According to the latest CreditorWatch Business Risk Review, this indicates business conditions are normalising as companies begin trading at pre-COVID levels.
Meanwhile, it said other data, including higher-than-expected economic growth of 3.1 per cent in the December quarter and a falling unemployment rate, also indicates Australia’s post-COVID economic recovery is both sustainable and in full swing.
Nevertheless, CreditorWatch noted the end of government measures such as JobKeeper that artificially supported the economy during the worst of the pandemic is yet to take effect across the broader business sector.
Data also showed growth in credit enquiries has been accelerating over the last six months while debtor court cases have bottomed out over the same period.
“While the number of external administrations rose in early 2021, on an annual basis these have now fallen over 13 consecutive months. The average number of external administrations over the last six months is 14 per cent lower than for the six-month period to September 2020,” said CreditorWatch chief executive Patrick Coghlan.
“This is a metric to watch given the economic forecast for 2021. We expect to see a rise in the number of administrations, especially with JobKeeper having come to an end.”
Further, in line with administration figures, payment default numbers are also on the rise, increasing by 13 per cent in the March 2021 quarter.
“The number of payment defaults has fallen for the past five consecutive months, which gives off conflicting signals. With government stimuli recently ending, we’ll be watching closely as we enter a post-JobKeeper economy to see how this changes,” Mr Coghlan said.
Across the board, there is a low probability of default, with businesses in the healthcare and social assistance, arts and recreation services, and agriculture, forestry and fishing sectors among the least likely to default.
Transport, postal and warehousing, public admin and safety, and professional scientific and technical services are among the industries that are most likely to default, according to CreditorWatch.
Sectors where payment times are improving include:
- Manufacturing (down by 15 per cent)
- Electricity, gas, water and waste services (down by 28 per cent)
- Retail (down by 23 per cent)
- Accommodation and food services (down by 57 per cent)
Sectors where rising payment times are a concern include:
- Healthcare and social administrative assistance (up by 140 per cent)
- Administrative and support services (up by 49 per cent)
- Construction (up by 29 per cent)
- Professional, scientific and technical services (up by 25 per cent)