Recent data from Xero indicates a positive trend in small business sales, signaling a potential recovery in 2024. Despite experiencing a decline in the March quarter, year-over-year sales showed encouraging improvement, with February marking the first notable increase in 13 months. While the average payment times have seen a slight uptick, late payments have increased, now averaging nearly 10 days overdue.
The Xero Small Business Insights program, which analyzes data from small businesses across North America, uncovers these key trends. This initiative monitors sales and payment timelines in four key U.S. regions: the West, Midwest, Northeast, and South.
The growth in February sales represents a significant milestone for small businesses, marking the first rise since January 2023. Although there was a year-over-year decline of 1.8% in the March quarter, this is an improvement compared to a 2.4% drop in the preceding quarter. Monthly data reveals mixed results, with sales climbing in February (+1.3% year-over-year) but experiencing a downturn in March (-4.7% year-over-year), partly due to the timing of Good Friday this year.
Regionally, the Northeast recorded the steepest decline in sales for the March quarter at -3.5% year-over-year, followed closely by the Midwest (-3.3%), the South (-1.7%), and the West (-0.5%).
Xero’s insights suggest that February’s sales growth could mark a turning point for small businesses. Anticipated interest rate cuts by the Federal Reserve may provide a further boost to consumer spending, benefiting the small business landscape.
Payment timelines showed slight improvement, with an average wait of 28.5 days for payments in the March quarter, down from 28.7 days previously. However, the situation regarding late payments worsened, with businesses now facing an average delay of 9.8 days, a rise from the previous average of 9.0 days. Notably, February exhibited a significant increase in late payments, with averages reaching 12.6 days overdue.
Given these challenges, addressing late payment issues is crucial for small businesses. Implementing strategies to encourage prompt payments, such as providing diverse payment options and utilizing timely customer reminders, could prove beneficial in mitigating these delays.
