The insolvency and restructuring trade body’s analysis of data provided by Creditsafe shows that businesses in Scotland had a total of 611,754 overdue invoices on their books last month. This was the highest number on record since January 2022.

Overdue invoice numbers rose by 44.3% year-on-year from January 2024’s total of 423,836. This was the second largest yearly percentage increase when compared to the other UK regions and nation, preceded only by the West Midlands which saw a 50.4% increase.

Richard Bathgate, chair of R3 in the Scotland, said: “The last few years have been incredibly challenging for Scottish businesses. While a decline in inflation levels in 2024 provided some relief by slowing the pace of rising costs, it has only slowed them, and this has also been overshadowed by a host of other mounting challenges.

“High and rising energy bills are continuing to squeeze profit margins, and the additional burdens introduced in the Autumn Budget, including the increase in Employers’ National Insurance Contributions and the minimum wage, have added further strain.

“These challenges are even harder to overcome for Scotland’s many small businesses, which often lack the financial cushion needed to cope with such shocks. As a result, we’re seeing more businesses delay payments for longer.”

The total number of Scottish companies with overdue invoices on their books rose to 38,511 in January, also the highest level since January 2022.

The number of companies with overdue invoices on their books rose by 27.8% year-on-year from January 2024’s total of 30,144. This was the largest percentage increase of all the UK regions and nations.

Mr Bathgate, who is also a restructuring partner at Johnston Carmichael in Aberdeen, continued: “While late payments are a concern across the UK, the figures in Scotland are rising at an unprecedented level.

“Our economy is particularly reliant on sectors like oil and gas, agriculture, and construction, all of which are facing significant challenges. Regulatory issues, rising costs and ongoing supply chain issues have hit these sectors especially hard in recent years, which has put more pressure on cash flow and is likely to have affected their ability to meet payment deadlines.

“If conditions don’t improve early this year, we could see even greater pressures on businesses, with some being forced to turn to insolvency processes to address their financial struggles.

“I would urge businesses in Scotland to seek advice at the first signs of financial distress. Conversations around money can be extremely difficult, but by facing your problems early, you’ll have more time to think about your next steps and more potential options available to you for resolving your concerns.”