For a manufacturer, wholesaler, warehouse operator or industrial business in Dandenong South, late September can be a useful time to look beyond Christmas sales and think about something else entirely:
What happens to cashflow if part of the business shuts down over Christmas and New Year?
For many businesses, the end-of-year period is not simply about higher demand.
There may be a final production run before closing.
Customer orders might need to be completed before staff take leave.
Suppliers may want accounts cleared.
Annual leave and payroll still need to be funded.
Rent, finance repayments, insurance and other fixed costs continue even if production temporarily stops.
Meanwhile, invoices raised during November or December may not turn into cash until January.
On 22 September, this is still a planning issue rather than an immediate problem.
That is exactly why it is worth looking at now.
A shutdown stops activity, not necessarily expenses
Closing a factory or warehouse for a week or two does not mean the business stops spending.
Some expenses may reduce.
Others continue regardless.
Depending on the business, that can include:
annual leave and payroll
rent
equipment finance
vehicle repayments
insurance
utilities and service charges
software and systems
supplier accounts
tax obligations
loan repayments
security
maintenance contracts
The business may therefore experience fewer customer receipts while many of its normal commitments continue.
That difference needs to be built into the cashflow forecast before deciding how much working capital should be preserved going into the shutdown.
Start with the last normal trading week
A useful way to plan is to work backwards from the expected closure date.
When will the final normal payroll be paid?
Which suppliers need to be settled beforehand?
Are there large material purchases required for jobs being completed before the break?
What customer invoices are likely to be outstanding?
Will stock need to be built before the shutdown?
Will machinery undergo maintenance while production is quieter?
Once those commitments are listed, the business can estimate how much cash it wants available before closing.
The question is not merely:
Can we pay everything due before Christmas?
It is also:
How much should remain available when we reopen?
Annual leave can make payroll look different
For businesses with a significant workforce, Christmas and New Year leave arrangements can materially affect cashflow.
Employees may take annual leave.
Some businesses close for a defined period.
Others retain a smaller operational team while much of the workforce is away.
Depending on payroll timing and employment arrangements, the business may still need to fund substantial wage and leave payments during a period when fewer invoices are being generated.
That does not mean leave itself is an unexpected expense.
It means its timing should be included in the forecast.
A business that enters the shutdown with very little cash after completing its final supplier and payroll commitments could have limited flexibility if customer receipts are then slower than expected.
The last production run may require the most working capital
Manufacturers can also experience an increase in expenditure before they close.
Customers may want orders completed before Christmas.
The business might need:
additional raw materials
more packaging
overtime
extra shifts
casual labour
freight
maintenance
subcontractors
Those costs can occur through October, November and December.
The customer payment may arrive after the work has been completed.
If the invoice falls due around the shutdown period, the cash could arrive later than the business expects.
The business can therefore experience a double effect:
higher costs before closing and slower cash receipts while closed.
That is worth identifying early.
Warehouse and distribution businesses should consider the final dispatch cycle
A distribution business may not manufacture anything, but the cashflow pattern can be similar.
There may be a final period of higher dispatch activity before customers or suppliers close.
That can require additional:
warehouse labour
pick-and-pack costs
pallets and packaging
freight
subcontracted transport
stock purchases
overtime
Once the goods leave, the customer may still receive ordinary commercial payment terms.
If an invoice is issued in December, the corresponding money may not arrive until January.
The stock has gone.
The labour has been paid.
The freight has been paid.
But the cash has not yet returned.
That gap belongs in the Christmas cashflow plan.
Customer shutdowns matter as much as your own
A business may remain open throughout December and still experience slower receipts because its customers close.
This is particularly important for B2B businesses.
An invoice may technically become due on 29 December.
But if the customer’s accounts team closed on 22 December, when will the payment actually be processed?
Possibly before the closure.
Possibly after staff return in January.
A realistic cashflow forecast should consider the customer’s likely behaviour rather than relying only on the due date printed on the invoice.
This is where historical information can be valuable.
What happened last Christmas?
Did particular customers pay before closing?
Did December invoices move into January?
Were payment approvals delayed?
Those patterns can help make this year’s forecast more realistic.
Do not assume December sales will fund December expenses
This is an easy assumption to make.
A business expects strong November or December sales and feels comfortable committing to additional stock, raw materials or labour.
But the timing may not line up.
December sales might not produce December cash.
If the business sells to commercial customers on account, some of that revenue may not be collected until the new year.
The business should therefore separate:
when revenue is earned
from
when the cash is expected to arrive.
That distinction becomes particularly important around a shutdown period.
Build the forecast through January, not just Christmas
A Christmas cashflow forecast that finishes on 24 December is incomplete.
The business needs to reopen.
Payroll resumes.
Suppliers need paying.
Raw materials or stock may need replenishing.
Fuel and freight resume.
Finance repayments continue.
Tax commitments remain.
Customers may still owe money from December.
There can also be several quieter trading days before activity returns to its normal rhythm.
The forecast should therefore continue until normal customer receipts and trading patterns are expected to resume.
For some businesses, the lowest cash position may not occur before Christmas at all.
It may occur in January.
What does reopening cost?
This is a useful question that can easily be missed.
Businesses often calculate the cost of closing but not the cost of restarting.
A manufacturer may need new raw materials.
