Xero’s recent data release indicates that small business sales are starting to recover in 2024. Despite a decline in the March quarter, sales showed a year-on-year improvement, with February marking the first sales increase in 13 months. However, Average payment times have improved slightlywhile late payments have worsened, now averaging nearly 10 days late.
These trends were revealed by the Xero Small Business Insights (XSBI) program, which collects data from Xero small business subscribers in North America. The program tracks sales and payment times across four main US regions: West, Midwest, Northeast and South.
February sales growth is a positive sign for small businesses, showing the first increase since January 2023. Although sales fell by 1.8% year-on-year in the March quarter, this is an improvement on the 2.4% decline in the previous quarter. Monthly data showed mixed results: sales improved in February (+1.3% year-on-year) but fell again in March (-4.7% year-on-year). The March decline is partly attributed to Good Friday being celebrated in March instead of April this year.
Regionally, the Northeast experienced the largest decline in sales (-3.5% year-over-year) for the March quarter, followed by the Midwest (-3.3% year-over-year), the South (-1.7% year-over-year) and the West (-0.5% year-over-year).
Xero economist Louise Southall highlighted the significance of February’s growth and suggested it signals a turning point for small business sales. She highlighted the Federal Reserve’s expected interest rate cuts as a potential boost to consumer spending, which could further support small businesses.
Average payment times showed a slight improvement, with small businesses waiting an average of 28.5 days to receive payment in the March quarter, compared with 28.7 days in the previous quarters. However, late payment times have worsened, with businesses receiving payment an average of 9.8 days late in the March quarter, compared with 9.0 days in the previous two quarters. February saw a particularly sharp increase in late payments, with an average of 12.6 days late.
Ben Richmond, CEO of North America at Xero, highlighted the importance of addressing late payment issues. He highlighted the role of advisors in helping small businesses implement strategies to encourage on-time payments. Richmond suggested initiatives such as offering a variety of payment options, integrating “pay now” features into invoices, and sending timely reminders to customers to reduce late payments.
Image: Xero