Trade Credit Market Update: November 2025
Authored by Peter Ghaleb, National Manager - Trade Credit Insurance
Our November market update covers recent trends in Australian business payment behaviour and insolvencies, highlighting the sectors most at risk and the factors driving current stress. While some industries have shown modest improvement, persistent cost pressures, tighter credit conditions, and global uncertainties continue to challenge businesses across Australia.
Economic Conditions and Business Health Overview
Payment stress across Australian businesses has remained elevated in recent months. The B2B Payment Default Index rose sharply, around 19% in July, and has held at that higher level since¹. Businesses with multiple registered trade defaults continue to face significantly higher failure rates. Although August recorded a decline in first-time insolvencies, levels remain high and uneven across industries. Construction and hospitality continue to lead insolvency volumes nationally.
Business confidence remains cautiously optimistic, though access to finance continues to present a challenge. Over half of business owners report difficulties securing funding, complex application processes and collateral requirements. Many have turned to personal savings to support working capital, suggesting ongoing strain on liquidity and external credit availability².
On the broader economic front, the ABS reported that the monthly Consumer Price Index (CPI) indicator rose 3.5% in the 12 months to September, with housing, food, and alcohol and tobacco the largest contributors to price growth³. In response, the RBA kept the cash rate unchanged at 3.60% in early November, aiming to balance the need to contain inflation with support for continued economic recovery4.
Top 10 Industry Insolvencies
The usual leaders, Construction and Accommodation & Food Services, remain at the top of the insolvency list5. While some improvement is evident compared to Q1-FY25, with Construction down around 8% year-on-year and Accommodation & Food Services down approximately 21%, absolute volumes are still very high.
Two notable movers up the ranking are Transport, Postal & Warehousing and Financial & Insurance Services. Both sectors show significant year-on-year increases in insolvencies, with Transport experiencing a raise of over 38% and Financial & Insurance Services up around 69%.
Rental, Hiring & Real Estate, and Health Care & Social Assistance have also shown notable year-on-year increases.
Top 10 Insolvencies Q1 2026 Compared to Q1 2025
| Rank | Movement | Industry | No. of Insolvencies Q1-FY26 | % Difference compared to Q1-FY25 |
| 1 | - | Construction | 1,128 | -8.29% |
| 2 | - | Accommodation and Food Services | 718 | -20.75% |
| 3 | - | Other Services | 523 | +15.96% |
| 4 | - | Professional, Scientific and Technical Services | 308 | -1.93% |
| 5 | - | Retail Trade | 281 | -1.05% |
| 6 | ▲ (+1) | Transport, Postal and Warehousing | 263 | +38.42% |
| 7 | ▼ (-1) | Administrative and Support Services | 236 | -5.22% |
| 8 | ▲ (+2) | Financial and Insurance Services | 207 | +69.67% |
| 9 | ▼ (-1) | Rental Hiring and Real Estate | 206 | +21.89% |
| 10 | ▼ (-1) | Healthcare and Social Assistance | 161 | +21.05% |
Source: http://www.asic.gov.au/
What's driving these trends?
- Transport, Postal & Warehousing: Rising input costs, wage pressures, falling second-hand asset values, and harder borrowing are squeezing margins. Weak freight demand and long contracts limit the ability to pass costs on.
- Financial & Insurance Services: Insolvencies are concentrated among smaller, commission-based businesses such as mortgage brokers and credit intermediaries. Lower loan volumes, higher compliance costs, and tighter refinancing make revenue volatile.
- Rental, Hiring & Real Estate: Higher interest rates, falling property values, and weaker transaction volumes (especially commercial) are tightening cashflow for property holders and agents.
- Healthcare & Social Assistance: Health and community service providers face rising wages, compliance costs, capped NDIS pricing, and tighter audits. Non-NDIS operators also contend with workforce shortages and heavy regulation. Combined with higher interest rates and tighter credit.
Current & near-term outlook for Australia
Inflation Trends
Inflation has moderated from the earlier spikes but remains above the RBA's 2-3 per cent target, with housing and food costs still particularly sticky. Persistent cost pressures are likely to keep margins tight for businesses, especially those unable to pass on higher input costs. While underlying inflation is expected to gradually ease over 2025-26, any resurgence could prolong rate pressure and cost volatility.
Monetary Policy & Economic Activity
The RBA held the cash rate at 3.60% in November, maintaining a data-dependent stance. While underlying inflation is expected to gradually ease over 2025-26, persistent price pressures in key sectors could keep RBA core inflation measures above the 2-3% target into early 2026. This suggests borrowing and refinancing costs for leveraged businesses are likely to remain elevated, while moderate economic growth, around 2%, leaves limited buffer to absorb shocks.
Labour Market
Tight labour conditions in logistics, skilled trades and other sectors continue to push up wages and compliance costs. For operators, rising labour costs combined with margin pressures and fluctuating operating expenses, are creating ongoing strain.
Global Uncertainty
External shocks, including trade slowdowns, commodity price swings, and geopolitical risks, are expected to continue weighing on export-dependent sectors and supply chains. These pressures could further influence business confidence and payment behaviour, particularly for companies exposed to global demand fluctuations.
Near-term Risk Outlook (6-12 months)
Payment stress indicators, combined with higher interest rates and tighter access to credit, suggest elevated risk of further insolvency clustering in vulnerable sectors such as construction, logistics, accommodation/food services, and smaller service operators. Even if headline insolvency numbers show short-term dips, businesses should anticipate longer payment terms, more defaults, and ongoing margin pressure in high-cost, low-buffer sectors.
How Trade Credit Insurance can help
In the current environment of elevated payment stress, persistent cost pressures, and tighter access to credit, trade credit insurance offers businesses a safety net against customer non-payment. By covering the risk of insolvency or late payment, it protects cashflow and allows companies to continue trading confidently with both existing and new customers. Beyond financial protection, insurers provide access to customer monitoring, credit assessments, and debt-recovery support, helping businesses act early when risk signals emerge. This not only reduces the impact of defaults but also strengthens resilience, enabling companies to manage exposure, safeguard working capital, and plan growth with greater certainty.
Coverforce is among the select insurance brokers in the country with a dedicated, in-house Trade Credit team. We offer customised insurance solutions at competitive rates to businesses throughout Australia. Find out more about our Trade Credit and Debtor Insurance solutions here
REFERENCES
- https://creditorwatch.com.au/introducing-the-business-risk-monitor/
- https://creditorwatch.com.au/australian-business-leaders-optimistic-despite-challenges-accessing-credit/
- https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/monthly-consumer-price-index-indicator/latest-release
- https://www.rba.gov.au/media-releases/2025/mr-25-27.html
- https://www.asic.gov.au/about-asic/corporate-publications/statistics/insolvency-statistics/
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