We get it. For a lot of businesses, no money is flowing in for a few weeks each Christmas while your team are taking a much needed break. Holiday payrolls, GST and provisional tax due 15th January, PAYE due 20th January - you sit and watch your money disappear. But a bit of forward planning you can sail through the end of year money madness like a cashflow pro.
Plan like a road trip
Think of your annual budget like planning a good old summer roadie. Your business’s financial journey is no different. Start by plotting out the major costs of the year, and don’t forget to highlight December and January as those tricky corners.
Work out how much you’ll need for Christmas payrolls (remember those stat days!) and your provisional tax payment in January. Then divide that total by 12. Setting aside a chunk of cash each month means no nasty surprises halfway through the trip.
Open a Rainy Day Account
Most of us have a rainy day fund for when the washing machine goes kaput or the car won’t start. Well, your business deserves one too! Open a separate savings account specifically for end-of-year expenses and give it a catchy name, like “Santa’s Payroll Stash” or “Tame the Tax Beast.”
Automate those transfers so you’re not tempted to spend the money on something else. Even small topups can help (think ASBs Save the Change)
Embrace the Kiwi No. 8 Wire Spirit
We’re a resourceful bunch, and a bit of that No. 8 wire ingenuity can go a long way. Look for ways to smooth out your cash flow during the year. Maybe that’s offering a discount to customers who pay early or spreading out big costs like insurance premiums over monthly payments.
And don’t be shy to renegotiate with suppliers or chat with your bank about options if you’re finding things a bit tight. Remember, they’d rather you ask for help early than wait until you’re in deep water.
Keep an Eye on the Books
Consistently monitoring your financial records is crucial. If you haven’t already done so, make regular use of accounting software to track income and expenses. Staying informed about your financial position enables you to make better decisions and reduces the likelihood of unexpected shortfalls. Think of this as checking the weather forecast before embarking on a tramp — it helps you prepare adequately.
It is also advisable to maintain regular communication with your accountant. Our expertise can guide you through complex financial matters and ensure compliance with tax obligations, helping to avoid costly errors. We can also do all this planning for you!
Don’t Forget Your Own Wellbeing
While we’re talking about planning and saving, let’s not forget to look after number one. Running a business can be full-on, and the end of the year is often the busiest time. Take a breather when you can, even if it’s just a quick walk along the beach or a cuppa in the sun. A clear head will help you make better decisions. I see a lot of business owners who don't take holidays, and no the days between Christmas and New Year isn't a holiday. Make sure your annual savings plan builds in a fund to cover you taking time off, if you are the one bringing the money in.
Celebrate the Wins
Once you’ve successfully navigated the financial silly season, take a moment to celebrate. Whether it’s shouting the team a Friday lunch or just giving yourself a pat on the back, it’s important to acknowledge the work you’ve put in.
So there you have it — a few simple, practical steps to keep the stress levels low and the bank balance happy as during the festive season. Remember, a little bit of planning now will save you a heap of headaches later. And who knows? You might even enjoy a bit of that summer break without worrying about the bills.
Kia kaha, and here’s to a financially chill end of the year!