How Payment Terms Can Make or Break Your Agribusiness

Mary runs a cereals business in Uasin Gishu. Every week, she buys maize from local farmers and pays in cash. But her main buyer in Nairobi pays after 30 days. That means for a full month, Mary’s money is tied up in stock she’s already delivered. Meanwhile, she still needs to buy more maize, pay workers, fuel her truck, and keep the business running.

The books may say she’s doing well, sales are good, and profit is there. But cash? It’s always tight.

This is the reality for many Kenyan agri-SMEs: you’re profitable, but stuck. And most of the time, the reason is simple: payment terms.

The Double Pressure: Cash Out, Payment Pending

Across Kenya, agri-SMEs often face a tough cash flow mismatch. You pay your suppliers immediately and in cash, whether they’re farmers, traders, or input providers. But when it’s time for your buyer to pay you, it could take 30, 45, even 60 days.

You’ve already delivered stock, but the payment is weeks away. And in the meantime, you’re trying to restock, fulfill new orders, and keep your team and trucks running.

The business is active, but your hands are tied. The Hidden Cost of Growing Without Cash Flow.

You’re not slowing down because of a lack of demand, you’re slowing down because your cash is locked in pending payments.

And the impact is real:

• You miss out on restocking when prices are lowest

• You turn down big orders you could fulfill — if only the money were available

• You watch others move faster, not because they make more profit, but because they can access their cash when they need it

The more your business grows, the more cash gets locked away. And if you can’t unlock it, growth becomes the very thing that slows you down.

How to Stay Ahead of the Payment Gap

You may not control how fast your buyer pays, but you can run your business in a way that doesn’t leave you stuck.

Start by planning your restocking and deliveries around when the money comes in, not just when you close the sale. That way, you’re not stranded while waiting for payment.

If delayed payments are part of how you operate, adjust your pricing slightly to reflect that. Waiting has a cost, and someone has to cover it.

Also, pay attention to buyer behaviour. If someone always delays, plan with that in mind. And if you’ve built trust, don’t shy away from asking for better terms, even a partial payment up front can go a long way.

These small decisions won’t solve everything, but they ease the pressure. And when you're trying to grow, that breathing room makes all the difference.

.

What You Can Do When Cash Is Stuck in Pending Payments

When your buyer takes weeks or months to pay, but you’ve already spent on stock, delivery, and labour, you need a way to stay in business without getting stuck.

That’s where trade financing comes in. These are financial tools designed to bridge the gap between when you spend money and when you get paid, especially useful when working with term payments.

There are different ways agri-SMEs can use trade financing, depending on their position in the supply chain:

• If you’re supplying goods and waiting to be paid, some financing options let you get a portion of your expected payment in advance. That gives you the cash to restock, keep operating, and avoid delays.

• If you’re the buyer, and your suppliers need cash urgently, you can use trade financing to pay them right away, while still keeping your usual payment schedule. It helps keep your supply chain running smoothly, even when your cash is still tied up.

• If you’re somewhere in the middle, such as a trader or aggregator, having access to a reliable source of funds to purchase stock or inputs quickly can make all the difference, especially during busy seasons.

Used wisely, these tools help you move when it matters. They let you run your business based on opportunity and need, not just when your account, as we like to say, ‘iko sawa’.

At Avenews, we offer tailored trade financing solutions for agri-SMEs in Kenya:

• Agri Supplier Financing: advance against pending buyer payments (up to 85%, for 45 days)

• Agri Buyer Financing: pay suppliers now, repay later (up to 85%, within 28 days)

• Agri Credit Line: a recurring facility for purchasing stock or inputs

These are designed for the realities of Kenyan agribusiness and offer a way to keep moving, even when payment terms stretch out.

Closing Thought

Payment terms may look small, but they shape how fast your business can grow.

When your money is stuck in the system, suppliers still want cash, and buyers are still delaying. You end up waiting while the business slows down.

Knowing how to manage that timing and what tools can help makes all the difference.

Because sometimes, it’s not about working harder, it’s about freeing the money that’s already yours.

Don’t Wait for Buyers, Get Paid Now. Increase you cash flow and grow your business

Apply Now