Media releasePublished on 27 July 2023

New Xero data reveals Canadian small business sales growth not keeping pace with Canadian economy

Xero Small Business Insights shows declining sales volumes despite Canadian economic growth in the March quarter

Toronto — July 27, 2023 — Canada’s small business sales growth slowed further between October 2022 and March 2023, according to recent Xero Small Business Insights (XSBI) data from the global small business platform Xero. The declining growth rate offers an indication of how difficult conditions are for many small businesses in Canada right now.

In March, Xero data shows sales rose just 0.4 per cent year-over-year (y/y), significantly slower than sales were growing last year, when the average was 7.3 per cent y/y between June and September 2022.

In contrast, the Canadian economy grew 2.2 per cent y/y in the 2023 March quarter. Using the Consumer Price Index (CPI) as a proxy for prices shows that small businesses are missing out on this economic growth, with sales volumes actually declining an average of 4.1 per cent y/y in the first three months of 2023.

Additionally, Canadian small businesses are waiting longer to be paid, with Xero data showing small businesses waited an average of 31.1 days to be paid in the first three months of 2023, a full day longer than the 2022 average. These most recent results saw payment times return to nearly the same level as when the pandemic first emerged in early 2020. The combination of nearly no sales growth and longer payment times is likely to put many small businesses under cash flow pressures.

“The Xero Small Business Insights quarterly data shows the pressure that Canadian small businesses are under,” said Louise Southall, Economist at Xero. “Being unsure about when you will be paid makes it difficult to plan ahead and make investment or hiring decisions with confidence. This combined with low sales growth makes it critically important for small business owners to work with their advisors to ensure it’s as easy as possible for customers to pay them, such as providing quicker online payment methods on invoices.”

Payment times steadily increasing since mid-2021

Both the late payment time and time to be paid measures have been increasing since the middle of 2021. This trend is the reverse of what was observed prior to the pandemic in terms of payments, which saw generally shorter wait times. Over the second half of 2020, and in the first half of 2021, there had been improvements in the time to be paid measure, but this progress has now almost completely reversed for small businesses.

The latest data also found that small businesses were paid an average of 10 days late in the first three months of this year, 1.4 days longer than the average in 2022. Similar to the trend observed with the time to be paid payment measure, late payments saw the same reversal of previous progress from the end of 2020 and the beginning of 2021, when late payments were less severe.

Sales drop as household savings diminish, while consumer confidence shows positive signs

The latest XSBI data shows Canadian small business sales only averaged 1.0 per cent y/y growth in the first three months of 2023, similar to the 0.9 per cent y/y average growth in the last three months of 2022. Sales growth has remained on a downward trajectory since the middle of 2021, and is now well below the long-term average of 8.5 per cent y/y. During the past six months, Canada’s inflation rate had also declined to 4.3 per cent in March but is still above the pace of sales growth, meaning sales results for the past six months are due to higher prices rather than larger sales volumes in small businesses.

Following a temporary boost from pandemic payments, household savings are starting to run low. In the March quarter, household disposable income fell 1.0 per cent, indicating that spending was supported by households dipping into their savings. With the household savings rate sitting at only 2.9 per cent, just above pre-pandemic levels, households appear to be running low on reserves and sales growth for small businesses will depend on the growth of disposable incomes.

In more positive news, the June quarter Bank of Canada Survey of Consumer Expectations showed signs of improved consumer confidence. When asked about the next 12 months, fewer Canadians were concerned about the economy entering recession, inflation expectations eased, and workers remained confident about job security.

“As Canadians continue to face difficult economic conditions, small businesses are feeling the impact of reduced household spending and a trend of longer payment times, which is likely putting a strain on their cash flow,” said Faye Pang, Xero Canada Country Manager . “Looking forward, consumer confidence is showing signs of improving and the unemployment rate remains lower than it was before the pandemic, which in turn should support household spending in the coming months.”

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. The program also releases small business data covering Australia, New Zealand and the United Kingdom. This Xero Small Business Insights data and a free summary report is available to download each quarter at


Media Contact

Xero Canada | Kelly Kerr |


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 3.7 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 four consecutive years (2020-2023) 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.

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

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

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