Xero, the global small business platform, released its quarterly Xero Small Business Insights (XSBI) report for Canada, including data from April to June 2024.
As noted in the latest report, Canada’s weak small business sales performance continued in the three months to June.
The data in the previous quarter’s XSBI report, paired with the Bank of Canada’s (BoC’s) first interest rate cut in June, “suggested there may be some improvement in sales on the horizon.”
On a more positive note, late payment times reduced in the three months to June, with small businesses being paid “6.3 days late on average, compared to 7.6 days late in the previous quarter.”
Lack of sales remained a core challenge “facing Canada’s small businesses in the June quarter.”
Over the course of the 15 months to June 2024, sales dropped in “13 out of the 15 months and in the three months to June, sales fell an average of 3.7% y/y. Sales volumes, which tracks how many goods and services are being sold, excluding the effect of price changes, also declined.”
From April to June, small business sales volume fell by “6.5% y/y on average, following a 7.1% y/y decline in the previous quarter.”
Ben Richmond, Managing Director, North America at Xero said that the latest XSBI findings highlight that Canada’s small business economy is still dealing with “tough trading conditions, despite the Bank of Canada’s rate cut,”
Richmond added that consumers continue to be reluctant to spend which flows through to the “bottom line of small businesses.”
They also noted that is is a “crucial time for business owners to extend their brand loyalty efforts, in the form of bonus rewards programs, being lenient on return policies, and offering exceptional customer service, to ensure they are well placed when consumers increase their spending again.”
The report’s regional data, which covers British Columbia, Alberta and Ontario, showed that the provinces collectively experienced negative sales growth, however some fared better than others across XSBI’s payment times metrics:
- British Columbia: Payments were made the quickest in the westernmost province in the April quarter, sitting at 26.6 days on average
- Alberta: Sales fell by 0.9% y/y, which was the best result in the region since the three months to March 2023
- Ontario: Payment times improved by 1.4 days on average, with the average payment time for the three months to June sitting at 28.6 days
Louise Southall, Economist at Xero said that while the June quarter’s sales data was not what they had hoped for, it serves as a “reminder that small businesses likely have to wait a little longer until they see tangible benefits resulting from the Bank of Canada’s recent interest rate cuts.”
Louise added that supporting local vendors in the upcoming holiday season is a small, accessible “way for anyone to contribute to Canada’s economic recovery.”
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 the report is customer data from Xero – a small business platform that “supports online accounting and a range of other applications.”
Xero says it is a custodian of customers’ sensitive data and claims that it 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.
