How to Beat the End-of-Year Cashflow Crunch
The festive season in Australia is meant to be a break, but for many business owners it quickly becomes a cashflow headache.
December brings a rush of expenses, January slows customer payments to a crawl, and the gap in between can strain even healthy businesses.
Here is a simple strategy to help you get through the December and January pinch with confidence.
The anatomy of the December and January cashflow pinch
Why does this period hit Australian businesses’ cashflow so hard? It’s a mix of seasonal shifts and statutory obligations:
1. The December outflow rush
December is when expenses stack up fast.
Employee costs rise as staff take annual leave and you prepare the December quarter Super payment due by January 28.
Many suppliers tighten payment terms as they close their books.
Festive costs like team events, client gifts, or end of year purchases all hit at once.
2. The January income drought
January can feel slow and long.
Clients take extended breaks so invoices sent in mid December may not be paid until late January or early February.
The December quarter BAS may not be due until late February, but the tax liability still forms in December. If you have not set funds aside, this can be the final squeeze.
Plan ahead with a simple 12-week cashflow forecast
You can't manage what you don't measure. The single most important action you can take right now is to create a detailed, week-by-week cashflow forecast for the next 12 weeks.
1. Map and time your outgoings (the non-negotiables)
Payroll & Super: Calculate all leave owed and the Super Guarantee due in January. Set aside that amount immediately.
Tax Obligations: Work with us to estimate GST and PAYG for the December BAS. Keep these funds protected.
Supplier Review: Review supplier invoices and negotiate longer terms for January if possible. Pay only what is necessary in December.
Model Scenarios: Create a worst case version of your forecast. Assume slower sales and late client payments. If the plan still works, you are ready.
2. Accelerate your inflows (don't be a bank)
This is about getting paid faster and reducing your Accounts Receivable (AR) days.
Early Invoicing: Set a final invoicing date such as December 15. Send all work and invoices before clients close for the year.
Pre-Payment Options: Offer a small incentive for clients who pre-pay for January work.
Ruthless Follow-Up: Automate reminders before invoices fall due and follow up the moment they become late. Strong collection habits reduce the January dip.
The emergency toolkit
Even with good planning, unexpected costs or delays can still create a short term gap. Cashflow finance is not long-term debt. It is a short-term bridge that helps your business stay liquid until the normal cycle returns.
1. Business overdraft or line of credit
What it is: A flexible facility linked to your bank account. You only pay interest on the amount used.
Best for covering short, predictable dips such as December payroll when you know a major payment is coming in January.
2. Invoice factoring/discounting
What it is: A finance provider pays you most of the value of your outstanding invoices upfront.
Best for businesses with reliable customers but slow payment terms.
3. Short-term business loan
What it is: A fixed loan repaid over three to twelve months.
Best for planned purchases with a clear return, such as upgrading equipment or using a tax deduction before year end.
Pro tip: Apply for a line of credit or overdraft now, not when you are already under pressure. Lenders make better offers when your financials look strong.
Partnering for better cashflow year round
The end of year squeeze is often a sign of limited forecasting throughout the year. Our goal is not only to complete your BAS and tax return, but to give you visibility and control every month.
We help you:
Use cloud-based forecasting tools for real time cashflow clarity
Strengthen your debtor management so you get paid faster
Model your tax and Super obligations so there are no surprises
With the right plan and support, the holiday season becomes a well deserved break instead of a financial strain.
Stop fearing the holidays
The festive season should be a reward for your hard work, not a financial penalty. With smart planning, proactive debtor management, and a pre-approved safety net, you can confidently close out the year and hit the ground running in January.
Important Note:
The information provided in this article is general in nature and does not constitute financial or tax advice. This information has not been prepared taking into account your specific objectives, financial situation or needs. Before acting on any information in this article, you should consider its appropriateness to your circumstances and consult with a registered tax agent or financial advisor.
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