Almost 1 in 5 of SMEs say their business would not survive the loss of one major client, highlighting that business insolvencies continue to be a major concern in 2025.

The over-reliance of SMEs on a single client was a major finding in the latest edition of ScotPac’s bi-annual SME Growth Index Report.

It found that 17% of Australian SMEs believe they would be out of business if one major client or supplier fell over, highlighting the need for SMEs to manage concentration risk.

The finding comes on the heels of ASIC data that revealed 3,306 companies became insolvent for the first time in the first three months of 2025, and restructuring appointments have seen a seven-fold increase over the past three years.

Construction, which accounts for around 9.5% of all employment in Australia, was one of the hardest hit sectors.  More than 2,600 construction businesses became insolvent in the financial year to March 2025, up almost 25% year-on-year.

Key related findings from the latest SME Growth Index Report include:

  • SMEs reported that losing a key client would, on average, result in average revenue loss of 22%.
  • 59% of SMEs predicting declining revenue growth are now in full contraction – three times the level seen in 2019 – signalling further business failures are likely.
  • In addition to construction, hospitality businesses are particularly vulnerable, with restaurants and cafes struggling to manage rising operational costs and tighter consumer spending

ScotPac CEO, Jon Sutton, said that diversifying funding sources is critical for boosting SME resilience against market fluctuations.

“This feedback tells us that too many SMEs are just one shock away from collapse,” Mr Sutton said.

“Relying heavily on a single client or supplier can create serious vulnerability – especially in a volatile trading environment.”

“Over the past 12 months we’ve seen insolvency levels not witnessed in more than a decade, driven by rising costs, aggressive debt collection, and weakening consumer demand.”

Mr Sutton said that ScotPac can help by working with brokers to regularly assess an SME’s business risk and by exploring flexible finance solutions to manage volatility.

“In challenging conditions, businesses that diversify their client base and secure flexible funding are the ones that survive and thrive.”

“That’s where ScotPac can make a real difference – helping SMEs optimise their cashflow so they remain agile when it matters most.”

ScotPac has the largest range of fast and flexible lending solutions to support SMEs in any business scenario. Our core Invoice Finance product, otherwise known as Debtor Finance, was recently awarded The Adviser Magazine’s Debtor Finance Loan of the Year for a sixth time.

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About the SME Growth Index

Commencing in March 2014, ScotPac’s twice-yearly SME Growth Index is Australia’s longest-running research report on SME sentiment towards revenue growth prospects.

The Round 22 research was conducted by East & Partners who interviewed 724 SME enterprises with annual revenues of A$1-20 million.

SMEs surveyed have operated continuously for an average of 15.6 years and manage, on average, 55 full-time employees.

Sectors represented in the survey included Property & Business Services (14%), Manufacturing (13%), Wholesale (12%), Retail (10%), Transport & Storage (10%), Personal & Other Services (10%), Construction (10%) and other industries including Mining & Resources, Agriculture, Media & Telco, Accommodation, Cafes & Restaurants, Finance & Insurance (non-bank) and Electricity, Gas & Water.

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ScotPac is Australia and New Zealand’s largest non-bank SME business lender, providing funding to small, medium and large businesses from start-ups to enterprises exceeding $1 billion in revenues. For more than 35 years, ScotPac has helped thousands of business owners succeed, offering fast and flexible funding. From simple to complex, small to large, start-up, growth or turnaround – ScotPac can help with a range of funding including Invoice Finance, Trade Finance, Asset Finance and Business Loans.

 

For more information contact:

Todd Hayward
Mob: 0412 205 151