‘Exceptionally hard to run a business’: Credit card ban yet another squeeze on cash flow

CreditorWatch CEO Patrick Coghlan said the ATO’s looming credit card ban and any other supplier that removes credit cards as an option could negatively impact businesses that are using the facility to pay their bills.

“All of a sudden, they’ve likely got to come up with cash in a shorter timeframe,” he told Accounting Times.

“A business orders and provides goods and services. There’s a cash cycle from when they order them to when they get paid for those goods and services. If that’s usually 90 days, and then all of a sudden you lose a 30-day credit card option, that’s a significant change that they’ve got to manage from a cash flow perspective.

Businesses have already been feeling the strain, with CreditorWatch’s September 2026 Business Risk Index (BRI) showing that ATO tax debt defaults spiked by 20.7 per cent in September from a year earlier to 37,577, and 5,289 higher than in January.

New defaults continued to outpace removals, with 2,024 new tax defaults lodged in September, representing a significant increase on recent months.

Moreover, one in 10 invoices was more than 60 days overdue, double the rate of a year ago and the highest since April 2018.

Coghlan attributed the rise in overdue invoices to a multitude of challenges, including that inflation is “continuing to run hot”. According to the Australian Bureau of Statistics, the consumer price index (CPI) rose 4.3 per cent in the 12 months to September 2026, up from 4.0 per cent in the 12 months to August 2026. Trimmed mean inflation was 3.6 per cent in the 12 months to September 2026, up from a revised 3.5 per cent in the 12 months to August 2026.

“Sometimes, inflation is just thought of as a number, but what that actually means is all of the input costs that go into running a business, be it salaries, energy, fuel, rent, the cost of goods, are all going up,” Coghlan said.

“That puts a margin pressure on businesses, particularly if they’re in industries that aren’t able to pass on cost increases as easily as other industries.”

Alongside this, the cost of capital has risen as interest rates continue to climb while consumer discretionary spending has dwindled significantly, Coghlan said.

“That squeezes a business. Costs are increasing while their revenue is reducing. It’s exceptionally hard to run a business at the moment. We’re not being draconian in our messaging and statements. That’s just the cold hard truth of it.”

CreditorWatch data revealed that company insolvencies remained volatile and are likely to begin to rise in the coming months as a result of difficult conditions for businesses and consumers with large debts. These include interest-sensitive sectors of the economy, including residential construction and real estate, businesses reliant on discretionary spending, and low-income earners.

“We’re seeing business insolvency risk increase over the next 12 months as a result of the increase in late payments and payment defaults that we’re seeing within our proprietary data,” Coghlan said.

“It's often not one thing that tips a business over the edge from an insolvency perspective. It's often the cumulative effect of changes. The credit card ban is just another change that has the ability to really impact a business.”

Coghlan offered suggestions on how accountants could help small businesses navigate the credit card ban and cash flow constraints, including reviewing working capital and cash flow on a regular basis.

“Business owners are busy running their business and might not be experts in cash flow accounting,” he said.

“They need to be leaning on experts like their accountants to assist them with making the right decisions, ensuring that they're planning for the future and can withstand price increases from suppliers or reductions in revenue as a result of subdued consumer demand.”