Make next Christmas your best yet

Don't let December knock your cash flow

Smaller building firms often rely on steady cash flow. When income slows or stops for a few weeks, it exposes gaps very quickly. Wages still need to be paid, leave balances come into play and statutory holidays stack up over the shutdown period.

If these costs haven’t been allowed for throughout the year, December can arrive with a nasty surprise.

The costs that don't take a holiday

Even when the team is on leave, business owners still need to be paid and expenses don’t stop. Most businesses are still responsible for covering:

• Annual leave and public holidays

• KiwiSaver and PAYE on wages paid

• Vehicle costs, rent, insurance and subscriptions

• Fixed loan or hire purchase repayments

Track wage liabilities

Wage related liabilities are the leave and holiday entitlements your team earns as they work. Annual leave and public holidays don’t suddenly appear at Christmas, they build up steadily across the year. However, many business owners treat these costs as a future problem and when December rolls around, it puts immediate pressure on cash flow.

Under the Holidays Act 2003, if your business shuts down for more than one week, there are rules around how employees with less than 12 months’ service must be paid. Getting this wrong can create compliance issues and unexpected costs.

As a business owner, it’s your responsibility to plan for these entitlements and ensure employees are paid correctly. Using a good payroll system is critical, as they’re not all created equal. Systems like Smartly or Pay Hero handle all leave calculations and stay aligned with current legislation. If you’re unsure about the rules, working with a payroll specialist can help you stay compliant and remove a lot of stress.

Get ready before tools down

In the lead-up to Christmas, finalise progress claims earlier than usual, follow up overdue invoices and make sure enough cash is in the bank to cover wages and leave.

Relying on January payments to cover December costs is risky. Some builders take out short-term loans just to get through the break. While this provides temporary breathing space, it also creates longer-term pressure through interest costs and repayments that linger well into the new year.

Survive the Christmas crunch

The Christmas shutdown happens every year but with the right preparation, you can step away knowing your team is paid correctly, your obligations are covered and your business is compliant. That peace of mind is what turns Christmas into a genuine break, not a financial headache waiting to happen.

Spread the load

Putting aside a portion of the business revenue for leave accruals every week or month smooths cash flow, removes the panic factor and gives you a much clearer picture of what your business can actually afford. You don’t need complex systems; even simple payroll reports or software makes tracking leave accruals easy, accurate and effective. Make sure to:

• Have leave costs, KiwiSaver and ACC factored into your charge out rates

• Check accrual balances regularly, not just at year end

• Put aside accruals for leave, KiwiSaver and ACC each week or every time you receive payment

• Keep funds for leave in a separate account and don’t touch them

Amanda is a regular contributor to Inhouse

Published in print and online, InHouse is the official magazine for NZ Certified Builders.

This article featured in the March 2026 issue.