B2B payment defaults have reached elevated levels that correlate strongly with increased business insolvency risk, according to Arteva Funding.
Its PF Insights FY25: Smarter Debtor Management for Insurance Brokers report has findings that are consistent with analysis from CreditorWatch’s Business Risk Monitor (BRM), which shows a strong correlation between B2B payment defaults and business insolvency risk.
Missed premium funding payments are concentrated in construction, professional services, and retail, according to the report’s analysis of debtor management trends. These findings align with CreditorWatch’s BRM data for August 2025, which shows the B2B Payment Default Index increased 19% in July and remained at elevated levels in August, marking a classic precursor to future insolvencies.
According to the BRM, companies with four or more registered trade defaults recorded business failure rates exceeding 50% over the past year, including both strike-offs and voluntary deregistrations. Approximately 26% of businesses carrying ATO tax debts exceeding $100,000 became insolvent within 12 months, with an average lead time of 235 days before insolvency. Businesses rated E – the lowest rating on the spectrum – experienced a 41.6% failure rate in the 12 months to August, representing a significant concentration of risk that brokers should consider when setting limits and prioritising collections.
The BRM showed that payment arrears for 60 or more days rose to 6.0% in August from 5.8% in July, indicating the need for dynamic credit limits and automated follow-ups. Risk levels vary across Australian regions, with Western Sydney and South-East Queensland containing clusters of highest risk, while inner-metro Adelaide, regional Victoria, and North Queensland recorded lower risk levels.
Arteva Funding’s report advises brokers to implement three key measures to mitigate payment risk:
Daniel Gronert, CEO of Arteva Funding, said management of payment behaviour enables brokers to respond more effectively to client financial distress. “Across Australia, B2B payment defaults continue to rise and are one of the strongest early warning signs of financial distress. Understanding payment behaviour isn’t just about admin – it helps us act fast, get better outcomes for clients, and build premium partnerships that last,” Gronert said.
Arteva Funding reported that its debtor management processes have reduced cancellations due to non-payment by 14% over two years. The report states that implementing the action steps may affect client retention and payment default exposure among brokers using the recommended measures.
