New Xero Data Shows U.S. Small Businesses Face Mounting Pressure as Payment Delays Rise and Cost Shocks Loom

San Mateo — April 30, 2026 — Xero, the global small business platform, today released its latest data on small business sales and payment times, revealing a reversal in payment trends that point to growing cash flow pressure as a new wave of cost increases begins to take hold. These insights are based on Xero Small Business Insights (XSBI), which draws on aggregated and anonymized data from more than 32,000 U.S. small businesses on the Xero platform since January 2017.

While sales remained positive in the March quarter, rising 2.5% year-over-year (y/y), growth was less than half the long-term average (5.4%), suggesting small businesses are entering an increasingly costly environment without strong sales momentum. Throughout the quarter, though, there was improved sales momentum, rising from 1.3% y/y in January to 2.6% y/y in February and 3.6% y/y in March, suggesting some resilience in activity despite broader headwinds.

However, this momentum comes as cost pressures continue to build, which may limit the impact of stronger sales.

Payment delays signal renewed cash flow pressure

Payment times worsened in the March quarter, with small businesses waiting an average of 28.8 days to be paid, up from 28.3 days in the previous quarter. Late payments also increased, with invoices paid 9.0 days late on average, up from 8.4 days. After improving throughout much of 2025, payment times have begun to edge up again, pointing to a potential shift in small business conditions. While still broadly in line with longer-term trends, slower payments can add pressure on working capital, making it increasingly complex for small businesses to manage expenses, invest in growth, and absorb rising costs.

“While small business sales are holding steady, there are early signs that conditions are becoming more challenging,” said Louise Southall, Economist at Xero. “Payment times are starting to shift up again, and with fuel and input costs rising, many businesses are likely to face increased pressure on cash flow in the months ahead. The pace at which these costs are building is expected to make it more challenging for small businesses to adjust.”

Cost pressures set to intensify

Small businesses are currently navigating a rapidly shifting cost environment, as fuel price spikes linked to geopolitical tensions begin to flow through the economy. In March, consumer prices rose 3.3% y/y, up from 2.4% y/y in February marking the biggest CPI increase in nearly two years according to the latest CPI data for March 2026. Gasoline prices increasing 21.2% likely accounted for roughly three-quarters of that rise.

These impacts remain in the early stage, and are not yet fully reflected in small business performance. As these higher fuel costs flow through supply chains, they are expected to increase transportation, shipping, and input costs more broadly, building pressure on already tight margins and reducing consumer spending power.

Additionally, while 2026 tax returns are expected to provide some financial relief - estimated by the Tax Foundation to be around $1,500 for small businesses and $2,300 for individuals - these benefits may be short-lived. With operating costs rising, much of this support is likely to be absorbed by higher expenses rather than driving expansion or hiring.

Outlook: Stability on the surface, pressure underneath

The latest XSBI data highlights a growing disconnect between headline performance and underlying business conditions. Sales remain positive, but weakening payment trends and rising costs could point to increasing pressure on small business cash flow.

Impacts will also vary across the country, with businesses in fuel-intensive industries and regions more exposed to transportation costs likely to feel the effects more acutely. With fuel prices expected to remain elevated and broader cost increases still working their way through the economy, small businesses may face a more challenging operating environment in the months ahead.

“Small businesses are navigating an increasingly complex environment, where conditions can shift quickly,” said Andrew Kanzer, Managing Director, North America at Xero. “In times like these, it’s important to focus on the areas you can control like managing cash flow, staying on top of incoming and outgoing payments, and planning ahead for cost changes. The businesses that maintain visibility and act quickly will be better positioned to manage through ongoing uncertainty.”

To access the latest US data, visit the XSBI website.

ENDS

Media Contact

Xero US | 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 connect 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.