A similar number (65%) of small businesses also expect further gains this quarter despite concerns about a looming recession.

Data from Barclaycard Payments, which processes one in three debit and credit card payments in the UK, shows an annual rise of 19.4% in the value and 21.5% in the volume of payments made to SMEs in Scotland between April and June this year.

The research found that to support this growth, nearly two fifths (34%) of SMEs in Scotland responded that they increased their number of full-time employees in Q2.

This trend is also expected to continue in quarter three, as on average small businesses predict a further 16.7% increase in their turnover for July to September, against the same period a year ago.

This reported revenue growth comes, however, at a time when more than half (54%) of Scottish small business leaders are pessimistic about the prospects of the UK economy, with 87% concerned over rising cost of bills and inflation, 77% worried about the UK going into a recession and 83% worried about the soaring cost of energy.

Last quarter, 56% of Scottish businesses were concerned that increased living costs would impact consumer spending, and 30% feared it would make them less competitive as they would need to increase prices.

These concerns have dropped slightly in Q3, with over half (51%) businesses worried about consumer spending levels and 52% now worried that rising costs will impact their competitiveness.

Despite the backdrop of uncertainty, 78% of Scottish SMEs are neutral (45%) or optimistic (33%) about their own business’ prospects, with half (50%) describing their current cashflow as strong.

Over half (57%) of SMEs say they plan to invest in their business over the next 12 months, turning to recruitment (34%), marketing (30%) and purchasing new equipment or technology (21%) to shore up their operations.

Colin O’Flaherty, head of SME at Barclaycard Payments, said: “The current trading environment brings a host of challenges for businesses, but as we saw throughout the pandemic, SMEs are resilient and our research shows they are proving this again this in the face of rising costs and inflation.

“We are confident they will prove adaptable and innovative to meet the challenge, but now more than ever, the nation must pull together to continue its support for local SMEs and provide them with the support they need.”