There is an increasing number of businesses across the country delaying entering administration and instead remain propped up by government support, according to new CreditorWatch data.

There was a 20% decrease in the number of businesses entering administration from May to June and 50% fewer than in June 2019. This is coupled with a 17% decrease in court actions and 25% decrease in payment defaults.

CreditorWatch CEO, Patrick Coghlan said, “While at first glance, a decrease in business administrations, court actions and defaults seems to indicate a rebounding economy, it is clear that trouble is brewing, and businesses are struggling with significant cashflow issues.”

Payments in June were overdue by an average of 49 days across various industries, 342% higher than in June 2019, but even greater in Arts and Recreation (up 900%) and Retail (up 367%).

“Government stimulus packages like JobKeeper, JobSeeker, mortgage holidays and the much-needed Safe Harbour changes have provided businesses with a buffer of protection. Until now, the priority has been to keep as many businesses as possible above water.

“However, when support packages are eventually lifted, there will be a substantial number of ‘zombie businesses’ that have been kept artificially afloat. Banks will not be prepared to prop unviable companies and nor should taxpayers. However, the government can ease the impending insolvency curve by lifting Safe Harbour measures and forming an administration service to support the industry.”