Xero data shows declining small business performance amidst economic uncertainty
Small business sales lower than a year ago with worsening late payment times
Denver — October 31, 2024 —Xero, the global small business platform, today released its latest data on small business sales and payment times that showed sales continued to decline in mid-2024. This result comes after initial signs of recovery in the beginning of the year, with February showing sales growth for the second time in a year. Similarly, small businesses also faced declining late payment times in the June quarter, increasing by nearly a day from the 2023 average.
These trends were identified as part of Xero Small Business Insights (XSBI), which uses aggregated and anonymized data from tens of thousands of Xero small business subscribers in North America covering the past seven years (January 2017 through June 2024). XSBI also tracks sales and time to be paid for four of the US Census Bureau's major regions (West, Midwest, Northeast and South) to showcase the differing experiences of small businesses in each region.
June quarter at a glance:
- Small business sales fell an average of 0.9% year-over-year (y/y) in the three months to June (versus a 1.1% y/y decline in the March quarter)
- Small businesses waited an average of 29.6 days to be paid in the June quarter (versus 29.8 days in the March quarter)
- Small businesses were paid an average of 9.5 days late in the June quarter (versus 9 days in the March quarter)
Regional differences highlight different experiences across the US
While sales continue to fall at the national level, the West was the only region to see an increase in sales this quarter, with a 0.3% rise in sales y/y in the June quarter. This follows a similar increase for the West of 0.5% y/y in the March quarter. This result still shows sales are barely growing in the West, but small businesses in this region are doing slightly better than the rest of the country.
On the payment times front:
- The Midwest (28.3 days) had the shortest average payment times for the quarter across the four major regions
- The Northeast (28.5 days) and the South (30.7 days) both had payment times that were shorter than in the previous quarter
- Despite an increase in sales, small businesses in the West saw a sharp increase in time to payment from 26.7 days in the March quarter to 30.8 days in the June quarter
“While small business sales and payment times results were disappointing in the June quarter, small businesses will be hoping to see some improvements in the second half of the year following the Federal Reserve’s sizable interest rate cut in September. Unfortunately, how quickly rate cuts flow through the economy is always uncertain,” said Louise Southall, Economist at Xero. “While we wait to see how consumers respond to lower interest rates in the coming months, we continue to encourage small business owners to remain focused on ensuring they get paid as quickly as possible.”
Uncertainty underscores need for timely invoicing
The latest figures from the National Federation of Independent Business (NFIB) indicate U.S. small business owners are uncertain about the future, with the NFIB Small Business Uncertainty Index reaching its highest-ever reading in September 2024, and the Small Business Optimism Index on a 33-month stint below its 50-year average.
Available solutions to help mitigate late payments – from adapted invoicing flows, automated reminders to broader payment offerings – should certainly be leveraged by small businesses and accountants alike in the face of soft sales.
“Being more agile in our approach to invoicing has helped us mitigate the impact of the current economic conditions,” said Pierre Goldie, Co-Founder of FISKAL INC. “By using Xero and GoCardless, we established a new invoicing flow that moved our cash flow position by 29 days — a shift that has helped our company move away from a negative cash flow position of 10 days to a positive cash of flow of 19 days.”
To access the latest data, visit https://www.xero.com/us/resources/small-business-insights/.
ENDS
Media Contact
Xero US | Rola Tfaili | rola.tfaili@xero.com
Methodology
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 4.2 million subscribers. Xero’s smart tools help small businesses and their advisors to manage core accounting functions like tax and bank reconciliation, and complete other important small business tasks like payroll and payments. Xero’s extensive ecosystem of connected apps and connections to banks and other financial institutions provide a range of solutions from within Xero’s open platform to help small businesses run their business and manage their finances more efficiently.
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, research notes and deep-dive special reports on specific small business topics. These can all be found at xero.com/xerosbi.
Related media and enquiries
For all media enquiries, please contact the Xero media team.
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