Media releasePublished on 25 January 2023

New Xero data sees US small business sales slow as consumer spending tightens

Xero Small Business Insights reveals two slowest sales growth months since the start of 2021

Denver — January 25, 2023 —Xero, the global small business platform, today released a quarterly update as part of its Xero Small Business Insights (XSBI) program, which aggregates and anonymizes data from tens of thousands of Xero small business subscribers from the United States and Canada. The quarterly data, which tracks performance metrics from January 2017 through September 2022, found that sales growth for US small businesses continued to slow and recorded its two smallest rises of the past 20 months in July 2022 and September 2022. The slowdown in sales growth is likely due to the impact of inflation which is limiting the capacity of consumers to spend.

Small business owners in the US were paid quicker in the three months to September (7.2 days) compared with the previous three months, but only by an incremental amount (0.5 days). Small businesses waited to be paid for a longer period in the September quarter (26.4 days) than in the previous quarter (26.3 days). In the case of small businesses, this often means skewed revenue numbers, payroll delays and an inaccurate understanding of their cash flow positioning.

Sales growth records two slowest months since the start of 2021

XSBI measures sales in nominal terms, which means it captures changes in both price and the quantity of goods sold.

  • Sales growth slowed to 4.5% year-over-year (y/y) in September and recorded its two smallest rises of the past 20 months in July 2022 (3.6% y/y) and September 2022.
  • Sales growth averaged 5.9% y/y in the three months to September, down from an average of 12.3% y/y in the six months to June.
  • The rise in sales, as measured by XSBI, was due to price rises rather than small businesses selling more goods and services. Using the September Consumer Price Index (CPI) of 8.2% y/y as a proxy for prices suggests that sales volumes declined 3.7% y/y in September.

The slowdown in sales is likely due to the mounting cost-of-living pressures facing consumers, as wages continue to rise at a slower pace than inflation. This is having a significant impact on household budgets as consumers have less disposable income to spend at small businesses.

“Many small businesses rely on strong sales to help bring in positive cash flow, but we’re seeing consumers continue to face greater cost of living pressures from high-interest rates, rising rents and an increase in prices for goods and services,” said Chris O’Neill, Chief Growth Officer at Xero. “These impacts continue to stretch the average consumers’ budget and often divert spending away from small business.”

Improvement in late payment times, but not in time to be paid

Late payments improved during the three months to September, compared to the three months to June, and are also now shorter than the 2021 average. In contrast, the average length of time between when an invoice is issued and when it is fully paid lengthened during the September quarter.

  • Small businesses were paid, on average, 7.2 days late in the three months to September. This is shorter than the June quarter average (7.7 days) and the 2021 average (7.5 days).
  • Small businesses waited to be paid 26.4 days on average in the three months to September. This is broadly similar to the June quarter average (26.3 days) but longer than the 2021 average (25.5 days).

The different directions in movements in the two payment times most likely reflects a change in payment terms. The combination of shorter late payments with a longer period of time to be paid suggests payment terms for invoices have become longer. Despite this reduction in late payments, small businesses are still being paid more than a week late, which adds to the challenge of cash flow management for small businesses.

“Late payments and not being paid in a timely manner can be damaging for a small business, harming the stability of finances and limiting growth plans,” said O’Neill. “Business owners can take steps to assist in reducing this time to be paid by automating invoice reminders and accepting online payments, which make it easier to get paid.”

Small business performance foreshadowing future economic performance

While the reduction in late payment times in the latest quarterly XSBI update is positive, the continued slowdown in sales growth indicates ongoing tough trading conditions for small businesses.

As the impact of inflation continues to weigh on consumers, small business owners will need to consider the effect of any further price increases on consumers and their capacity for spending, as this could further impact the rate of sales growth in 2023.

For access to the latest data, visit


Media Contact

Xero US | Lauren Kido |


Full details of the methodology used to construct the Xero Small Business Insights can be found here.

About Xero

Xero is a global small business platform with 3.5 million subscribers which includes a core accounting solution, payroll, workforce management, expenses and projects. Xero also has an extensive ecosystem of connected apps and connections to banks and other financial institutions helping small businesses access a range of solutions from within Xero’s open platform to 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 and 2022, Xero was included in the Dow Jones Sustainability Index (DJSI), powered by the S&P Global Corporate Sustainability Assessment. Xero is a FIFA Women’s Football partner.

About Xero Small Business Insights

The aim of Xero Small Business Insights is to create insights to help inform decision makers in support of the small business economy as a whole. The principal source of small business insights in this report is customer data from Xero - a small business platform that supports online accounting and a range of other applications. Xero is a responsible custodian of our customers’ sensitive data and does not release any data that could identify individual businesses. The data used is aggregated and anonymized to ensure the privacy of Xero subscribers, and their counterparts.

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

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