Canadian small-business sales fell 0.6 per cent from a year earlier in the second quarter, marking the third consecutive quarterly decline as elevated payment times and higher gasoline prices continued to pressure spending and cash flow, according to data released by Xero.
The quarterly Xero Small Business Insights report, based on aggregated and anonymized data from 12,000 Canadian businesses using the platform, found sales were lower than a year earlier for eight of the past 12 months.
The data points to continued pressure on small businesses as they contend with weaker sales and longer waits for invoices to be paid.
“Canadian small businesses are likely to face continued economic uncertainty through the rest of 2026, with many business owners navigating ongoing cost pressures and cautious consumer spending” said Ashalee Mohamed, Country Manager for Canada at Xero. “While some sectors may benefit from broader market trends, many small businesses will continue to focus on protecting cash flow, managing expenses and adapting to changing customer demand. Maintaining visibility into business performance and planning ahead will be key to helping small businesses navigate the coming months.”
Sales remain below year-ago levels
Sales declined 2.7 per cent year over year in April and three per cent in May before rising 3.8 per cent in June, according to the report.
Xero said the monthly results show how gasoline prices affected household budgets and small-business sales during the quarter. Gasoline prices fell below $1.70 a litre in June, which the company said freed up some capacity for consumer spending.
However, Xero cautioned that the June result could be revised lower because its late-reporting adjustment has been over-adjusting in recent months.
Sales were down 3.0 per cent year over year in the March quarter and 1.3 per cent in the December quarter.
“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 (Organisation for Economic Co-operation and Development) expects the Canadian economy to grow just 1.2% in 2026, slower than the 1.7% recorded in 2025.”
Businesses continue to wait for payment
Canadian small businesses were paid an average of 11.3 days late during the June quarter, little changed from 11.4 days in the March quarter but above the 10.5-day average recorded in 2025.
The average time to be paid — measured from when an invoice was issued until it was paid — was 29.0 days in the June quarter. That compared with 29.2 days in the March quarter and 27.1 days in 2025.
The figures indicate payment times remained elevated even as the quarterly decline in sales moderated from the previous quarter.
Regional results
The latest report also expands Xero’s provincial data to include the Maritime Provinces, combining New Brunswick, Nova Scotia and Prince Edward Island.
Alberta recorded the strongest sales performance among the provinces tracked, with sales up 1.0 per cent from a year earlier. Xero said the province was a regional beneficiary of higher global oil prices.
Sales in the Maritime Provinces were 0.2 per cent higher than in the June quarter of the previous year.
Ontario sales fell 0.3 per cent year over year, while British Columbia sales declined 1.7 per cent.
British Columbia recorded the shortest average time to be paid among the provinces, at 25.7 days, an improvement from 26.9 days in the March quarter.
The average time to be paid was 28.4 days in Alberta, 30.0 days in Ontario and 31.8 days in the Maritime Provinces.
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