Australia is experiencing a sharp rise in business insolvencies, driven by cash-flow stress. More than 11,000 businesses entered external administration in FY 2023-24, a 39 per cent increase from the previous year and the highest number on record. By mid June 2025, the total number of insolvencies had reached 14,105.
This surge is hitting small businesses hardest. According to Asic, 68 per cent of companies that failed owed under $1 million to their creditors. In the hospitality sector alone, almost one in 10 businesses closed in the past year, with payment delays and rising tax debt creating unsustainable pressure.
The underlying issue? Cash flow. The Reserve Bank of Australia notes that insolvencies have surged largely due to rising costs, higher interest rates, tighter credit conditions, and increased ATO collections. These factors are squeezing working capital and leaving many businesses with little room to move when clients pay late or revenue dips seasonally. So, what’s the solution?
Invoice finance could be the key to keeping your doors open
Cash flow issues don’t usually strike out of nowhere, they build slowly. Often hidden in unpaid invoices. A delay of up to 90 days in customer payments across most industries can be enough to trigger payroll issues, missed supplier payments, or overdue tax bills.
This is where invoice finance comes in as the much-needed solution. Rather than waiting to be paid, businesses can access up to 90 per cent of the value of their unpaid invoices within 24 hours. But it’s not a loan. There’s no debt added to your balance sheet. The innovative funding solution leverages your accounts receivable, giving you faster access to money the business has already earned.
At OptiPay, we’ve seen firsthand how invoice finance helps companies stay ahead of the cash flow crunch. Whether it’s meeting payroll, taking on a new contract, or investing in inventory, invoice finance gives businesses the breathing space they need to operate with financial confidence. And in many cases, it’s the lifeline that prevents insolvency altogether.
For businesses already facing financial stress, invoice finance can play a fundamental role in regaining control. By stabilising cash flow, it can stop the spiral into tax arrears and creditor pressure. We’ve helped countless businesses use invoice finance to grow stronger.
For some businesses, small business restructuring (SBR) may be the best path forward, and OptiPay can still help.
In cases where a business has already accumulated unmanageable debt, particularly to the ATO, the Small Business Restructuring (SBR) process offers an alternative to liquidation. It allows eligible companies (those with under $1 million in liabilities) to work with a registered restructuring practitioner and propose a plan to creditors. If accepted by the creditors, a portion of the business’s debt can be forgiven, and they can continue trading under the same directors.
Unlike traditional administration, SBR is designed to be fast and cost-effective, typically completed within four to six weeks. Importantly, the business remains in the hands of its owners throughout the process.
At OptiPay, we continue to support clients even as they go through restructuring. We’ve worked with businesses during the SBR process, continuing to provide invoice finance so they can keep trading in better financial health.
Conclusion
There’s no doubt about it: Business insolvency in Australia is rising, and cash flow is often the root cause. But it doesn’t have to end in collapse.
Invoice finance gives businesses the funding line necessary to take control of cash flow before it becomes unmanageable or detrimental. And when needed, Small Business Restructuring can offer a second chance, with OptiPay standing alongside businesses every step of the way.
- If your business is amongst the majority in Australia feeling financial pressure, there is a solution for you. Contact OptiPay for personalised support.
