Canadian small business sales show first positive month in 2026, but drop 4.0% overall in Q1

Toronto, ON — April 30, 2026 —Xero, the global small business platform, today released its quarterly Xero Small Business Insights (XSBI) report, a snapshot of the health of the Canadian small business sector based on actual aggregated and anonymized data from 12,000 Canadian small businesses using Xero, including sales performance, late payments, and time-to-be-paid.

The report revealed that Canadian small business sales remained in sharp decline through the first two months of 2026, but returned to positive growth in March, for the first time since September 2025. While March sales growth offered a rare bright spot, longer payment wait times and higher late payments suggest continued cash flow pressures facing the Canadian small business sector.

Sales declines deepen, with an unexpected March rebound

In the quarter to March 2026, Canadian small business sales fell 4.0% year-over-year (y/y), a larger decline than the 1.8% y/y drop in the December quarter (revised up from -4.1% y/y). After dropping 2% in December, small business sales growth tumbled further in early 2026, dropping 10.1% y/y in January, followed by a 2.9% y/y decline in February.

A rare bright spot came in March, when sales rose 1.0% y/y, the first positive monthly result in five months. However, this remains well below the series' historical monthly average of 4.3%. In fact, over the past three years, monthly sales growth has only exceeded the historical average in four months, a reflection of the prolonged period of economic turbulence and macroeconomic uncertainty, and its continued impact on Canadian small businesses.

“Poor sales results driven by ongoing macroeconomic tensions are continuing to impact the ability of small businesses to pay their bills and manage cash flow. While the modest rise in March sales is welcome, it remains well below long-term averages, and we’ve seen only four months of above-average growth in the past three years,” said Louise Southall, Economist at Xero. “The recent spike in gasoline prices is a fresh headwind that could weigh on both costs and sales in the months ahead, as small businesses navigate the long-term impacts of fuel costs and small business customers have less to spend on non-fuel purchases.”

Cash flow pressures build as payment times lengthen

Reflecting consumers’ contracting budgets, small businesses were paid increasingly late in the quarter, reversing a recent period where payment times and late payments had been quicker than historical averages. Small businesses waited, on average, 29.8 days for their invoices to be paid in the March quarter, up from 27.2 days in the December quarter. Late payments, the time between a payment due date and when payment was actually received, rose to 11.6 days, up from 10.5 days the previous quarter.

Regional picture: All three provinces record declines, led by Alberta

The three provinces tracked by XSBI (Alberta, British Columbia and Ontario) all recorded declines in sales in the quarter to March:

• Alberta was the best performing province at -2.6% y/y, buoyed by two months of positive growth: +1.5% y/y in February and +2.5% y/y in March.
• Ontario posted a 4.7% y/y decline, but reversed a four-month run of falls with a 3.3% y/y rise in March.
• British Columbia recorded the largest drop at -4.8% y/y, with declines in all three months, although March’s 0.8% fall was the smallest in a six-month run of declines.

On time to be paid, British Columbia led in the March quarter at 26.5 days, 2.6 days faster than in the December quarter, while Alberta (26.9 days) and Ontario (30.7 days) both saw longer payment waits than the prior quarter.

“Small business owners across Canada have already navigated a prolonged stretch of tough trading conditions, and they now face a new set of challenges with the recent jump in fuel prices,” said Ashalee Mohamed, Country Manager for Canada at Xero. “Rising costs are hitting bottom lines at the same time as customers have less disposable income to spend. It’s a difficult combination, especially when cash flow is already under pressure from longer payment times. During periods of uncertainty that are largely outside their control, the best thing small business owners can do is focus on what they can influence: managing cash flow closely, encouraging prompt payment, and continuing to deliver great service to their customers.”

To access the latest data, visit xero.com/xerosbi.

ENDS

Media Contact

Xero Canada | Rola Tfaili | rola.tfaili@xero.com

About Xero

Xero is a global small business platform that helps customers supercharge their business by bringing together the most important small business tools, including accounting, payroll and payments — on one platform. Xero’s powerful platform helps customers automate routine tasks, get timely insights, and connects them with their data, their apps, and their accountant or bookkeeper so they can focus on what really matters. Trusted by millions of small businesses and accountants and bookkeepers globally, Xero makes life better for people in small business, their advisors, and communities around the world. For further information, please visit xero.com.

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.

As part of the program, we publish regular blogs and research notes and deep-dive special reports on specific small business topics. These can all be found at xero.com/xerosbi.

Methodology

Changes were made to the XSBI methodology in 2025. This includes changing the definition used for a small business and the way we identify regional-based businesses. Full details of the methodology used to construct Xero Small Business Insights can be found here.