Canadian small business sales rose for four consecutive months through September, offering signs of improvement after 18 difficult months, although sales remain below historical averages and renewed U.S. trade tensions continue to weigh on exporters, according to a new report from Xero.
The quarterly Xero Small Business Insights report found sales increased two per cent year over year in the September quarter, while businesses waited an average of 10.5 days beyond invoice due dates to receive payment. Alberta led regional sales growth, while British Columbia and the Maritime provinces recorded declines.
The report draws on aggregated and anonymized data from 12,000 Canadian small businesses using Xero, a global small business platform. It tracks sales performance, late payments and the time businesses take to receive payment.
“Four months of growth is encouraging, but sales are still well below historical levels, so it’s too early to call this a recovery,” said Ashalee Mohamed, Country Manager for Canada at Xero. “With ongoing trade tensions with the US and higher-than-normal fuel prices, many small businesses are still facing tough trading conditions. Now is a good time for owners to review their pricing, check where costs are creeping up and make sure that they have a clear view into their cash flow so they’re ready to act if pressure builds in the coming months.”
Sales growth remains below historical levels
Canadian small business sales increased 2 per cent year over year in the September quarter, following an upwardly revised gain of 0.4 per cent in the June quarter. It was the first time sales had increased for four consecutive months since April through July 2025.
Monthly sales growth was 3 per cent year over year in July, 2.5 per cent in August and 0.5 per cent in September. The results remain below the historical average of 4 per cent annual sales growth, although they follow months of declining sales.
Louise Southall, an economist at Xero, said the latest figures offer some encouragement after a prolonged period of difficulty for Canadian small businesses.
“After what has been a really difficult 18 months for Canadian small businesses, this growth is welcomed,” said Southall. “These are still tepid results, and Canada continues to trail the other countries we track on sales growth, but there are some early signs of recovery. Alberta is doing a lot of the heavy lifting thanks to higher oil prices, and without it the national picture would probably look a lot worse. The US-Canada trade conflict remains the key factor behind these results, and I don’t see that changing any time soon.”
Alberta leads regional sales performance
Alberta recorded the strongest sales performance among the regions tracked, with sales rising 5.9 per cent year over year in the September quarter. The report attributed the province’s performance largely to higher global oil prices.
Ontario sales increased 2.2 per cent, improving from growth of 0.8 per cent in the June quarter. However, a 1.7 per cent year-over-year decline in September weighed on the province’s quarterly results.
The Maritime provinces recorded a 1.4 per cent decline in sales compared with the same quarter a year earlier, largely because of a 9.5 per cent drop in July. British Columbia posted a 2.6 per cent decline, with sales falling year over year in each month of the quarter.
Despite the sales declines, British Columbia remained the fastest region for small businesses to receive payment, with an average time to be paid of 24.6 days.
Late payments remain a challenge
Canadian small businesses were paid an average of 10.5 days late in the September quarter, compared with 10.8 days in the June quarter. The measure tracks how long payments arrive after their due dates.
The average time from invoice issuance to payment was 28.4 days, up slightly from 28.2 days in the June quarter. The increase was largely attributable to a 29.8-day result in September. Canada continued to have the longest late payment times among the countries tracked by Xero Small Business Insights.
Regional time-to-payment figures for the September quarter were 28 days in Alberta, 28.9 days in Ontario and 33.7 days in the Maritime provinces. Alberta’s average was pushed higher by a rise to 34.1 days in September, its longest payment time since August 2023. Xero said that figure could be revised as additional data becomes available.
Exporters report weaker confidence
The report also highlighted a widening confidence gap between businesses involved in international trade and those operating domestically, amid renewed U.S. trade tensions.
The Canadian Federation of Independent Business’ September Business Barometer found no statistically significant difference in 12-month confidence among exporters, importers and businesses not engaged in international trade in September 2024.
By September 2026, exporters recorded a confidence score of 38.6 points, compared with 43.5 points for importers and 52.2 points for businesses that did not operate internationally.
Southall said tariffs are creating challenges for exporters on both sides of the Canada-U.S. border, affecting prices and the ability of businesses to compete.
“No one wins from tariffs,” added Southall. “Consumers on both sides of the border pay more for the same goods, and exporters find it harder to make a sale against products that don’t carry the same tariff. The obvious response for Canadian exporters is to find new markets, but that takes time and isn’t a costless exercise. And it’s not just Canadians feeling it. US businesses near the border are feeling the effects too.”
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