2023 Financial Year – Year in Review

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The 2023 Financial Year was a wild ride. Business failures were up over 60% on 2022, with the construction, hospitality and retail industries again over-represented in figures. For a lot of businesses we are in the middle of a perfect storm, but how long will it last?


Over 7,900 Australian businesses became insolvent over the last 12 months. This was up significantly on the last 4 years. The challenges of the pandemic, supply chain issues, economic imbalances and labour shortages seem to finally be catching up with Australian businesses. In addition, the amount of delayed payments, and legal actions undertaken to pursue debt has jumped considerably.

Interestingly, when compared to the 4 years prior to COVID (2017 FY – 2020 FY) – when on average 7,811 become insolvent each year – the number is very much on par. So is this just an over reaction to what are historically normal conditions?

A further dive into the numbers can give us some clues:

Certain sectors performed much worse than others. There were more than 1,000 extra construction insolvencies in the 2023 FY (a jump of over 70%). There was an increase of over 250% to insolvencies in the manufacturing sector.
Insolvencies in the final quarter of the year accounted for around 30% of the yearly numbers.

The worst of many of the challenges of the 2023 financial year may be behind us. The feedback we’re receiving is that the labour shortages, and supply chain issues are improving. What remains to be seen though is when the well publicised economic headwinds and uncertainty are going to subside.

It’s clear that significant credit risks will remain for the rest of the calendar year, and we have already seen some notable insolvencies in July. Businesses with exposures to the construction and manufacturing sectors need to be particularly careful in managing their customers accounts.

Debtor Protect are boutique and specialist trade credit insurance brokers. We understand that every business has unique risks and we aim to tailor a solution to those risks. To find out how we can assist your business, get in contact with us today.

Ian Markus
Director, Debtor Protect. 1300 249 744

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