5 steps small retailers can use to handle accounts payable during the holiday stock-up

It’s mid-October. Holiday orders are in with a dozen suppliers, each with different payment terms. The first invoices are arriving, with more in November, but most of the holiday revenue won’t come in until December. That’s an accounts payable squeeze: You owe suppliers for goods that haven’t sold yet.

For most retailers, that means inventory invoices and bills from contractors who handle repairs or build displays. The strain happens year-round, but the holidays add to it — bigger orders, earlier due dates, slower customer payments.

This cash squeeze can be managed by mapping out supplier terms and a payment calendar. Xero's guide to the accounts payable process walks through each stage a bill passes through. The five steps below put that process to work during the holiday stock-up.

1. Map every supplier's payment terms before invoices pile up

Take a gift shop's fall order book. Candles come from a maker who wants payment on receipt, toys from a distributor on net 30 and cards from a wholesaler on net 60. A handyman invoices separately for new shelving. With each supplier on its own schedule and invoice format, obligations scatter. Bills get missed. A late fee follows. Or five due dates land in one week and drain the account.

One supplier record helps organize those obligations and is a good first step for managing the holiday rush. Building it now, while invoices are still arriving, gives every new bill a place to go:

• List every supplier, its payment terms, contact and where to send payment
• Collect a W-9 where appropriate and track payments to vendors that may require 1099 reporting
• Confirm each invoice shows the due date and terms
• File supplier invoices and payment records in a single place, sorted by supplier and month

Tracking vendors that may require 1099 reporting is important because businesses may need to report certain payments to the IRS once annual payments reach the applicable threshold. For payments made in 2026, the federal reporting threshold for certain payments increased from $600 to $2,000, though requirements vary by payment type and vendor classification. Collecting W-9s and tracking payments throughout the year can help avoid a year-end scramble. A tax professional can help confirm which vendors and payments need to be reported.

The same supplier record also connects payment terms to shipping schedules, so the person receiving stock and the person paying bills work from the same information. A delayed shipment doesn’t trigger an early payment, and stock that arrives without a matching invoice gets flagged immediately. 

2. Create a plan for which bills get paid first if cash is tight

A complete supplier record shows everything the store owes, but the real test comes when customer money comes in slower than supplier bills. Picture a boutique that also sells corporate gift boxes. It ships client orders in October on net 30 terms, then waits weeks for payment while its own stock bills come due. According to Xero Small Business Insights data, the wait time for payment is getting longer. In the June 2026 quarter, U.S. small businesses waited 29.3 days on average to be paid, up from 28.6 days in March, and invoices were paid 8.5 days late on average. So a client on net 30 terms who pays 8.5 days late would pay around day 38 or 39. If suppliers want payment in 10 or 15 days, that gap needs to be covered from the store’s own cash.

With payments taking that long, a store can't pay every bill the day it lands, so a clear ranking keeps the right suppliers paid first:

• Pay suppliers of sellable holiday stock first — empty shelves cost more than most late fees
• Cover bills with the nearest due dates and steepest late fees next
• Weigh each early-payment discount against the cost of borrowing
• Call flexible suppliers before the due date to ask for seasonal terms or split payments

Run a weekly aging report during peak season for a current view of what’s owed. It groups unpaid bills by age (0-30 days, 31-60 days, 61 days or more) and shows what’s about to go late.

3. Negotiate early payment discounts

Suppliers sometimes offer early-payment discounts, especially on large holiday orders. A common one is 2/10 net 30: 2% off if paid within 10 days. While a 2% discount may seem small, it can add up with the right supplier. The math works like this:

1. Start with a $10,000 inventory invoice on 2/10 net 30 terms.
2. Pay by day 10, and the bill drops to $9,800.
3. Pay on day 30, and the full $10,000 is due. Waiting an extra 20 days means giving up  $200 in savings.
4. Annualize the cost of forgoing the discount: 2% ÷ 98% × (365 ÷ 20) comes to about 37% a year

But there’s a limit. If paying earlier leaves you short on holiday stock or payroll in December, using the full 30 days is safer. Compare the discount against cash needs. If early payment puts too much pressure on cash flow, take the full term.

4. Catch duplicate payments before they happen

Large holiday invoices arrive quickly during a busy time of year. That’s when two problems can slip through: duplicate payments and fraud.

Catch duplicate invoices with a three-way match. Before paying, check the purchase order, the packing slip or receiving record, and the supplier invoice against each other. What was ordered, what arrived, and what is billed must all match. This can catch short shipments. If an invoice bills for 48 units but only 36 arrived, pay for 36 and note the back-order.

Fraud is harder to spot. An email from what appears to be a regular supplier asks to update bank details days before a large invoice is due. Or an invoice arrives for an order never placed. According to the Association for Financial Professionals’ 2026 Payments Fraud and Control Survey, 76% of U.S. organizations faced attempted or actual fraud in 2025.

A few simple checks catch both:

• Match the purchase order, packing slip and invoice before approving payment.
• Call a known supplier number before acting on any bank-detail change.
• Split duties so the person who enters bills doesn't also approve them.
• Require the owner's sign-off on any payment above a set amount.
• Check each payment run for duplicates by supplier, amount and date.

Together, these checks keep what the store owes its suppliers from being paid twice or sent to the wrong account.

5. Build a cash calendar before the holiday stock-up

Once bills are organized and checked, the final step is to review the entire season's cash at once. Holiday orders placed in September and October come due in October and November, weeks before December sales peak. A week-by-week cash calendar, built by projecting weekly cash in and out, shows whether the store can cover upcoming holiday bills.

• List supplier due dates week by week through January.
• Set expected weekly sales and customer receipts against each week.
• Ask holiday suppliers for net 60 terms on seasonal orders or staggered deliveries.
• Hold late-season reorders until early sell-through data comes in.
• Budget for January returns and slower post-holiday sales.

If the calendar still shows a shortfall, inventory financing — a loan backed by the stock it pays for — may be an option worth exploring. Compare its cost with the supplier terms already on offer, and consider speaking with an accountant or financial adviser about the best way to manage the shortfall. Doing that in October beats finding the shortfall in November.

One hour now can prevent holiday cash flow problems later

The holiday season can already be full of chaos. Orders pile up, new vendors arrive, payments get delayed, and cash can get tight all at once. But owners who now spend an hour mapping out their supplier terms and payment schedule head into the rush with greater control. Each step answers a risk that grows during the holiday buying season:

• Supplier terms get messier as holiday orders add vendors, so log terms, contacts and W-9s for every supplier each week.
• Bill priority matters more as customers pay slower, so run a weekly aging report and pay stock-critical suppliers first.
• Early-payment discounts lapse when cash is tight, so compare each discount's annualized rate with the store's cost of funds.
• Payment fraud risks increase with large, rushed invoices, so match every order and phone-verify any bank-detail change.
• Holiday cash runs short when bills land before sales, so map due dates against weekly sales and ask for seasonal terms.

A store that does this work now pays suppliers on its own schedule, not on the suppliers' schedule or the holiday chaos's schedule.

This story was produced by Xero and reviewed and distributed by Stacker.