Introduction
As Australian businesses continue to manage a challenging credit environment, global interest in this topic is growing. Recently, ‘’Risk Management Magazine (opens a new window)’’ in the U.S. published a feature exploring how companies are responding to rising tariff-related risks and credit exposures. Lockton’s own Sam Rodda, Client Manager at Credit Solutions team, was invited to contribute expert commentary to the international piece - a strong acknowledgement of the depth of capability emerging from our Australian team.
While the article focuses on global trends, many of the pressures highlighted are even more pronounced here at home. Insolvencies in Australia have risen sharply, increasing 43% year-on-year, with construction, retail and wholesale businesses among the most severely affected. These figures are consistent with the broader risk landscape outlined in our previous publication, ‘’Australian Insolvency Market Insights (opens a new window)’’, where persistent inflation, labour shortages and higher interest rates continue to place pressure on cash flow and margins.
Against this backdrop, more organisations are reassessing their credit risk posture not only to protect working capital but also to create competitive advantage through stronger credit governance and access to better financing terms.
A strategic tool in a volatile economy
Trade credit insurance (TCI) has evolved well beyond its traditional definition as a safety net. Today, it can enable businesses to:
Safely extend credit to higher-risk or offshore customers, supporting commercial growth.
Protect receivables from insolvency and protracted default, maintaining cash flow stability.
Improve access to funding, with banks increasingly recognising insured receivables.
Leverage real-time risk insights and insurer monitoring to anticipate financial distress earlier.
These themes echo Sam’s comments in the U.S. feature, where he emphasised that TCI provides a strategic foundation for businesses needing to navigate uncertainty while still pursuing growth.
Local realities: Why Australian businesses are turning to TCI
The pressures affecting Australian credit markets are multifaceted:
Insolvencies have surpassed pre-COVID levels. The latest ‘’ASIC data shows a 45.6% year-on-year increase (opens a new window)’’ in external administrations in the first quarter of 2024-25, with the construction industry leading with 898 insolvencies.
Retail and accommodation/food services continue to experience elevated stress due to rising operating costs and weaker demand.
Supply chain volatility and tighter lending conditions are prompting businesses to reassess credit exposure concentration.
For many organisations, the question is no longer whether to adopt credit protection, but how to structure it to support their operating model, customer portfolio and growth plans.
As highlighted in our ‘’Trade Credit Market Update (opens a new window)’’, aligning internal credit practices with insurer expectations is now a competitive advantage. By implementing this approach, businesses can be better positioned to secure more substantial support, unlock additional capacity and build greater resilience.
How Lockton can help
Our team supports businesses across Australia with advice, programme structuring and ongoing credit risk management including:
Tailored TCI programmes aligned to your industry’s specific risks
Ongoing customer credit monitoring and early-warning signals
Support for collections and claims, including case-by-case advocacy
Guidance on credit governance to strengthen underwriting confidence
As economic conditions tighten, our specialists are working closely with clients to redesign credit strategies that provide meaningful protection while supporting commercial objectives.
Whether you are facing pressure from key customers, planning expansion, or simply seeking to reduce volatility in your cash flow, we can help you build a strategy to drive stability and growth.
The contents of this publication are provided for general information only. Lockton arranges the insurance and is not the insurer. While the content contributors have taken reasonable care in compiling the information presented, we do not warrant that the information is correct. The contents of this publication are not intended as a legal commentary or advice and should not be relied on in that way. It is not intended to be interpreted as advice on which you should rely and may not necessarily be suitable for you. You must obtain professional or specialist advice before taking, or refraining from, any action based on the content in this publication.
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