously assessed. Whether the cash rate stays at 4.35%, rises further, or is cut again depends on the inflation and labour-market trajectory through Q3 and Q4 2026. The historical rule of thumb is that each 25-basis-point movement in the cash rate produces approximately a 1 to 2% movement in subsequent-12-month insolvency volumes, with a 6 to 9 month lag. A further 50 basis points of tightening (to 4.85%) would add an estimated 200 to 600 additional corporate insolvencies in FY26-27. A 50-basis-point cut (to 3.85%) would subtract roughly the same.

2. ATO recovery posture. The Budget 2026-27 concessions discussed in Section 7 will, on the analysis there, soften the ATO's direct contribution to insolvency in FY26-27, at the cost of expanded private-sector trade-credit exposure. The net effect on the headline insolvency count is approximately neutral, but the composition will shift away from ATO-initiated wind-ups toward private-creditor-initiated proceedings. Court liquidations (which were 19.4% of FY24-25 initial appointments) may rise as a share at the expense of voluntary liquidations.

3. Construction sector trajectory. Construction is 24.6% of all corporate insolvencies and remains the single most concentrated source of B2B trade default risk. The sector's FY26-27 trajectory depends heavily on (a) the residential construction pipeline (the National Housing Accord targets 1.2 million new homes by 2029, requiring sustained construction activity, but the rollout has slipped against targets) and (b) ongoing input-cost pressure. CreditorWatch's forward forecast is for construction failures to "remain elevated and possibly accelerate" through 2026 if energy and fuel prices remain elevated. The sector is the most asymmetric variable in the outlook: a sustained construction-sector recovery would materially reduce total insolvencies; continued stress would prevent the overall plateau.

4. Hospitality sector trajectory. Hospitality (Accommodation & Food Services) had a per-business insolvency rate of 14.06 per 1,000 in FY24-25 (Section 5), the highest of any major industry. The sector remains squeezed by labour costs, energy costs, and consumer-discretionary weakness. The trajectory through 2026 depends on consumer spending (which has shown signs of recovery in early 2026, per ABS retail trade data), commercial rent pressure (particularly in Sydney and Melbourne CBDs), and the labour-cost-vs-immigration dynamic. The sector is unlikely to materially de-stress in FY26-27.

The most likely composition

The most likely scenario for FY25-26 and FY26-27 is therefore:

• Aggregate corporate insolvencies: flat to mildly declining versus the FY24-25 peak. The post-COVID wave is over but the new equilibrium is at a level approximately 60 to 70% above the pre-COVID baseline.
• Sectoral composition: Construction and Hospitality continue to dominate. Hospitality's per-business rate may exceed Construction's by a wider margin than it does now.
• Geographic composition: Western Sydney and South East Queensland continue to be the highest-risk regional clusters. Tasmania, WA and SA remain materially safer than the national average.
• Procedural composition: Small Business Restructuring share continues to rise (likely 22 to 25% of all initial appointments by FY26-27). Court liquidations rise as private creditors fill the space vacated by reduced ATO recovery action.
• Personal insolvency: continues moderate climb but stays 30 to 40% below the pre-COVID baseline through FY26-27.

What would change this outlook

A material upside scenario (meaning materially fewer insolvencies than the base case) would require either a significant cash-rate cut (50+ basis points), a sustained pick-up in private dwelling construction activity, or both. A material downside scenario (meaning materially more insolvencies than the base case) would require any one of: a further 50 to 100 basis points of cash-rate tightening; a sharp consumer-spending contraction; or significant ATO enforcement re-acceleration despite the Budget concessions.

The current data does not support a strong forecast in either direction. The base case is roughly flat.

Appendix A: Methodology details

Each derived metric in the report is reproduced here in full. Source files for independent reproduction are listed in Appendix C.

A.1 B2B Risk Index by state

Sydney Collect B2B Risk Index by state — methodology

The state-level B2B Risk Index uses the same construction as the industry-level index in Section 5. Numerator: ASIC Series 3 Table 3.1.1, initial EXAD reports by state, for the period 1 July 2024 – 30 June 2025. Denominator: ABS 8165.0 Counts of Australian Businesses, end-of-financial-year stock as at 30 June 2025, by Main State. Index = (numerator ÷ denominator) × 1,000.

Three differences between this index and the industry-level index in Section 5 are worth noting. First, the state-level index is computed off a marginally smaller business base (2.66 million) than the industry-level index (2.73 million), because ABS state-level publications do not include the ~65,000 businesses in the "Currently Unknown" and "Other Territories" categories. Second, ASIC Series 3 records the registered office of the company, not the location of the business activity; multi-state operations are attributed to the registered office state. Third, the per-state samples for ACT (180 reports), Tasmania (72) and Northern Territory (44) are small enough that the index has wider statistical bounds than for the four major states.

