Australian businesses struggling with debt

Australian debt repayments nosedived in Q4 of 2016, with late payments increasing nationally. 

In sour news for alternative lenders, new research by ratings giant Dun & Bradstreet found that ‘days past due’ rose across the board with the national average for late pay falling beyond a fortnight. 

Announcing the findings at the AltFi Australasia conference last week, D&B Australia CEO Simon Bligh said there was much to be concerned about. 

“What are we seeing in collections frankly is not good. The volume of customers is increasing quite significantly. The line that is more concerning to me here is the average value, you’ll see that that is on a distinct upward trend. It’s not a function of people’s spending patterns or revenue, it’s a function of distress.”

While late payment was ubiquitous, the trend was unevenly distributed across sectors and states. Mining, a major engine of the Australian economy, was by far the worst at paying back its debts. Agriculture, like mining a major exporter, was by contrast reliably prompt. 

Tasmania was the best state at paying down debts, while the ACT, home of politics and the public service, was the worst. In a surprising turn, it was big business that was slowest to repay its debts—a finding the report attributed to market power.

As well as businesses being late at paying debts, Mr Bligh noted that a similar trend was evident on the consumer finance side—particularly among the poor. “We’re seeing a sharp deterioration in the bottom three deciles. Its an early signal of distress," he said.