In late 2024, it’s clear that despite some hopes that conditions would improve this year, trading conditions have continued to deteriorate.

Amid rising costs, squeezed margins and plummeting consumer confidence, businesses are stressed, and in many cases, vulnerable. 

One key indicator? Dishonour and default rates. According to ASIC statistics, business-to-business trade defaults have increased by 14% year-on-year, indicating that businesses have more debt than ever, and less working capital to hand.

Within our portfolio at Hunter Premium Funding, we’ve seen our dishonour rate hitting a 5-year high, increasing 21.43% year-on-year. The impact is apparent across all states of Australia, and in New Zealand, both dishonours and insolvencies — the key lag indicator of economic stress —are rising.

Which industries have been hit the hardest?

If you work with clients in the accommodation, food, construction, manufacturing, rental or hiring sectors, you already know that these industries have been at the epicentre of 2024’s economic crunch.

Together, these industries have accounted for nearly 50% of all insolvencies, according to ASIC.

As consumers choose to save rather than spend on discretionary items, accommodation and food-based businesses have been hit hard. Within this field, insolvencies are up by a massive 49.64% year-on-year, while a full 1.52% of registered food and beverage businesses have declared insolvency —the highest rate of any sector.

Across all sectors, the majority of insolvencies are declared by small-to-medium enterprises (SMEs). If businesses like these number among your clients, then chances are they’re hurting right now.

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