Small Businesses Face Record Payment Arrears

Financial strain reaches an 8.5-year high as Australian small businesses struggle with rising costs and new regulations.

Updated on Oct. 26, 2026 in Remote Work

Isometric editorial illustration of a shipping container and pallet, representing the logistical strain on Australian small businesses. — Australian small businesses report record payment arrears in September 2026, as rising operational costs and new regulations severely restrict cashflow. AI Illustration. Upload story photo >

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Is now a difficult time for small businesses to manage both rising costs and new regulations?

Australian small businesses are grappling with an 8.5-year high in serious payment arrears as of September 2026. Data shows over 50 percent of invoices are not being paid on time, putting significant pressure on cashflow.

Why it matters

The cumulative impact of rising energy and fuel costs, coupled with increased interest rates and complex new government regulations, has pushed many firms to the brink. These financial challenges are compounded by the administrative costs of implementing new workplace policies.

CreditorWatch reports that 1 in 10 invoices are now more than 60 days overdue. Additionally, 38 percent of businesses report a year-over-year revenue drop, while 65 percent express concern over cashflow for the coming year.

The players

CreditorWatch

This is a commercial credit reporting agency that provides data and insights on business risk and payment behaviour across Australia.

MYOB

This is an Australian multinational corporation that provides accounting software and business management solutions to small and medium enterprises.

Reserve Bank

This is Australia's central bank responsible for monetary policy, currency issuance, and maintaining financial system stability.

The details

Business owners are hiring extra staff specifically to manage administrative requirements for new policies like wage increases, payday super, and trust tax reforms. While the federal government has made the $20,000 instant asset write-off permanent, many owners cite difficulty attracting new customers as a primary concern.

Serious arrears reached an 8.5-year high in September 2026.
The Reserve Bank meets in October 2026 to decide on a potential interest rate increase.

Market Landscape

The federal government made the $20,000 instant asset write-off permanent to help mitigate rising operational costs. This policy attempts to provide a buffer for small businesses amidst an environment of high interest rates and increased regulatory compliance burdens.

Consumers may experience slower service or higher prices as small businesses pass on the costs of administrative burdens and energy bills. If cashflow remains tight, some local businesses may reduce operating hours or cut staff to maintain viability.

The takeaway

Small business owners should prioritise cashflow forecasting and explore government tax incentives to offset rising administrative and operational costs. Proactive communication with creditors may help manage the risks associated with the current period of high payment arrears.