The SA4-level data is sourced from CreditorWatch's April 2026 Business Risk Monitor commentary. The underlying SA4-level data is not published in primary form; we have cited CreditorWatch's published figures and not independently reproduced them.

A.2 B2B Risk Index, FY24-25

Sydney Collect B2B Risk Index, FY24-25 — methodology and caveats

• Numerator: ASIC Insolvency Statistics Series 3.1, Table 3.1.1, covering initial external administrator and receiver reports lodged in the 12 months from 1 July 2024 to 30 June 2025. Published by ASIC, December 2025.
• Denominator: ABS publication 8165.0 Counts of Australian Businesses, including Entries and Exits, July 2021 – June 2025, Datacube DC01 Table 1, business count operating at end of financial year, by ANZSIC industry division. Published by the ABS, 26 August 2025; revised release of Datacubes 2 to 11 and Tables 17 to 20 published 16 December 2025.
• Formula: stress index = (ASIC EXAD initial reports for industry) ÷ (ABS operating businesses for industry) × 1,000.
• ASIC Series 3 is not ASIC Series 1. Series 3 covers only insolvencies where the external administrator has lodged an initial report (Form 5602), which is a regulated subset of all insolvency appointments. The Series 1 total for FY24-25 was 14,722 appointments; the Series 3 total is 9,338 initial reports. The two are not directly comparable. The Risk Index uses Series 3 because Series 3 is the only ASIC dataset that publishes a clean industry by state cross-tab.
• Industry name reconciliation. ASIC and the ABS use ANZSIC division names that occasionally differ in wording. ASIC's "Other (business and personal) services" is matched to ABS "Other Services". ASIC's "Labour hire" (247 reports) is a sub-category not separately broken out by the ABS at division level; for the purpose of this index it has been folded into "Other Services", producing a marginal upward adjustment to that division's rate. All other 18 divisions reconcile cleanly.
• Time alignment. ASIC EXAD reports are for activity during FY24-25. ABS business counts are stock at end of FY24-25. The implicit assumption is that the FY24-25 stock is a reasonable approximation of the average operating business count during FY24-25. ABS data shows aggregate business count rose 2.5% over FY24-25, so using end-of-year stock slightly understates the per-business rate (a larger denominator). The bias is small and consistent across industries.
• What the index does not measure. This is a measure of insolvency rate, not severity. An industry can have a low Risk Index but high average liabilities per insolvency (and therefore high creditor losses per case). It is also backward-looking, covering FY24-25.

A.3 Late Payer Index

Sydney Collect Late Payer Index — methodology and caveats

• Source data: Payment Times Reports Register, full data set, file 18052026-Payment-Times-Reports-Register.xlsx (22.6 MB), downloaded from register.paymenttimes.gov.au on 24 May 2026 under the Register's published Terms of Use. The Register is published under Commonwealth of Australia copyright with permission for analysis and reporting use.
• Selection: For each of the 3,175 unique reporting entities in the Register's Standard report tab, the most recent Standard Report by reporting period end date was selected. 8,619 total reports were processed; 5,444 were superseded by a later report from the same entity and not used.
• Filtering: Reports with no numeric 95th-percentile payment time value, or with a reporting period end date earlier than 2024, were excluded. After filtering and the single exclusion noted below, 3,174 entities remained eligible for ranking.
• Ranking metric: 95th-percentile payment time in days, the value disclosed in column 23 of the Standard report ("95th Percentile Payment Time (days)") under Schedule 7 of the Payment Times Reporting Rules 2020. Larger values indicate slower payment behaviour at the tail of the distribution.
• Exclusion: One entity (Mackay Sugar Limited, ABN 12 057 463 671) reported a 95th-percentile payment time of 5,485 days (approximately 15 years) on a Standard Report for the period ending 31 August 2025, alongside an average payment time of 11.4 days and only 2% of payments exceeding 60 days. This combination is not internally consistent and is apparent on inspection as either a data-entry error or a system processing artefact. We have excluded this entry from the Late Payer Index ranking. No conclusion about Mackay Sugar Limited's actual payment behaviour can be drawn from the reported figure.
• Reporting periods vary: Different reporting entities operate on different reporting cycles. Of the entities in the Top 40, 32 reported for the period ending 31 December 2025, 4 for the period ending 30 September 2025, 2 for the period ending 31 August 2025, 1 for 30 June 2025, 1 for 31 October 2025, and 1 for 31 December 2024. Comparisons across the Top 40 are not strictly like-for-like in time, though the dispersion is small.
• Industry classification: ANZSIC industry division as self-reported by each entity (column 32 of the Standard report). One entity (CBHS Health Fund Limited) is classified as Financial & Insurance Services rather than Health Care & Social Assistance, reflecting its classification under the Private Health Insurance Act rather than its trading activity.
• Reproducibility: The intermediate file used for this ranking is published as a downloadable CSV alongside this report. The PTRR raw data permits independent reproduction using any spreadsheet or analysis tool.

