The festive sales trap: Your January cash crisis is already taking shape
Opinion
By
James Mungai
| Oct 21, 2026
Most businesses believe January is when cash runs dry. But it is not. It's only when you find out. The real damage happens in September, when festive orders are booked on 60 day terms and nobody asks whether the customer could actually pay by Christmas.
Do the arithmetic. Take a distributor in Nairobi selling Sh3 million a month, two-thirds of it on 60-day credit. September’s Sh2 million falls due in November, October’s in December. Now let customers slow down by just 30 days over the holidays, as they almost always do. The money expected in December lands in January while one expected in January’s comes in on February.
The business opens the year with salaries, rent, PAYE and supplier bills due, and a full month of credit sales, Sh2 million, missing. Scale it up and nothing changes except the zeros. A manufacturer selling Sh300 million a month faces a Sh200 million hole. A hardware shop in Kitengela supplying contractors on account faces the same gap, just smaller, and with less room to absorb it.
This year, the hole could go deeper. The Central Bank of Kenya says private sector credit grew 10.6 per cent in the year to September, up from 10.3 per cent in August. Banks are lending again and lending flows downstream; distributors stock up and sell on terms to retailers who are stretching too.
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Inflation at 6.8 per cent, near the top of the target band, is squeezing margins along the chain. And with the average bank lending rate at 14.4 per cent, borrowing that missing Sh2 million for one month costs a small distributor about Sh24,000 in interest alone.
Then January adds its own weight. School fees, rent and statutory deductions land on your customers in the same fortnight, and your invoice becomes the easiest one to delay.
In my work of recovering debts for corporate clients, the pattern repeats with uncomfortable precision. Accounts that turn bad in March were usually created between September and December, and the warning signs showed early.
The customer who paid September’s invoice ten days late, sent a part payment without explanation, or asked you to “resend the statement” is telling you how December will go. Your September ledger is already a forecast. Most finance teams simply do not read it.
You cannot undo September. You can stop October and November repeating itself, and the window is closing. Right now, customers still need your stock for their own festive trade, so you still have leverage. Once the goods are delivered and their cash runs dry, that leverage is gone.
Five moves, whether you supply kiosks in Kawangware or run a listed company. First, pull September’s payment record this week and rank customers by how late they paid; that list is your December risk.
Second, shorten terms on festive orders, from 60 days to 30, or ask slow payers for a deposit before delivery. Third, set a hard cutoff: Anything invoiced in November is collected by 15 December, before offices close.
Fourth, turn promises into paper, because “we’ll pay after Christmas” should be a signed payment plan with dates and amounts. Fifth, build January’s cash flow forecast now, setting salaries, rent and loan repayments against realistic collections, not hopeful ones.
Accounts already past 60 days should be escalated today, internally or to a professional recovery partner.
Some will call this harsh in a tough economy. It is the opposite. Clear terms in October are kinder than a sudden credit hold in February. Bad loans in banks fell to 13.9 per cent of gross loans in September, which is real progress, but no Central Bank will rescue your receivables. Sell hard this festive season. Just make sure the cash comes home before you close the office.