Analysis of invoices sent by the cloud accounting software company’s small business customers between September 2024 and August 2025 has revealed the shocking late payment statistics for Scotland’s SME sector, with almost two-thirds (61.3%) of invoices paid late.

Motherwell and Glasgow are the cities worst affected by the late payments crisis in Scotland, with the former seeing 69.3% of invoices sent during the past year paid late, and the latter experiencing a 67.4% overdue invoice rate. While Dumfries is the city least affected by late payment, its SME community still experiences a staggering rate of 52.3% of invoices not being paid on time.

Looking at the wider picture, it’s clear that the issue of delayed payments is an epidemic which is harming Scottish small business owners: 

• Glasgow: 67.4%
• Dundee: 63.8%
• Aberdeen: 59.2%
• Edinburgh: 58.3%
• Perth: 58%
• Inverness: 54.5%
• Dumfries: 52.3%

Nationally, Scotland, alongside Wales, both have the lowest proportion of overdue invoices (61.3%) compared to England (62.8%) and Northern Ireland (72.8%). However, these findings show late payments as a continued obstacle for SMEs as they strive for growth.

The issue of late payment has also been highlighted by the government as an area of high priority, with a consultation currently underway to seek views into a range of proposed legislative measures aimed at tackling the problem. This consultation is due to continue until October 23rd 2025.

Roan Lavery, CEO and co-founder of FreeAgent, commented: “These figures highlight a serious and growing challenge for Scottish small businesses. When nearly two-thirds of invoices are being paid late, it’s not just inconvenient, it’s a fundamental threat to business survival and growth.

“Late payments hit hardest at the very businesses that are driving our economy, making it harder for them to plan, invest, and meet their own obligations. While there is a consultation currently underway which intends to address some of these issues, it’s vital that we see action from both policymakers and the business community to create a culture of prompt payment and to support SMEs in embracing digital tools that can protect their cash flow.”

Emma Jones, the UK’s Small Business Commissioner, added: “These figures paint a bleak picture. We know that on average 38 businesses close everyday as a result of late payment – this isn’t just an inconvenience.

“I am working to address the issue of late payment through encouraging digital adoption due to the link between using software and getting paid on time, active promotion of the Fair Payment Code that showcases companies with good payment performance, and direct contact with companies against whom cases of late payment are being raised.

“Late payment is a complex issue, exacerbated by a challenging economic environment, and we are working on all the elements to try and get money moving faster to small firms.”

A separate survey by FreeAgent reveals the consequences of late and non-payment for small businesses. Over a third (34.9%) of small businesses are left in limbo, waiting up to three months for outstanding invoices to be paid. Due to this late payment epidemic, almost half (43.1%) of small business owners report having to write off money due to late or non-payment of invoices. For some, the losses are significant with more than one in ten (10.3%) having had to write off between £1,001 and £5,000.

Due to this there is a strong appetite for tougher payment policies among SMEs with nearly half (49%) of those surveyed believing the Fair Payment Code should be made mandatory for all businesses.