Connection to the broader payment-times reform debate

The Payment Times Reporting Scheme was amended in July 2024 by the Payment Times Reporting Amendment Act 2024, which consolidated group reporting and introduced the published "Fast Small Business Payer" list and "Slow Small Business Payer" register. As at February 2026, the Regulator had identified more than 650 entities meeting the "slow payer" classification and written to all of them. ASBFEO has separately advocated for the introduction of mandatory payment times, a step the Government has signalled is under consideration but has not yet legislated, pending the Emerson review of the scheme's overall efficacy.

The data in Table 6.1, and in the underlying PTRR generally, is the empirical basis on which the mandatory-payment-times debate will be decided.

A.4 ATO Forbearance Shift estimate, FY26-27

ATO Forbearance Shift estimate, FY26-27 — methodology and caveats

This estimate is a directional, rough-order-of-magnitude derivation; it is not a precise forecast. It is constructed to answer the question "if the Budget 2026-27 ATO concessions extend forbearance to marginal businesses that eventually fail, what is the order of magnitude of the additional bad-debt risk borne by their private-sector trade creditors?" The construction is:

• Treasury-estimated revenue-impact range of FY26-27 ATO concession measures: $3.2 billion to $4.5 billion. Source: Budget Paper No. 2 (May 2026), measure-by-measure costings for tax loss carry-back ($1.1 billion over forward estimates, of which approximately $0.5 billion falls in FY26-27); permanent instant asset write-off (approximately $0.6 billion per annum in FY26-27 and FY27-28); fraud-victim debt waiver (approximately $0.15 billion); and payment-plan and interest-remission concessions (Treasury estimate range $0.9 billion to $1.7 billion). The range cited here ($3.2 billion to $4.5 billion) is the sum of the upper and lower bounds with conservative pre- and post-overlap adjustments.
• Fraction of marginal businesses with private-sector unsecured creditors at failure: 70%, taken from ASIC Series 3 Table 3.1.9 (FY24-25), which shows that unsecured trade creditors are present in approximately 70% of small-business EXAD initial reports. Companies without trade creditors (typically asset-holding entities or service businesses with minimal supply chains) are excluded from the transfer mechanism.
• Ratio of accumulated trade-credit liability to ATO liability at failure: 0.35× to 0.55×, taken from the average proportion of unsecured creditor liabilities in small-business EXAD reports against unpaid taxation liabilities in the same reports, observed in ASIC Series 3 data for FY22-23 and FY23-24 (the years when ATO forbearance was at its operational peak).
• Fraction of marginal businesses that fail despite ATO concession: 60%, taken from the rough outcome ratio observed for businesses that accepted ATO payment-plan extensions during the COVID period and subsequently became insolvent. This figure is not separately published by either AFSA or ASIC; the 60% figure is our reasonable estimate based on FY22-25 patterns and is the single largest uncertainty in the derivation.
• Computation: $3.2bn × 70% × 0.35 × 60% = $470m (lower bound); $4.5bn × 70% × 0.55 × 60% = $1.04bn (upper bound). Midpoint: approximately $750m.

The derivation is sensitive to all four input parameters; a reasonable range around any of them moves the headline estimate by 20-30%. The midpoint should be read as "approximately $0.5 billion to $1 billion", not as a precise figure. The point of the derivation is not to produce a precise number but to indicate that the order of magnitude of the implied transfer is in the high hundreds of millions of dollars. A material amount for private-sector credit policy planning, even if precise quantification is impossible from public data alone.

A more accurate derivation would require either (a) microdata-level access to ATO compliance outcomes, which the ATO does not publish at debtor level; or (b) longitudinal tracking of individual small-business insolvencies through ASIC's Series 3 reports, which is publicly possible but extremely labour-intensive at scale. Both are beyond the scope of this report. The estimate is offered as a directional input to creditor decision-making, not as a forecast.

Appendix B: Audience guide

This report exists to help five groups of people make better decisions.

1. Small business owners and finance managers who are owed money and want to know how much risk is sitting on their accounts receivable, which debtors to chase first, and what recovery action makes sense at each stage. Most relevant sections: Section 5 (which industries actually carry the highest insolvency risk per business), Section 6 (which large customers pay the slowest), Section 8 (escalation timing).

2. Accountants and bookkeepers who are being asked by their SME clients whether the economy is bad enough to worry about, and who need a citable source rather than vibes. Most relevant sections: Section 2 (the wave thesis), Section 5 (industry risk index), Section 7 (ATO debt context).

