New data shows importance for businesses to manage risk when providing goods on credit

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Specialist data from the Australian Financial Security Authority released today shows just how important it is for businesses that provide goods on credit to manage their risk.

In the September quarter, people in businesses who entered into a personal insolvency owed 32% of their debts to a business, sole trader or individual. In contrast, 35% of their debts were to banks.

This means that trade credit debt is almost as high as bank debt. This is significant because bank debt is frequently secured whereas trade credit is often not, increasing the risks for businesses, sole traders or individuals who provide goods or services on credit.

“Businesses, sole traders and individuals are just as exposed as banks. They have a similar exposure to debts owed by people in business who have entered into a personal insolvency. And the gap between these sources of credit has fallen this year,” said River Paul, AFSA’s Chief Economist and Statistician.  

The AFSA statistics are available now at Debts in business related personal insolvencies.

Common types of businesses that may be at risk include:

  • commercial leases and real estate
  • equipment rental and leasing
  • transport
  • accountants
  • lawyers and
  • internet, communications and marketing.

AFSA Deputy Chief Executive Gavin McCosker said that it’s important for businesses to consider their risks and how to protect themselves, particularly in these challenging economic times.

“It’s fair to assume that a significant proportion of business debts are owed to trade creditors – businesses that sell goods on credit.

“When combined with data released about delayed payment times and changes in trade credit insurance over recent months, AFSA’s data provides a significant call out to businesses right across the country.

“All business transactions carry an element of risk but there are ways for organisations to protect themselves and their interests.

 “Businesses should consider whether the PPSR, the Australian Government’s register of security interests, can provide peace of mind in these uncertain times.”

The Personal Property Securities Register (PPSR), provides an important level of risk protection for businesses selling their goods on credit or trade terms. A registration on the PPSR can mean a business will have a legal right to be paid first or to get their goods back if their customer can’t pay or goes out of business.

“In many cases, a registration on the PPSR may even put a small business ahead of banks which may have provided finance for their customer,” Mr McCosker said.

“PPSR protection even applies if goods are sold on, mixed or installed into other goods, such as in manufacturing, protecting a variety of industries.”

“A PPSR registration costs just $6 per customer and can cover future supplies of similar goods for up to 7 years.”

More information about the PPSR, including specific information for industries hard hit by the COVID-19 pandemic like building, construction and manufacturing, is available at

Useful links:

More information about AFSA’s personal insolvency statistics is available at This includes our fortnightly personal insolvency statistics and our quarterly business statistics.