The most affected sectors include electricity, gas, water and waste services, with an 89% increase, followed by education and training (87%), and mining (72%). The information, media and telecommunications sector was the only one to show improvement, with a 2% decrease in insolvency rates.

Small businesses in the electricity, gas, water and waste services sector are particularly impacted, entering external administration at a rate of 1.16%, up from 0.51% in May 2023. The mining sector faces rising insolvencies in both small and large businesses, particularly in mining services. Education and training sector insolvencies are predominantly among small businesses, exacerbated by declining international student numbers.

Business-to-business payment defaults set a new record in May, increasing by 21% from April and 58% year-on-year. CreditorWatch reports a strong correlation between payment defaults and business failure, with a 20% chance of failure for businesses with one default, rising to 42% with two defaults and 62% with three.

Meanwhile, court actions have surged past pre-COVID levels, up 63% year-on-year, indicating creditors have resumed regular collection activities.