Your essential guide to Christmas payroll and cash flow planning

Written by RightWay | 14 October 2025

Christmas is just around the corner, and while it's a time for celebration and relaxation, it can present some unique challenges for business owners. Between statutory holidays, skeleton staff, and the potential cash flow crunch that comes with paying people whilst the tills aren't ringing, the festive season requires careful planning to ensure you start the new year on solid ground.

Payroll, public holidays, and cash flow ... oh my! The festive season can throw some serious curveballs at your business.

Our CFO Cherie is here with her top tips to help you plan ahead and keep things running smoothly this Christmas. Watch our latest tips video here 👍

Cash really is king at Christmas

Let's be frank: Christmas is all about cash. For most businesses, there's a significant period where operations slow down or stop entirely. Your doors might be closed, your sales pipeline goes quiet, and yet your financial obligations don't take a holiday.

This is why robust cash flow forecasting becomes absolutely critical in the lead-up to Christmas. You need clear visibility of exactly how much money you'll need to cover your expenses during the shutdown period, when you'll have outgoings but limited (or no) income flowing in.

What should your cash flow forecast include?

When building your Christmas cash flow forecast, make sure you're accounting for:

Payroll costs during the shutdown period including holiday pay and statutory day entitlements
Regular overhead expenses that continue regardless of whether you're trading or not (rent, utilities, insurance, software subscriptions)
Early payment requirements that some suppliers and payroll may need to be processed earlier than usual
Tax obligations GST, PAYE, and other tax payments that might fall during or immediately after the holiday period
Any seasonal cost increases if you're a hospitality or retail business, you might face higher inventory costs during your busy period

Getting this forecast right gives you peace of mind and crucial time to take action if you spot potential shortfalls. Whether that's arranging overdraft facilities, timing your invoicing strategically, or having conversations with suppliers about payment terms, you need to be doing this work in November, not December.

The payroll puzzle: timing is everything

One of the trickiest aspects of Christmas planning is navigating payroll timing. With public holidays and business closures, your normal payroll schedule often gets thrown out the window.

Pay dates shift earlier

Your team will likely need to be paid earlier than usual over the holiday period. If your business is closing for an extended break, you may have to process payroll well in advance of your normal schedule. This brings forward a major cash outflow, which is important to factor into your financial planning.

And here's the thing: payroll isn't something you can be flexible with. It's not negotiable. Your legal obligations to pay your staff correctly and on time don't change just because it's Christmas. Getting it wrong isn't just stressful, it can land you in hot water with employment law.

Getting your payroll data right

Before you head into the Christmas period, make sure your payroll system is completely up to date. This isn't the time to discover discrepancies or realise you've been calculating holiday pay incorrectly.

Check that:

All hours worked are accurately recorded
Annual leave balances are correct
Holiday pay calculations reflect any recent pay increases
Your payroll software has the correct public holiday settings for your region
You understand your obligations around statutory days (especially if staff work during public holidays)

If you're even slightly uncertain about your payroll compliance, now is the time to get expert advice. The consequences of getting it wrong, underpaying staff, incorrect holiday calculations, or missing statutory obligations can be costly and damage staff morale heading into the new year.

Special considerations for seasonal businesses

If you run a seasonal business, Christmas presents both opportunities and challenges. You might be heading into your busiest period of the year, which is fantastic for revenue but can create operational pressures elsewhere.

The hidden costs of success

During peak season, you're likely to experience:

Significantly higher transaction volumes more sales, more invoices, more bank transactions to reconcile
Increased inventory and supply costs which need to be paid before you receive the corresponding revenue
Additional staffing costs casual or temporary staff to handle the increased demand
More complex cash flow timing juggling larger outflows with hopefully larger inflows

The risk here is that you're so focused on delivering to customers during your busy period that the back-office processing falls behind. Before you know it, you've got weeks or even months of bookkeeping to catch up on, and you've lost visibility of your true financial position.

Don't drown in your own success

One of the smartest moves a seasonal business can make is to outsource bookkeeping and financial processing during peak periods. Having someone else handle the reconciliations, invoice processing, and financial admin whilst you focus on operations can be transformative.

This approach:

Keeps your financial records current and accurate
Maintains real-time visibility of your cash position
Ensures you don't start the new year with a mountain of admin
Allows you to make informed decisions during your busiest trading period
Helps you sleep better at night (and that's worth a lot)

Your Christmas business checklist ✔️

As we head into the festive season, here's your action plan:

By early December:

Complete your cash flow forecast through to mid-January
Identify any potential cash shortfalls and arrange facilities if needed
Confirm your payroll schedule and communicate dates to staff
Ensure all payroll records are accurate and up to date
Review your supplier payment terms and schedule early payments if required

Before you close:

Process payroll with all correct holiday and public holiday entitlements
Confirm your banking arrangements (will you have online access during the break?)
Set up out-of-office notifications and emergency contact protocols
Ensure your bookkeeping is current so you know exactly where you stand
Back up critical financial data

For seasonal businesses:

Arrange additional bookkeeping support for your peak period
Set up systems to capture all transactions in real-time
Establish a schedule for regular financial reviews during your busy period
Plan for tax obligations that might arise from increased turnover