Every credit and collection professional knows the truth: January isn’t just the start of a new year; it’s the start of the annual payment excuse season. Once the holiday decorations come down, the real “January effect” kicks in, and suddenly the promises that customers made in November and December evaporate like they never existed. For credit managers across nearly every industry, January is the month when commitments collapse, payment dates slip, and the A/R aging report becomes a battlefield of broken pledges.
It’s not that customers suddenly become dishonest in January. The problem is more structural, and in some cases, psychological. Many companies close out the prior year with depleted cash flow, heavy fourth-quarter expenses, and unresolved year-end obligations. Add December’s production shutdowns, holiday slowdowns, and extended vacations, and you get a predictable result: accounts payable departments walk into January already behind. The first thing they do is push back payments. The second thing they do is send vague, noncommittal promises like “we should have an update next week” or “we’re waiting for the year-end numbers.” Credit professionals recognize these phrases instantly because they appear every single January like clockwork.
January is also the month when customers begin to “reframe” prior agreements. A commitment to pay on December 20 quietly becomes “end of January,” a partial payment that was promised for the first week of the month becomes “we’re working on it,” and invoices that were approved last year suddenly require “one more level of review.” These aren’t unusual or even malicious behaviors; they’re symptoms of the cash-flow reset that happens across the business world as companies try to position themselves for the new fiscal year. Unfortunately, the ripple effects fall squarely on credit teams, who must chase last year’s promises while trying to build discipline for the year ahead.
To make matters worse, January often exposes deeper operational issues that went unnoticed during the Q4 rush. Customers who overbought in November, suddenly admit they’re carrying too much inventory. Others reveal delays in receiving their own receivables, leading to cascading payment slowdowns. And of course, some simply rely on the hope that suppliers will “understand the situation” and quietly grant more time. In reality, January is a perfect storm: a blend of slow cash inflow, increased expenses, and internal pressure on customers to conserve liquidity until the landscape becomes clearer.
For credit professionals navigating the chaos, it helps to recognize the common January risk signals early. Look out for customers who exhibit any of the following behaviors:
- Suddenly extended payment commitments (“give us two more weeks”)
- Delayed communication or selective email replies
- Requests for re-sent invoices that were already approved
- Changes in payment approval workflow
- Reduced order volume paired with slower payments
- Unusual nervousness or defensiveness from A/P staff
These small signs may indicate temporary challenges, or they may point to broader financial strain.
January may always be the month of broken promises, but with preparation and clear engagement, credit professionals can turn it into a month of regained control, renewed discipline, and the foundation for a stronger year ahead.
Your thoughts and comments (nseiverd@cmiweb.com) are most welcome!
Nancy Seiverd, President
CMI Credit Mediators, Inc.
All Rights Reserved
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