The ripples of an insolvency wave have begun to wash through the economy, with cuts to stimulus payments prompting business owners to shut up shop.

Analysis from credit reporting agency CreditorWatch found the number of firms entering administration rose by 11 per cent in September to 436.

And the number of business defaults increased by 23 per cent – the first time the metric has risen since May.

Despite the uplift, the number of businesses in administration is still 48 per cent lower than last year (833) – a peculiarity that can be traced back to a government-enforced moratorium on insolvent trading.

But the experience differs from state to state.

Both Victoria (23.8 per cent rise) and Queensland (24.1 per cent rise) recorded near-identical increases in business administrations following substantial decreases over August.

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But NSW posted a 1.6 per cent fall in administrations in September, despite also recording a 34.3 per cent decrease in August.

CreditorWatch chief economist Harley Dale told The New Daily there’s “some correlation” between the rise in business administrations and the cuts to wage subsidies, with family-run businesses deciding to cut their losses now payments have been cut by $300 a fortnight.

But he said JobKeeper was still hiding the extent of economic damage caused by coronavirus lockdowns.

“I think the next six months are crucial as we continue to see a wind back of stimulus payments and we slowly assess how many businesses come out of that and how many don’t,” Mr Dale said.

The data comes two weeks after JobKeeper was cut from $1500 a fortnight to $1200 a fortnight for full-time workers and from $1500 to $750 for part-time workers.

And it comes amid fears that emergency protections to assist struggling-yet-viable businesses may be kicking the can down the road for a cohort of so-called zombie firms – those with insurmountable amounts of debt.

According to analysis compiled by Deloitte Access Economics, 240,000 businesses could fail due to the economic fallout of the coronavirus, which is a 3000 per cent increase on pre-pandemic years.

When pressed on whether the latest data is a precursor to an insolvency wave, Mr Dale said: “Not necessarily.”

“The biggest challenge for the Australian economy is uncertainty around the inevitable fact that – at some point – we’re going to see an increase in insolvencies and maybe it will be a substantial increase you could appropriately call a tsunami,” Mr Dale said.

“It’s a terrible tale to tell and you don’t want to talk about it.”

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CreditorWatch’s analysis also found payment times across industries had been slashed by 10 per cent, with the most substantial declines coming in IT (down 30 days), real estate (down 24 days) and public administration (down 15 days).

However, payment times are 222 per cent higher year on year.

Financial and insurance services (up nine days), health care (up four days) and manufacturing (up four days) were among the few industries to see payment times continue to increase.

CreditorWatch CEO Patrick Coghlan said continual attempts to support otherwise inviable firms could discourage otherwise healthy businesses that may be relying on creditors to support their own recovery.

“What we don’t want to see is businesses doomed to fail continuing to operate and taking healthy companies down with them,” Mr Coghlan said.