Canadian small business sales growth drops to pandemic-era levels, Xero reports

Toronto, ON — March 3, 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 (SMB) 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 a significant decline in Canadian small business sales growth in the quarter to December 2025, reflecting the uncertain macroeconomic environment and an increasingly volatile Canadian small business landscape.

Declining sales growth

From October to December 2025, Canadian small business sales growth dropped 4.1% year-over-year (y/y), the largest quarterly decline in sales since the September quarter 2020, falling well below the long-term series average of 4.5% y/y. Despite a solid start to 2025, sales growth slowed each quarter before experiencing a notable decline in the quarter to December. Over the same period, the length of time small businesses waited to be paid remained steady at approximately 27 days (26.8 days in the quarter to December), and late payments improved marginally, with late payments averaging 9.7 days in the December quarter.

“Heightened macroeconomic uncertainty, heavily disrupted supply chains, and shifting trade policy have significantly impacted the Canadian small business economy. We’re now seeing the true cost of a fractured global economy show up at the SMB level,” said Louise Southall, Economist at Xero. “The small business sector started last year in a solid position, following earlier policy interest rate cuts by the Bank of Canada. But throughout the year, the general trend in Canada’s small business sales growth slowed, culminating in a decline in sales in the final quarter.”

Regional Contrasts: Alberta sales growth outperforms national average

Regionally, Alberta maintained sales growth results well above the national average over the course of the year, experiencing significant growth in the March, June, and September quarters (+11.0%, +2.9%, and +3.8%, respectively). Meanwhile, British Columbia experienced the weakest result, with sales dropping 8.2% y/y in the quarter to December. Time to be paid metrics showed considerable volatility between provinces from quarter to quarter, but Alberta generally outperformed British Columbia and Ontario, dropping to 26.6 days in Alberta in the quarter to December.

“In an operating environment that is increasingly irregular and unpredictable, it’s incredibly challenging for small business owners to anticipate demand or make strategic plans right now,” said Ashalee Mohamed, Head of GTM for Canada at Xero. “While the road ahead is uncertain, Canadian small businesses have proved time and again that they can be agile and resilient in the face of uncertainty. Small business owners should prioritize decisions that are within their control and look for ways to insulate themselves against market uncertainty wherever possible.”

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.