Payment defaults have surged in business transactions as cost pressures bite.
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The Business Risk Index released by CreditorWatch shows that invoice values - the total billable amount - continue to trend downwards, and sit at their lowest point since September.
The report found businesses with one default have a 24 per cent chance of going insolvent in the next 12 months.
CreditorWatch chief executive Patrick Coghlan said trade payment defaults going up while invoice values decline was a "real worry".
"This indicates that cash reserves are being depleted and margins are being squeezed," he said.
"An increasing number of businesses have less cash coming in, which means they are then finding it more difficult to pay their own suppliers.
"They are also cutting the size of their orders and running down inventories."
Although the average value of invoices for Australian businesses had a small uptick in January, they sit at 16 per cent below the February 2023 level.
Last month, CreditorWatch recorded the average value of invoices at a record low.
Higher interest rates, persistent inflation and lower consumer demand are placing extra pressure on businesses.
The areas with the lowest risk of business failure can be found in regional Victoria, inner Adelaide and North Queensland.
Western Sydney and Queensland's southeast are the regions where businesses face the highest risk of failure.
Businesses in the hospitality sector remain most at risk of failure, and lead others in the worrying metric.
Public administration and safety is the next riskiest industry, followed by accommodation.
Australian Associated Press
