Xero, the global small business platform, released its latest Xero Small Business Insights (XSBI) quarterly update for Canada, based on data from October to December 2023.
The data showed that Canada’s small business sales decline “may be levelling off, which is an encouraging signal for the small business economy.”
While the sales decline “was less than in previous quarters (-4.3% year-over-year [y/y] in the September quarter), small businesses still experienced lower sales compared to the December quarter in 2022, sitting at -3.8% y/y.”
Small businesses were paid “an average of 8.6 days late in the quarter, slightly higher than in the previous quarter (8.0 days), and the average time small businesses waited to be paid after issuing an invoice increased to 29.4 days from 29.0.”
After seeing improvement in previous quarters, the recent “increase in time to be paid metrics was a disappointing shift.”
Earlier this month, the Bank of Canada (BoC) announced “an interest rate hold for the sixth consecutive time since July 2023. Small businesses eager for a rate cut will need to wait to see what happens at the June meeting.”
Recent ongoing improvements in inflation, “coupled with Canada’s flattening sales decline and new incentives and rebate measures announced by the Canadian Federal Government as part of Budget 2024, hint at a potentially more positive trend on the horizon.”
Xero’s data makes it clear, however, “that small businesses are still feeling the squeeze for the near term.”
Louise Southall, Economist, Xero said:
“The latest XSBI data signals that Canada’s small business economy was starting to head in the right direction at the end of 2023 — which we hope brings positive energy to the sector’s stakeholders. Market consensus is that the next move in official interest rates is most likely to be down, and now is the time to really focus on sustainable business decisions, such as encouraging prompt payments, as we hopefully move closer to improved small business outcomes in the next quarter.”
In addition to tracking national small business data, “from this quarter onwards the Canadian XSBI program has expanded to include province-specific updates, tracking sales performance and time to be paid from 2017 onward for Alberta, British Columbia, and Ontario.”
Highlights from each province include:
- Alberta small businesses had the smallest decline in sales in the December quarter, down 3.0% y/y. This was followed by British Columbia (-3.4% y/y) and then Ontario (-5.4% y/y).
- Small businesses in British Columbia were paid the quickest, at an average of 27.1 days in the December quarter, followed by Alberta (27.7 days) and Ontario (29.2 days).
Faye Pang, Canada Country Manager, Xero said:
“Expanding the XSBI program to include provincial data for British Columbia, Alberta, and Ontario enables more informed decision making from stakeholders who are in need of this real, economic data. We encourage small business owners and operators to pay attention to the signals the market is sending—lean on your advisors, get smart with cloud accounting and other digital tools, and plan ahead.”