There’s something about May that naturally brings optimism. The weather improves, business activity picks up, and for many companies, the second quarter begins to feel like a turning point. Orders increase, pipelines look healthier, and there’s a general sense that momentum is building. After months of uncertainty, it’s easy to believe that conditions are finally stabilizing.
But this year, that optimism deserves a closer look.
Beneath the surface, several pressures continue to quietly shape the global economy. Energy prices remain sensitive to geopolitical tensions, particularly in the Middle East, where even minor disruptions can ripple through fuel and transportation costs. Trade policy uncertainty, including lingering tariff effects and ongoing adjustments, continues to impact pricing and margins. Add to that elevated borrowing costs and cautious capital spending in an election year, and it becomes clear that while activity may be increasing, stability is far from guaranteed.
This is where credit professionals have a unique advantage.
While sales teams see growth, and leadership sees revenue, credit managers often see something else entirely, it’s behavior. And right now, that behavior is sending mixed signals. Customers are placing orders, but they’re also stretching payables. They’re maintaining volume, but quietly conserving cash. Conversations may sound positive, but payment patterns often tell a more cautious story. In many cases, companies are managing through uncertainty not by slowing down operations, but by extending their payment cycles just enough to preserve liquidity.
This creates what might be called the “A/R lag effect.” Growth shows up first. Risk shows up later.
In practical terms, this means that what looks like a strong May can turn into a more challenging July or August. The warning signs are rarely dramatic at first. They tend to appear gradually:
- Partial payments becoming more common
- Payment promises becoming less specific
- Disputes increasing, often tied to costs or timing
- Requests for extended terms framed as “temporary”
- Slower response times from accounts payable contacts
Individually, these may seem manageable. Collectively, they often signal that financial pressure is building beneath the surface.
That’s why this time of year is so critical for credit risk management. Periods of growth can create a false sense of security, leading to increased exposure at exactly the wrong moment. As order volumes rise, so does the potential downside if payment behavior shifts. The strongest credit teams recognize that optimism is not a strategy, and that discipline during growth periods is just as important as discipline during downturns.
As you move through the second quarter, it may be worth taking a step back and asking a few key questions:
- Have credit limits kept pace with current financial realities?
- Are your largest exposures still aligned with verified risk?
- Have recent behavioral changes been documented and addressed?
- Are you relying on past performance more than current indicators?
- If payment patterns shift this summer, how quickly will you respond?
Spring often brings renewed energy and opportunity. But in credit and collections, timing matters. What you see today is not always what you collect tomorrow.
Because while spring may bring optimism, summer often reveals the truth.
Your thoughts and comments (nseiverd@cmiweb.com) are most welcome!
Nancy Seiverd, President
CMI Credit Mediators, Inc.
All Rights Reserved
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