Media releasePublished on 27 October 2022

Canadian small business sales growth slows as cost of living pressures bite

Latest Xero Small Business Insights data shows sales growth slowed and payment times improved slightly

Toronto — October 27, 2022 — Canada’s small business sales growth slowed significantly in the three months to June 2022, and actually fell when rising prices were taken into account, according to recent Xero Small Business Insights data from global small business platform Xero.

At the same time, the latest Xero Small Business Insights payment time data shows that small businesses waited slightly less time to be paid, on average, in the three months to June than in the first three months of the year. However, measures of time to be paid and late payments are both still longer than they averaged in 2021.

The data highlights the challenging environment facing this crucial sector of the Canadian economy, as small businesses continued to fare poorly amid rising inflation this summer.

“The biggest takeaway from the Xero Small Business Insights quarterly data is that both consumers and small businesses have struggled, and continue to struggle, under the impact of high inflation,” said Louise Southall, Economist at Xero. “In Canada, small businesses are a major part of our economy, and so the data reflects how mounting cost-of-living pressures adversely impact us all.”

Stalled sales growth and declining real sales

Canadian small business sales growth slowed to 7.1 percent year-over-year (y/y) in June, a decrease from a monthly average sales growth of 10.6 percent y/y in the first quarter of the year (January to March).

Using the Consumer Price Index (CPI) as a proxy for prices, sales volumes fell 1 percent (y/y) in June. This means small businesses sold fewer goods and services in June 2022 than in June 2021, and that sales growth was due to price increases only.

The slowdown in sales growth is likely driven by Canadian consumers having less purchasing power to shop at small businesses. Prices for household essentials – debt repayments, energy bills, transport, housing, groceries – are rising faster than wages. This leaves less money for spending in small businesses on non-essentials such as personal care, meals out, or new clothes. The longer trend of slowing sales growth, from a high of 34.0 percent in April 2021, indicates pandemic-related consumer support for shopping local may have been short-lived.

Customers paid slightly quicker in the three months to June, but still taking longer than in 2021

As small businesses manage rising costs and juggle cash flow, there was some short-term improvement in payment times, but still an increase compared to the 2021 average.

Customers made payments 7.7 days late on average during the three months to June, which was 0.5 days shorter than the 8.3 days late for the three months to March. Despite this improvement, this remains above the 6.6 day average for 2021. Such delays create unnecessary complications for small businesses and make them more vulnerable to cash flow pressures.

A similar pattern was seen when measuring the delay between when an invoice is issued and when it is fully paid – known as the time to be paid. The average time small businesses waited to be paid was 29.4 days in the three months to June, compared to 30.2 days for the first three months of the year. However, the time to be paid metric is still above the 2021 average of 28.1 days.

“We have seen remarkable resilience among small businesses over the course of the past two years, and this period of rapid inflation continues to present challenges to this critical sector of our economy,” said Chris O’Neill, Chief Growth Officer, Xero. “With real sales continuing to decline, less purchasing power in Canadians’ pockets, and the holiday season around the corner, ensuring the health of our small businesses should be our priority and focus – especially amid a volatile economic environment.”

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 customers. The Xero Small Business data and a free summary report is available for download each quarter at


Media Contact

Xero Communications | Kelly Kerr |

Methodology and Background

Xero Small Business Insights quarterly update for Canada and the United States is principally based on aggregated and anonymized data from tens of thousands of small business customers across Canada and the US. This represents actual data and is not a survey.

For several years, Xero has been providing small business performance reports in Australia, New Zealand and the United Kingdom, based on the aggregated and anonymized data of its customers. In August 2022, Xero announced the expansion of Xero Small Business Insights to Canada and the United States for the first time.

Xero Small Business Insights will be released quarterly in Canada and the United States to help increase understanding about the performance of the small business economy. The data and a summary report will be available to download for free each quarter at

About Xero

Xero is a global small business platform with 3.3 million subscribers which includes a core accounting solution, payroll, workforce management, expenses and projects. Xero also provides access to financial services, and an ecosystem of more than 1,000 connected apps and more than 300 connections to banks and other financial institutions. Through Xero’s open platform, small businesses can connect to a range of solutions that help them run their business and manage their finances. For three consecutive years (2020-2022) Xero was included in the Bloomberg Gender-Equality Index. In 2021, Xero was included in the Dow Jones Sustainability Index (DJSI), powered by the S&P Global Corporate Sustainability Assessment. Xero has been named as a FIFA Women’s Football partner under FIFA’s new commercial structure.

For all media enquiries, please contact the Xero media team.

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