Findings from the January 2025 Australian Commercial Risk Barometer reveal a moderate deterioration in Australian business failure risk during the final quarter of the year, reversing some of the gains made earlier in 2024.
While the rate of increase is slower than in 2023, the trend signals a return to tougher trading conditions, which follows declining business confidence shown in previous Commercial Barometer reports.
The report highlights a disparity in risk across different sectors. While traditionally high-risk industries such as food services and construction saw stabilisation, lower-risk sectors – such as finance, insurance, utilities, and education – experienced a disproportionate increase in failure risk. This uneven impact is attributed to a number of factors, including shifting consumer behaviour and industry-specific challenges.
Key findings are:
- Increased failure risk: Overall business failure risk is now 6% higher than two years ago and only slightly below the peak reached in late 2023. Businesses at very high risk of failure increased at almost double the rate of lower-risk businesses.
- Shifting consumer behaviour: Consumers are increasingly favouring buy now, pay later (BNPL) services over traditional credit products, and reducing their spending on insurance, education, and energy. This shift is significantly impacting the finance sector.
- Financial sector stress: The financial services sector experienced a sharp increase in overdue trade invoices (8% between September and December 2024), surpassing increases in traditionally high-risk sectors. This indicates heightened financial stress and elevated failure risk within the sector.
- Uneven industry performance: The inconsistent performance across industries makes the outlook for 2025 uncertain. We recommend the close monitoring of businesses for the foreseeable future.
About illion
illion, an Experian company, is a leading provider of data and analytics products and services in Australia and New Zealand. illion is now owned by Experian, one of the world’s leading global data and technology companies.
About Experian
Experian is a global data and technology company, powering opportunities for people and businesses around the world. We help to redefine lending practices, uncover and prevent fraud, simplify healthcare, deliver digital marketing solutions, and gain deeper insights into the automotive market, all using our unique combination of data, analytics and software. We also assist millions of people to realise their financial goals and help them to save time and money.
We operate across a range of markets, from financial services to healthcare, automotive, agribusiness, insurance, and many more industry segments.
We invest in talented people and new advanced technologies to unlock the power of data and innovate. As a FTSE 100 Index company listed on the London Stock Exchange (EXPN), we have a team of 22,500 people across 32 countries. Our corporate headquarters are in Dublin, Ireland. Learn more at experianplc.com.
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