Scottish Businesses had over 1.2 million overdue invoices on their books this winter.
Insolvency and restructuring trade body R3 analysed data from Creditsafe, revealing that 416,856 were due in December, 400,272 in January and 414,575 in February.
Scotland saw the biggest month-on-month increase in late payments between January and February in the UK, with numbers rising by 3.6%.
More than 94,000 Scottish businesses reported that they had overdue invoices on their books this winter – a figure which peaked last month at 32,074 firms, which was 3.7% higher than the January 2023 total of 30,939.
Paying invoices late
Richard Bathgate, chair of R3 in Scotland, said: “Paying invoices late can be a sign of wider issues within the business, or that it’s financially distressed, and can have a negative knock-on effect on supply chains if the payment issues from one customer are passed on by the supplier to those they owe money to.”
The restructuring partner at Johnston Carmichael in Aberdeen continued: “As a company director, keeping your business financially healthy should be a top priority, and you should be alert to any signs that issues may be arising.
“If your business is having problems paying invoices, staff or suppliers, or you’re worried about its finances, that’s the time to seek expert advice from a restructuring professional or licensed insolvency practitioner. “
Overdue Invoices can have serious implications for businesses, and insolvency is the worst-case scenario. It’s important to recognise the signs early on so that steps can be taken to prevent this from happening.
Taking action early could mean working out a payment plan with suppliers, or restructuring the business in order to free up cash-flow. Of course, insolvency is sometimes unavoidable and in this case, it’s important to act promptly in order to minimise losses.
Whatever the situation, seeking expert advice from a professional restructuring or licensed insolvency practitioner will help you find the best solution for your business. They can provide tailored advice on how to navigate difficult financial times, as well as helping you understand the legal and regulatory requirements that must be met.
Finding the right support is essential in order to make sure that all available options are explored and a course of action is mapped out. Asking for help doesn’t mean admitting defeat, but rather being proactive in taking control of your business’s finances.
Taking action against Overdue invoices
Overdue invoices can be a major drain on your business’s cash flow. It is important to have a clear plan of action in place to ensure prompt payment when customers fail to pay on time.
Ideally, invoices should include a clear payment structure such as details of any discounts offered for early payments or penalties for late payment. This should be made clear to the customer at the outset, in order for them to understand their obligations and avoid any confusion later on.
If invoices are still not paid, then any Scottish Business should consider debt collection action against the company or individual in question. Depending on the amount owed, recovery action is usually advised.
In most cases, this involves sending the debtor a formal letter before action, informing them that debt collection action will be taken if payment is not made within an agreed timeframe.
Overdue invoices are widely recognised as the silent killer of Small Businesses across the UK.