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First Xero Small Business Insights report for Canada reveals inflation impact on small businesses

August 24, 2022

Real sales for Canadian small businesses fell by 1.7% year-over-year amid challenging economic climate

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Xero, the global small business platform, today launched its Xero Small Business Insights for Canada and the United States, which provides critical insights into what is happening in this important sector of the economy, and highlights the impact inflation is having on Canadian small businesses.

Each quarter, Xero will provide small business performance data for Canada and the US, covering sales, time to be paid, and late payments across tens of thousands of its small business customers. The launch special report, Small business snapshot: United States and Canada, shares insights into the performance of small businesses in Canada through a shifting economy, from 2017, through the pandemic and recovery, to the current inflationary climate.

Growth has slowed, with inflation skewing sales

The report, produced in partnership with Accenture and based on aggregated and anonymized data from tens and thousands of small business customers across Canada and the US, reveals important insights into how the Canadian economic climate is affecting small businesses:

  • Canadian small business sales growth has slowed through early 2022. In March 2022, small business sales growth was 5.0 percent year-over-year (y/y), a notable slowdown from pre-pandemic average growth of 9.0 percent y/y, and slower than the 13.4 percent y/y rise recorded in February 2022. This measure is a nominal measure of sales - including both price and volume changes.
  • And real sales have fallen: As inflation rose 6.7 percent y/y in March 2022, this means real sales growth, which excludes price effects, actually fell 1.7 percent y/y (down from a 7.7 percent rise in February). That is, the rise in sales growth in March 2022 was due to higher prices, rather than an increase in the amount of goods and services sold.

“With our Xero Small Business Insights, our goal is to not only advocate for small businesses, but also empower them and our policy makers with data that informs the right decisions for our shared futures,” said Chris O’Neill, Chief Growth Officer, Xero. “We’ve seen from other regions how these insights have truly supported small businesses - and even helped to shape concrete action - and we’re thrilled to bring these insights to the Canadian market.

“Small and medium businesses are the heart of Canada’s economy but it’s been an incredibly tough few years. Sales growth collapsed in May 2020 when the pandemic hit, down 23 percent year-over-year, and then took eight months to get back to consistent positive sales growth.

“As borrowing costs rise, expenses increase, and customer dollars decline in purchasing power, it is more important than ever that small businesses understand exactly what is happening to their costs and profit margins at all times to navigate this tricky period.”

Payment times signal trend towards increased stability

The report also revealed that payment times and late payment delays have improved for small businesses in Canada. An improvement in these metrics means small businesses experienced decreased cash flow pressures.

  • Small businesses waited an average of 27.5 days for invoices to be paid in March 2022, which was slightly quicker than the 2021 average of 28.1 days.
  • Payments were an average of 6.6 days late in March 2022 - just below the 2021 average of 6.7 days.

“It’s heartening that Canadian small businesses haven’t suffered major increases in payment times or delays, due in part to the rapid pandemic-driven uptake of online payments as well as substantial government stimulus packages that added much-needed liquidity into the market,” said O’Neill.

“However, small business owners should note that as inflation continues to rise over the remainder of the year they need to stay on top of their accounts to ensure they are maintaining cash flow and profitability.”

Amit Singh, Managing Director, Accenture, said: “Small businesses and medium sized businesses are the heartbeat of the Canadian economy – making up almost 99.8 percent of employing businesses. Understanding and tracking the performance of small businesses, particularly during times of economic uncertainty, is absolutely crucial for effective economic management and public policy. The Xero Small Business Insights program provides timely insights about the health of small businesses. The metrics in this report have proven the resilience of small businesses in times of challenge – lockdowns, social distancing mandates and now unprecedented growth in inflation.”

The launch of Xero Small Business Insights for the US and Canada was announced at Xerocon New Orleans, one of the world’s premier events for cloud accounting leaders. Accounting and bookkeeping partners and the Xero app partner community are gathered over two days to hear the latest from industry leaders and gain expert insight into the newest Xero tools and features to help save time, grow their business and have a greater impact on their clients’ success. Xero also produces regular Xero Small Business Insights for Australia, the United Kingdom and New Zealand. Visit for more information.

For access to the full Small business snapshot: United States and Canada report and access quarterly updates, visit

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