In this exclusive CanadianSME Small Business Magazine interview, Ashalee Mohamed, Head of Canada, Sales & Go‑To‑Market at Xero, unpacks what the latest Xero Small Business Insights data reveals about the real conditions facing Canadian SMEs as they exit 2025 and move through 2026. Drawing on nearly two decades across multiple industries, she explains how a sharp 4.1% year‑over‑year sales drop in the December quarter, regional divergences, and persistent volatility in trade and costs are reshaping small business realities—and why real‑time cash flow visibility, stronger advisor relationships, and proactive use of tools like Xero’s Canada‑specific XSBI metrics can help owners protect cash, build resilience, and make more confident decisions in an uncertain economy.
You lead Xero’s go‑to‑market strategy in Canada after nearly two decades across multiple industries—how does that breadth of experience shape the way you read the latest Xero Small Business Insights report and its story about Canadian SMEs right now?
My experience has taught me that the numbers are only part of the story. When I look at data showing that Canadian small business sales growth dropped 4.1% year-over-year in the December quarter, I don’t just see a statistic. I see the cumulative weight of what business owners have been absorbing: disrupted supply chains, shifting consumer behaviour, rising costs, and now a fundamentally uncertain global trade environment.
What strikes me most is that many of the small business owners I work with are incredibly resourceful and resilient. They’ve navigated difficult periods before. But this moment feels different in a specific way: the uncertainty isn’t coming from one identifiable source they can plan around. It’s layered and persistent. When operating conditions become unpredictable over a sustained period, the most important thing a business can do is build visibility into cash flow, payment cycles, and the levers they actually control. That’s what motivates me to get this data into the hands of Canadian business owners as quickly and clearly as possible.
The newest XSBI data shows 2025 was a tough year, with average sales growth well below the long‑term trend and a sharp 4.1% year‑over‑year drop in the December quarter—can you walk us through the key findings and what stood out to you most?
What the data shows is a year that started with genuine promise and then deteriorated steadily as global headwinds mounted. Canadian small business sales growth came in at 5.0% year-over-year in the first quarter of 2025, a solid result that gave a lot of small business owners reason to feel optimistic. The picture shifted meaningfully as the year progressed: by the fourth quarter, sales had declined 4.1% year-over-year, the steepest quarterly drop we’ve recorded since the fall of 2020. For the year as a whole, sales growth averaged just 1.4% year-over-year, well below the long-term series average of 4.5%.
The end-of-year period stood out to me in particular. The holiday season is critical for many small businesses; it’s when they expect to offset softer months earlier in the year. Instead, sales fell 1.6% year-over-year in October, 5.6% in November, and 5.1% in December. That sequential softening tells me this wasn’t a one-month anomaly. It was the cumulative effect of macro pressure finally showing up in full force at the ground level.
On the payment side, the data was somewhat more stable. Late payments averaged 9.7 days in the December quarter, a slight improvement from the prior quarter, and time-to-be-paid remained relatively steady at 26.8 days. Those are meaningful metrics for cash flow management, and while they didn’t deteriorate dramatically, 9.7 days late is still a real burden for businesses operating on tight margins.
Many of the pressures behind today’s weaker sales—like macro uncertainty, disrupted supply chains, and shifting trade patterns—echo some of what we saw around 2020; what patterns or parallels are you seeing, and what feels structurally different this time for Canadian small businesses?
There are real parallels. In 2020, we saw a sudden, significant disruption to the Canadian small business economy driven by an external event that business owners had no control over. The December quarter data we’re seeing now has a similar quality: a sharp, nationally synchronised decline suggesting that something systemic is happening, not just isolated sectoral shifts.
In 2020, the disruption was acute and, in many ways, came with meaningful policy responses: government support programs, rate cuts, and demand that eventually rebounded. This time, the uncertainty is more diffuse and longer-lasting. It isn’t a single event with a defined end, it’s an environment of ongoing volatility in global trade policy that makes it very hard for small businesses to forecast demand or make confident investment decisions.
Regionally, we also see a different texture this time. Alberta, which benefits from significant investment in the energy sector, outperformed the national average for much of the year, suggesting that sectors less exposed to goods trade disruptions have had more insulation. Meanwhile, British Columbia recorded an 8.2% year-over-year decline in the December quarter and bore the brunt of the slowdown. In 2020, the impact was more uniformly distributed. Today’s divergence reflects the uneven way that trade policy uncertainty moves through different parts of the economy.
Xero invests heavily in XSBI and publishes Canada‑specific data on sales, payment times, and late payments—why is it important for a platform like Xero to report on these metrics, and how do you hope policymakers, advisors, and small business owners will actually use this information in their decisions?
Small businesses represent 97.8% of all employer businesses in Canada and employ nearly half of the total private labour force. They are, in a very real sense, the backbone of the Canadian economy, yet their economic story is often told through aggregated national data that doesn’t capture the specific dynamics they face.
Xero’s platform gives us something genuinely rare: actual, aggregated, anonymized transaction data from 12,000 Canadian small businesses. We’re not surveying sentiment. We’re measuring what’s actually happening in terms of sales invoices, payment timing, and cash flow cycles. That specificity is what makes this data meaningful for decision-making.
For policymakers, we hope XSBI helps surface the real-world impact of macroeconomic conditions before they become full-blown crises. For accountants and bookkeepers who advise small businesses, we want this data to provide context, helping advisors understand how their clients’ situations compare to national and regional trends and opening conversations about cash flow management. And for small business owners themselves, we hope it helps them feel less alone. When you’re running a business and your sales are down, it can feel like a personal failure. Seeing that this is a national trend driven by forces well outside anyone’s individual control is important, both psychologically and strategically.
For Canadian small business owners who see themselves in this data—slowing sales, volatile cash flow, and customers taking longer to pay—what practical steps or strategies would you encourage them to consider in 2026 to protect cash flow, build resilience, and make the most of the tools available to them through platforms like Xero?
What you’re experiencing is real, and it reflects a genuinely difficult operating environment. Canadian small business owners have navigated extraordinary challenges over the past several years, and the resilience this community has shown is remarkable.
With that said, the most consistent piece of advice I can offer right now is to focus on what’s within your control. The most important thing within your control is visibility. Understand your cash flow position in real time, not just at month’s end. Know your payment cycles: how long does it typically take customers to pay you, and what does that mean for your ability to cover costs? If late payments are a recurring issue, consider whether you have the right invoicing terms in place and whether automated payment reminders might help move the needle.
Beyond cash flow visibility, 2026 is likely to be a year of continued adjustment for businesses that export or source goods internationally. Where possible, exploring supplier diversification or new market opportunities now, before volatility forces your hand, puts you in a stronger position.
Finally, don’t underestimate the value of your accountant or bookkeeper in moments like this. The businesses that tend to navigate uncertainty most effectively are the ones that have strong, proactive advisory relationships. Tools like Xero are designed to make those conversations more data-driven and less reactive, and that kind of informed, forward-looking partnership is exactly what small business owners need most right now.
Disclaimer: The views and opinions expressed in this interview are those of the interviewee and do not necessarily reflect the official policy or position of CanadianSME Small Business Magazine. Our platform is dedicated to fostering dialogue and sharing insights that inspire and empower small and medium-sized businesses across Canada.
