Canadian small business sales fall for third straight quarter amid cash flow strain
The data reinforces a picture of sustained operating pressure that may have direct implications for client cash flow, investment capacity, and succession planning timelines.
Sales declined 2.7 per cent year-over-year in April and 3.0 per cent in May, according to Xero, before rebounding 3.8 per cent in June as gasoline prices dipped below $1.70 per litre — temporarily freeing up household spending. Xero’s economist cautioned, however, that its late-reporting adjustment has been over-correcting in recent months, and the June result is likely to be revised downward in subsequent reports.
“Overall, the biggest positive from this data is that performance didn’t get worse, but it is not improving much either,” said Louise Southall, economist at Xero. “The continued geo-political conflicts and uncertainty have made conditions harder for Canadian small businesses, building on the impact of US trade policy since April 2025. Gasoline prices peaked in May, and while various ceasefire agreements have offered brief relief, none have been able to hold for more than a few weeks.”
The OECD projects Canadian GDP growth will reach 1.2 per cent in 2026, recovering from the trade-related slowdown triggered by higher US tariffs — a modest rebound that does little to insulate small business owners from near-term cash flow strain.
Payment times also remain a concern. Canadian small businesses were paid an average of 11.3 days late in the second quarter, comparable to the 11.4 days recorded in the first quarter, but notably worse than the 10.5-day average seen across 2025, Xero reported. The total time from invoice issuance to receipt of payment stood at 29.0 days in the June quarter, down slightly from 29.2 days in March but well above the 27.1-day average recorded through 2025.
