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New Xero data reveals Canadian small business sales decline as inflation persists

January 26, 2023

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Toronto — January 25, 2023 — Canada’s small business sales growth slowed further between July and September 2022, reaching a 19-month low, according to recent Xero Small Business Insights (XSBI) data from global small business platform Xero. The declining growth rate, a trend throughout 2022, was affected by the impact of the rising cost of living in Canada, lessening customers’ purchasing capacities.

Despite the slow sales growth, payment times slightly improved in the three months to September (8.3 days) compared to the three months prior (8.4 days). These figures are still considerably higher than the 6.6-day average recorded in September 2021.

The XSBI data, which is aggregated and anonymized from tens of thousands of Xero small business subscribers in the United States and Canada, reinforces the difficult financial climate that a critical sector of the Canadian economy continues to face. The quarterly data highlights the impact rising inflation has had on trading conditions for small businesses over the course of 2022.

“The Xero Small Business Insights quarterly data shows small businesses continue to be affected by ongoing high inflation,” said Louise Southall, Economist at Xero. “Small businesses are massively important to the Canadian economy, and the data reflects how this contingent of our economy is facing into- the same increasing cost-of-living that has challenged many of us.”

Sales growth slows and real sales dip

The latest XSBI data showed Canadian small business sales growth slowed to 3.4 percent year-over-year (y/y) in September, a significant decrease and the smallest rise since February 2021, making this the lowest increase in over a year and a half.

Sales growth averaged 5.2 percent y/y in the three months to September, down from an average of 9.5 percent y/y in the six months to June. Using the September Consumer Price Index (CPI) of 6.9 percent y/y as a proxy for prices, the volume of sales actually declined 3.5 percent y/y in September. That is, small businesses sold fewer goods and services in September 2022 than they did in September 2021.

The sales slowdown is likely due to the mounting cost-of-living pressures customers are facing as wages continue to rise at a slower rate than inflation. As Canadians continue to assess their own financial situations amid shifting markets and turbulent economic conditions, discretionary spending has taken a hit, impacting many small businesses.

Payment times improved, but still lagging behind 2021 average

Late payment times slightly improved in the three months to September, averaging 8.3 days compared to 8.4 days in the three months to June. Despite the nominal improvement, small businesses are still being paid substantially later than they were a year ago, when the average late payment time was 6.6 days. Delays like these can create complications for small businesses in Canada, making them more susceptible to cash flow pressures, especially during times of financial stress.

Similarly, when measuring the delay between the time after an invoice is issued and when it is fully paid, known as the time to be paid, small businesses saw a slight short-term improvement. In the three months to September, small businesses waited an average of 29.8 days to be paid, bettering the previous 30.6 day average for the three months to June, although still longer than the 28.0 days they waited on average in 2021.

“Small businesses continue to display resilience during difficult times, especially as consumers face greater cost of living pressures and ultimately have less to spend on discretionary items,” said Chris O’Neill, Chief Growth Officer, Xero. “These businesses make up a key sector of our economy, but as sales growth declines and Canadians continue to weather a volatile economic environment, it’s more important than ever to ensure the health and longevity of the Canadian small business sector.”

Each quarter, Xero provides small business performance data for Canada and the United States, covering sales, time to be paid, and late payments across tens of thousands of its small business subscribers. This Xero Small Business Insights data and a free summary report is available to download each quarter at

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