Denver — April 24, 2024 —Xero, the global small business platform, today released new data which revealed that the downward trend in small business sales growth, which began in mid-2021, appears to have stabilized. Data also showed sales are still lower than a year ago, but this fall has stopped increasing every quarter, and that US small business payment times and late payments increased over the last quarter of 2023, mainly driven by an uptick in November.
This was released as part of the Xero Small Business Insights (XSBI) program, which uses aggregated and anonymized data from tens of thousands of Xero small business subscribers in North America covering the past seven years (January 2017 through December 2023).
For the first time, XSBI also includes sales and time to be paid data from all four of the US Census Bureau's major regions (West, Midwest, Northeast and South) to highlight the contrasting experiences of small businesses regionally. The most recent data shows Northeast small businesses had the longest average payment times in 2023 (29.5 days) and the largest fall in sales (-4.9% year-over-year) in the December quarter.
Sales decline for eleventh consecutive month, but seem to be leveling out
Sales growth has been on a clear downward trend since mid-2021 and for the past 11 months, sales have been lower than the year prior. Looking at the monthly pattern for sales growth, some signs of improvement are seen on the horizon:
Small business sales fell 3.2% y/y in the December quarter; smaller than the 4.4% y/y fall in the September quarter
Sales growth showed improvement between September (-6.5% y/y) and October (-0.3% y/y), but then deteriorated again in November (-4.4% y/y) and December (-5.0% y/y)
Using the US CPI as a proxy for prices, sales volumes declined an average of 6.4% y/y in the December quarter after declining an average of 7.9% y/y in the September quarter
At the regional level, in the December quarter, low sales were led by the Northeast (-4.9% y/y) and the South (-4.2% y/y), with the Midwest (-2.4% y/y) and the West (-1.7% y/y) recording smaller falls than the national average
“While sales were still lower than at the same time last year, there were tentative signs of stabilizing in the quarter, and we are hopeful the downward trend may be over. However, small business owners continue to have a different experience than larger businesses and are missing out on consumer spending,” said Louise Southall, Economist at Xero. “This continues to highlight the importance of business owners utilizing all the resources they have to attract customers and increase their productivity.”
Payment times lengthen, driven by November results
Both average payment times and late payment times have worsened in the most recent data period as small businesses waited almost 30 days to be paid - almost 10 days late.
Small businesses waited an average of 29.1 days to be paid in the December quarter, which is 1.1 days longer than the September quarter (28.0 days) and 0.2 days longer than in the June quarter (28.9 days). This deterioration was particularly evident in November when payment times rose to 30.4 days
Small businesses were paid an average of 9.6 days late in the December quarter, which is 1.4 days longer than the September quarter (8.2 days) but 0.1 days quicker than in the June quarter (9.7 days). The late payments data can be volatile, and this quarterly deterioration was largely due to November when payments were made on average 11.6 days late
“Small businesses and their advisors will be disappointed about the lengthening in payment times, but this just further highlights how important it is to take steps to encourage prompt payment, including having as many options to pay as possible, adding a ‘pay now’ button to invoices and sending reminders to late-paying customers,” said Ben Richmond, US Country Manager at Xero. “More recent small business surveys show that around two-thirds of small businesses report their business is in good health, and we’re ready to continue to support them through these economic transitions.”
For access to the latest Xero Small Business Insights data, visit the website.
Media Contact
Xero US | Diandra Binney | diandra.binney@xero.com
About Xero
Xero is a global small business platform with 3.95 million subscribers which includes a core accounting solution, payroll, workforce management, expenses and projects. Xero also has an extensive ecosystem of connected apps and connections to banks and other financial institutions helping small businesses access a range of solutions from within Xero’s open platform to help them run their business and manage their finances. Xero is a FIFA Women’s Football partner.
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 this report is customer data from Xero - a small business platform that supports online accounting and a range of other applications. Xero is a responsible custodian of our customers' sensitive data and 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.
As part of the program, we publish regular blogs, research notes and deep-dive Special Reports on specific small business topics. These can all be found at xero.com/xerosbi.
Disclaimer
This media release includes and is in parts based on assumptions or estimates. It contains general information only and should not be taken as taxation, financial, investment or legal advice. Xero recommends that readers always obtain specific and detailed professional advice about any business decision. The insights in this release were created from the data that was available as at the date it was extracted. Data used was anonymized and aggregated to ensure individual businesses can not be identified.
For all media enquiries, please contact the Xero media team.
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