New report reveals Canadian small-business owners are struggling to pay themselves

It’s no secret that inflation is impacting small businesses all over the country. In fact, a staggering 31% of Canadian small business owners have been so affected by it that they have been unable to pay themselves at times in the last 12 months.

This is all according to a new report by global small-business platform Xero, which surveyed over 1,000 small to medium-sized businesses (SMBs) across the country.

The Money matters report found that more than half of small businesses (53%) say inflation has had a big impact on their cash flow management in the past six months alone. And, unfortunately, the uncertainty of our current economic landscape points toward more challenges to come.

For many businesses, effective cash flow management has never been more important.

The reality of cash flow challenges

Xero

In the past year, many small companies have had to reshape the way they operate. For example, 54% have increased their prices to mitigate cash flow challenges.

These challenges have also had significantly negative effects on the emotional and physical health of small business owners. The report reveals that many admitted to experiencing feelings of stress (54%), anxiety (43%), trouble sleeping (35%), and the loss of time with friends or family (27%).

Despite this, there is a remarkable sense of optimism among business owners, with 78% reporting some level of confidence in their financial well-being.

Digital solutions to help

Xero

The good news is there are a variety of methods Canadian small businesses can use to simplify and optimize cash flow management. One helpful tool is accounting software.

Currently, just a third (31%) of Canadian businesses use accounting software to track payments and manage their cash flow.

This figure, when considered alongside the survey’s findings on cash flow challenges, shows the need for more effective cash flow management tools.

This is where Xero comes in. It offers real-time financial insights for small businesses to better manage cash flow and measure financial performance — aiding them as they navigate difficult times.

Xero can help you get your books done faster by automating tasks that take up a lot of time, allowing access to invoicing and payroll at your fingertips, giving you payment reminders, and more. There’s also the option to use AI to manage cash flow with tools like Xero Analytics Plus, which offers cash flow forecasting.

“Our survey showed that Canadian small businesses are resilient, but, in today’s economy, it’s proving to be even more challenging to grow your business and manage its finances at the same time,” says Faye Pang, Canadian Country Manager at Xero.

“For these small business owners, many of whom have not yet adapted digital accounting solutions, there’s a better way to approach cash flow so you can spend more time doing the things that helped you build your business in the first place.”

You can read the full Money matters report by Xero here. And for more information about how accounting software can help your Canadian small business, visit Xero’s website.