Small businesses in the US saw improved performance in the September 2024 quarter, marking the first positive sales growth since late 2022, according to new data from Xero. The findings, part of Xero Small Business Insights (XSBI), also show a reduction in late payments and shorter average payment times, signaling a more stable financial environment for small businesses.
Key Findings: Sales Growth and Payment Trends
Small business sales increased by 0.8% year-over-year (y/y) in the three months ending in September, reversing a 0.1% decline in the June quarter. Businesses also experienced improved payment timelines:
- Late payments decreased, with businesses receiving payments 9.1 days late on average, a 0.5-day improvement over the June quarter.
- Average time to be paid dropped to 28.7 days, a 0.7-day improvement, maintaining a general range between 28.5 and 29.5 days since early 2023.
Regional Differences in Small Business Performance
All major US regions recorded sales growth in the September quarter, though results varied:
- Northeast led with 1.3% y/y growth
- West followed at 0.8% y/y
- South posted 0.6% y/y growth
- Midwest saw 0.2% y/y growth
While the West region maintained three consecutive quarters of sales growth, payment times varied across regions:
- Improved payment times: The South (down 1.8 days to 28.5 days) and Midwest (down 0.3 days to 30.0 days)
- Longer payment times: The Northeast (up 1.3 days to 29.0 days) and West (up 0.5 days to 28.2 days)
“It’s encouraging to see US small businesses trending in a positive direction after nearly two years of challenging conditions,” said Louise Southall, Economist at Xero. “Positive sales growth and shorter payment times in the September quarter are promising indicators that economic pressures are easing. To maintain healthy cash flow and build resilience against any future economic uncertainties, small businesses should prioritize strategies that encourage their customers to pay promptly.”
Optimism and Challenges in 2025
A November 2024 Xero survey found 88% of US small business respondents felt more optimistic about their business prospects heading into 2025 than they had the previous month. This level of optimism was the highest among surveyed countries, including Australia, Canada, New Zealand, and the UK. Lower inflation and multiple Federal Reserve interest rate cuts since September 2024 contributed to improved economic conditions, easing pressures on cash flow and profitability.
However, recent policy decisions present new challenges. Tariffs on Canadian goods and retaliatory trade measures have impacted cross-border supply chains, increasing operational costs for businesses dependent on US-Canada trade. “Unfortunately, the US government’s decision to levy tariffs on Canadian goods, and the subsequent retaliatory measures, have likely dented this growing optimism,” Southall noted. “Small businesses and their customers on both sides of the US-Canadian border will pay more for goods that travel across this border, impacting the often intertwined supply chains and adding to the cost of business operations.”
Adapting to a Changing Business Landscape
While macroeconomic trends point to easing financial pressures, Xero urges small businesses to prepare for continued volatility. “While the new administration has promised economic policy changes that will impact the business landscape, small businesses must also contend with ongoing economic challenges like cash flow disruptions and late payments,” said Michael Cascone, Vice President of Government Experience, Americas at Xero. “To remain agile and adapt to new policies and economic shifts that impact their long-term success, small businesses should prioritize financial resilience—through strategic planning, operational efficiency, and proactive cash flow management.”
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