The summer shutdown gap: January bills with no income

In much of New Zealand, business slows to a crawl somewhere between Christmas Eve and the end of January. Offices close, tradies take their break, factories shut for a fortnight. The beach is a lovely place to be. The bank account is a different story, because rent, leases, insurance and loan repayments carry on regardless while the takings stop.

Why January bites

Three forces squeeze at the same time.

1. Takings drop for the weeks you’re closed or slow.
2. Costs continue, including premises, finance, subscriptions and any staff you are paying through the break.
3. Tax falls due in the middle of it.

And behind all this sits a fourth: customers who were meant to pay you in December are on holiday too.

What’s due in January

For many businesses with a 31 March balance date, one date stands out.

Date	What is typically due
15 January	GST return for the period ending 30 November
15 January	Second provisional tax instalment (31 March balance date)
15 January	PAYE and ESCT for 16 to 31 December paydays, for twice-monthly payers
20 January	Monthly PAYE and KiwiSaver for December paydays

If a weekend or public holiday falls on a due date, it moves to the next working day. Check your own dates in myIR, because yours may differ. The GST return crunch page explains the schedule in more detail.

The payroll twist

The Holidays Act means pay around the break is rarely routine:

• Christmas Day, Boxing Day, New Year’s Day and 2 January are public holidays, with their own pay rules.
• If you close down, you can require staff to take annual leave during one closedown a year, with 14 days’ notice.
• Staff without enough leave accrued may need special arrangements.
• Casuals and part-timers can have complicated entitlements.

All of this lands on payroll just when income is lowest. See cash for wages for how to cover pay weeks.

Closing for summer and worried about January? Start the 60-second enquiry.

Build a shutdown forecast in October

Waiting until December leaves few options. Starting now:

1. List the weeks of reduced takings, with realistic figures.
2. List every cost during those weeks, by date.
3. Add the January tax dates, from your myIR account.
4. Add expected customer payments, allowing for holiday delays.
5. Find the lowest balance and how many weeks it stays below your buffer.

The cash gap calculator will run this in minutes.

Ways to cover the gap

Save during the busy weeks

If trade peaks before Christmas, move a fixed amount weekly into a separate account for January. It’s the cheapest solution.

Collect before you close

Invoice early in December, chase before the break and agree payment dates with big customers. Our guide on getting invoices paid faster is worth a read before the end of November.

Spread the tax

Instalments with Inland Revenue can ease a single heavy payment. Ask early, and file on time regardless.

Arrange funding before you need it

A short-term loan or business cash line arranged while takings are strong costs less stress than one begged for in the first week of January. Seasonal patterns are explained further on the seasonal business cash flow page.

What lenders ask

Because the shutdown is predictable, lenders are comfortable with it if it is explained. Show a full year of statements so the pattern is visible, and note that December and January are seasonal. Repayments can then be shaped to fit, with lighter ones during the break.

Speaking to customers before you close

Tell your main customers your closing and reopening dates in November, and ask when they plan to pay invoices over the break. Many accounts teams will release payments before their own shutdown if asked. Offer a small incentive for settling early, such as a tidy end-of-year statement, or confirm the date you expect each payment in writing. Customers who understand your position tend to prioritise it, and a handful of early payments can erase a substantial slice of the January gap before any funding is needed.

An illustrative example

Illustrative only. A Rotorua joinery firm closes from 23 December to 12 January. Its GST of $16,400 and provisional tax of $11,000 fall due on 15 January, wages of $9,000 are due on 14 January for staff on leave, and the largest client has said “payment in February”. The owner draws $28,000 on a cash line on 12 January, pays both tax bills on time and repays the line in the first two weeks of February.

Get ahead of the break

Talk to us in October or November, when the business is busy and the options are best. The enquiry takes about a minute, asking involves no credit check, and your details stay with one team. A real person rings you.

Dates and amounts, even rough ones, help us line funding up with your shutdown.

Plan my January cash →