The number of overdue invoices on the books of Scottish firms increased by 42.8% in October 2024 when compared to the same period in 2023, according to new research by R3, the UK’s insolvency and restructuring trade body.

R3’s analysis of data provided by Creditsafe shows Scottish businesses had 600,588 invoices that had gone past their payment deadline on their books in October 2024 – almost 180,000 more than in October 2023 and the highest monthly total of 2024 so far.

Scotland saw the second largest yearly rise in overdue invoice numbers of all the UK’s regions and nations. The West Midlands in England saw an increase of 49.5%.

Richard Bathgate, Chair of R3 in Scotland, says: “The sharp rise in overdue invoices is a clear indication of the financial strain many businesses in Scotland are still facing. Costs are continuing to rise, albeit at a slower pace, and it’s becoming increasingly more difficult to pass on these extra costs to customers or to cut back in other ways.

“As a result, businesses are experiencing tighter margins and cash flow challenges, making it harder to keep up to date with the payments they owe.”

In October, the number of Scottish businesses that reported they had overdue invoices on their books also rose to 37,821 – to the highest total of 2024 so far. This is 22.7% higher than the same period in 2023 (30,827) and was the largest yearly percentage increase of all the UK’s regions and nations.

Bathgate, Restructuring Partner at Johnston Carmichael in Aberdeen, added: “While late payments are not an issue unique to Scotland, we have seen a significantly sharper increase in the number of companies that are failing to pay their bills on time in comparison to the other UK nations.

“England and Wales have already experienced significant increases in insolvency numbers in recent years, and Scotland’s rising debt burden could be a warning sign that we are on a similar path, as many of the businesses grappling with overdue payments become insolvent as a result of the weight of their debt.

“I would urge business owners and directors that are struggling to pay their bills on time to seek advice as soon as they can. Taking that first step can be hard, but by having the conversation early, you will have more time and more options available to you than if you’d waited for the problem to get worse.”