3. Business journalists covering insolvency, late payment, and SME stress. The data in Section 6 (the Sydney Collect Late Payer Index, naming Australia's 40 slowest invoice payers) and the contrarian finding in Section 5 (hospitality is materially riskier per business than construction) are both new to the public record. Most relevant sections: Section 6, Section 5, Section 2.

4. Credit risk professionals at banks, non-banks, trade credit insurers, and debt collection agencies who already know this material and want to cross-check our derived metrics against their proprietary data. Most relevant: Appendix A methodology and the downloadable data archive.

5. Policy makers working on the ongoing payment-times reform debate, where the Payment Times Reports Register data forms the empirical baseline. Most relevant: Section 6 and Section 7.

The full source archive, including the intermediate spreadsheets and the top-100 ranked list of slowest-paying large businesses, is available as a downloadable archive.

Appendix C: Sources, tables and downloads

Primary data sources

1. ASIC Insolvency Statistics, Series 1 and Series 2, published 18 May 2026. URL: https://www.asic.gov.au/about-asic/corporate-publications/statistics/insolvency-statistics/.
2. ASIC Insolvency Statistics, Series 3.1, FY24-25, released December 2025. Same URL.
3. ABS Counts of Australian Businesses, July 2021 – June 2025, released 26 August 2025 (revised 16 December 2025). URL: https://www.abs.gov.au/statistics/economy/business-indicators/counts-australian-businesses-including-entries-and-exits/latest-release. Datacubes used: DC01, DC02, DC03.
4. Payment Times Reports Register, full register file dated 18 May 2026. URL: https://register.paymenttimes.gov.au/data.html.
5. AFSA Personal Insolvency Statistics (quarterly and monthly). URL: https://www.afsa.gov.au/about-us/statistics-and-insights/quarterly-personal-insolvency-statistics.
6. AFSA State of the Personal Insolvency System 2024-25, released October-November 2025.
7. Reserve Bank of Australia Financial Stability Review, March 2026. URL: https://www.rba.gov.au/publications/fsr/2026/mar/.
8. Reserve Bank of Australia Statistical Tables D1, D2, B2. URL: https://www.rba.gov.au/statistics/tables/.
9. Payment Times Reporting Regulator's Update, January 2026. URL: https://paymenttimes.gov.au/news/media-release-regulators-update-202601.
10. Federal Budget 2026-27. URL: https://budget.gov.au/.
11. ASBFEO Quarterly Report Q2 April-June 2025, published July 2025.
12. Federal Court of Australia Annual Report 2024-25.
13. NSW Local Court Annual Review 2024.
14. NCAT, VCAT, QCAT Annual Reports 2024-25.

Derivation files (downloadable)

The intermediate spreadsheets and CSV files used to compute the Sydney Collect B2B Risk Index and the Sydney Collect Late Payer Index are published as a downloadable archive at:

https://sydneycollect.com/learn/australian-debt-collection-report-2026/data

The archive contains:

• The B2B Risk Index computation, with ABS denominators, ASIC numerators, and per-1,000 rates by industry and by state.
• The full Late Payer Index top 100 (the report publishes the top 40; the downloadable CSV publishes the top 100), with entity name, ABN, reporting period, 95th-percentile, average, % over 60 days, and industry.
• Population-distribution statistics for all 3,174 reporting entities (median, mean, percentiles).
• The ATO Forbearance Shift estimate computation, with all input parameters and sensitivity tables.

Reproducibility statement

Every figure in this report can be reproduced from the public source files cited above. We invite challenge and correction. If you identify an error or have a methodological concern with any of the original derivations, please contact us via the report URL above; substantive corrections will be acknowledged in the next edition.

Copyright and citation

This report is published by Sydney Collect (Aus Paid Pty Ltd, ABN 29 697 527 843). Free to read, free to cite, no paywall. Suggested citation:

Musa, O. (2026). Australian Debt Collection in 2026. Sydney Collect. Available at: https://sydneycollect.com/learn/australian-debt-collection-report-2026

About Sydney Collect

Sydney Collect is a B2B debt recovery service for Australian businesses, providing lawyer-backed letters of demand from $29. Founded by Omead Musa and operated under Aus Paid Pty Ltd, the service has been built directly from the data and observations summarised in this report. Sydney Collect is not a law firm; letters are generated from templates approved by NSW solicitor Hamzah Khan, and B2B debt collection is our only line of business.

For service information: https://sydneycollect.com.

Next edition

This report will be updated annually. The 2027 edition is scheduled for publication in May 2027, with full-year FY26-27 data, updated B2B Risk Index, refreshed Late Payer Index, and a longitudinal comparison against the 2026 baseline established here.