Australia is experiencing a sharp rise in business insolvencies, driven by cash-flow stress. More than 11,000 businesses entered external administration in FY 2023-24, a 39 per cent increase from the previous year and the highest number on record. By mid June 2025, the total number of insolvencies had reached 14,105.
This surge is hitting small businesses hardest. According to Asic, 68 per cent of companies that failed owed under $1 million to their creditors. In the hospitality sector alone, almost one in 10 businesses closed in the past year, with payment delays and rising tax debt creating unsustainable pressure.
The underlying issue? Cash flow. The Reserve Bank of Australia notes that insolvencies have surged largely due to…