Why Cashflow Dips After Christmas (and How to Plan for It)

Avoid January Cashflow Stress: Tips for Small Business Owners

If January feels tighter than it should, you are not imagining it.

Every year I see the same pattern across small and medium businesses: sales slow down over Christmas, but expenses do not. Then January arrives and suddenly GST, provisional tax and wages land all at once.

For many business owners, it feels like a nasty surprise. In reality, it is predictable – and manageable – with the right planning.

Why cashflow drops in January

There are a few key reasons this happens:

1. Quiet trading over the holidays
Many businesses slow down or close completely. Income dips, but fixed costs like rent, software subscriptions and insurance keep ticking over.

2. Big tax obligations fall together
For many businesses, January includes:

• GST payments
• Provisional tax
• Regular wages

That combination can drain cash very quickly.

3. Customers pay more slowly
Your clients are also on holiday. Invoices go unpaid for longer, which stretches cashflow just when you need it most.

4. No forward planning
This is the biggest one. Without forecasting or setting money aside, tax bills feel like they come out of nowhere.

What you can do differently

The good news is that January cashflow stress is not unavoidable.

1. Forecast ahead (even roughly)
A simple cashflow forecast showing expected income, GST, tax and wages for the next 3–6 months can make a huge difference.

2. Put tax money aside as you go
Treat GST and provisional tax as money that is not yours. Moving it into a separate account regularly avoids panic when payment dates arrive.

3. Review debtor management
Tidy accounts receivable before Christmas. Following up overdue invoices in November and early December helps protect January cashflow.

4. Plan for quiet periods
If your business slows over the holidays every year, build that into your budget. January should never be a surprise.

The role of good bookkeeping

Good bookkeeping is not just about compliance. It is about visibility and control.

When your numbers are up to date, you can:

• See cashflow pressure coming
• Make informed decisions early
• Avoid last-minute stress

At Book and Admin Ltd, this is exactly what we help clients with – keeping the books tidy, explaining the numbers in plain language, and helping business owners feel prepared instead of reactive.

If January cashflow feels stressful every year, it might be time to change the approach.

Sometimes a small amount of planning makes a very big difference.