'Massive' increase in non-payers

A "staggering increase" in the number of firms not paying their bills in the first half of the year has prompted credit bureau Veda Advantage to warn businesses of a deterioration in the next 18 months.

Veda said it saw a "massive" 64.56 per cent rise in commercial defaults in the six months to June compared with a year ago. Defaults are essentially where the business owed money has given up and turned to a debt collection company which then informs a credit bureau like Veda.

Commercial inquiries for credit were down 16.43 per cent.

Veda Advantage managing director John Roberts said the "staggering increase" in defaults showed the recession was hitting businesses hard, "and sadly, our predictionis that it is only going to get tougher".

"We are already seeing businesses fail in this economic climate and we predict that more will follow - we urge all businesses to keep a close check on their debtors."

Veda's figures were not all gloomy. There was a small improvement in the rate at which consumer credit inquiries were falling, from more than 10 per cent last year to 8.19 per cent.

In fact there had been a small month-on-month increase in some types of credit inquiries during June, suggesting consumers might now have seen the worst of the downturn, said Roberts.

"It would seem that the consumer demand cycle has plateaued and is even possibly showing a bit of growth again."