A warehouse may need replenishment stock.
Vehicles may require fuel immediately.
Employees return to payroll.
Suppliers begin sending new invoices.
Production may restart before the first significant January customer payment arrives.
That can create another working capital gap after the shutdown.
When forecasting, include the amount needed to restart normal operations, not just the amount required to reach Christmas.
Maintenance during a shutdown can affect the cash requirement
Some manufacturers and industrial businesses use quieter periods for machinery maintenance, repairs or upgrades.
Operationally, that can be sensible.
But it can create another cash commitment at a time when customer receipts may already be reduced.
If planned maintenance is expected, include it in the forecast.
Depending on the requirement, the business may also need to consider whether a major replacement should be funded from cash or whether asset finance is appropriate for eligible equipment.
Using a large amount of available cash on machinery immediately before a quieter cash-receipt period could leave less working capital for payroll and the January restart.
Supplier accounts may fall due while the business is closed
A supplier invoice does not know the factory has shut for Christmas.
If accounts fall due during the closure, the business still needs to arrange payment.
This can be particularly important where materials were purchased earlier to complete final customer orders.
The timeline might be:
purchase materials ? manufacture goods ? deliver customer order ? close for Christmas ? supplier invoice becomes due ? customer payment arrives later.
The business is carrying that gap.
Before the shutdown period, review creditor due dates and compare them with expected customer receipts.
Can supplier terms be adjusted?
Finance does not need to be the first solution considered.
Where appropriate, businesses may be able to speak with suppliers about:
payment dates
extended terms
staged deliveries
staged payments
credit limits
A supplier that understands the business’s regular purchasing pattern may be willing to structure an order differently.
Likewise, a business expecting a large final order from a customer might negotiate a deposit or staged payment.
Small improvements on both sides of the cycle can reduce the amount of working capital required.
Existing cash reserves need a purpose
A business might have substantial cash available today.
The question is how much of it is genuinely free to spend.
Part of the balance may effectively already be allocated to:
payroll
GST
tax
supplier accounts
annual leave
equipment commitments
loan repayments
Before deciding to use existing cash for additional stock or production, separate the amount required for known commitments from the amount actually available for discretionary use.
This gives the owner a much clearer picture of the working capital buffer.
Trade finance may be relevant before the sale
If the business needs to purchase eligible stock, inventory or raw materials before customer payments are received, trade finance may be worth considering.
Depending on the lender and transaction, facilities may be available for eligible Australian or overseas supplier purchases.
This can allow a business to preserve more of its existing cash while goods move through the procurement and sales cycle.
The lender will generally want to understand the transaction, supplier, business performance and repayment source.
Trade finance will not suit every situation.
But it may be relevant where supplier payments are creating the main pre-Christmas cashflow requirement.
Debtor finance may become relevant after delivery
Once the goods have been delivered and eligible commercial invoices are outstanding, the issue may be different.
The business has already earned the revenue.
It is waiting for the customer to pay.
For eligible B2B businesses, debtor or invoice finance may provide earlier access to part of the value of qualifying receivables.
Lenders may consider:
debtor quality
invoice age
customer payment history
debtor concentration
disputes or credits
nature of the transaction
This may be particularly relevant where a large amount of working capital is expected to sit in unpaid invoices across December and January.
One business can have both problems
An industrial business may need to pay suppliers before Christmas and then wait for customers after Christmas.
That is two sides of the same working capital cycle.
For example:
Raw materials are purchased in October.
Production occurs in November.
Goods are delivered in December.
The customer is invoiced.
The factory closes.
Supplier accounts become due.
The customer pays in January.
The business may have carried the transaction for several months.
Mapping that complete cycle is far more useful than simply asking how large the December sales forecast is.
Existing overdrafts should be tested against the shutdown period
A business may already have an overdraft or line of credit.
The facility may have worked well throughout the year.
But how much room will remain after final production, payroll, stock and supplier commitments?
If the facility is normally heavily used, a shutdown period could leave little capacity for unexpected costs.
Look at:
current limit
normal utilisation
expected peak utilisation
upcoming supplier payments
payroll and leave
tax
January restart requirements
A facility that appears adequate today may look different once the full seasonal cycle is included.
Planning on 22 September gives the business choices
At this point in September, many of these numbers will still be estimates.
That is fine.
The business does not need a perfect forecast to start planning.
It can estimate:
expected closure dates
staffing arrangements
supplier commitments
production requirements
likely December invoices
realistic payment dates
January restart expenses
As the end of the year approaches, those estimates can be updated.
The benefit of starting now is that the business can adjust purchasing, invoicing, supplier arrangements or finance well before anything becomes urgent.
What if there is no shutdown?
Not every Dandenong South business closes.
Some continue operating throughout Christmas and New Year.
The same planning principles still apply.
A business remaining open may face:
higher staff costs
different rosters
customer closures
supplier closures
freight changes
reduced administrative support
delayed customer payments
The relevant question becomes whether the business can keep operating comfortably while some of its normal commercial counterparties are temporarily working differently.
The exact cashflow pattern may change, but timing remains important.
What information may help if finance is being considered?
Depending on the lender and facility, useful information may include:
recent business bank statements
financial statements or management accounts
debtor ledger
creditor ledger
expected supplier purchases
customer payment terms
shutdown dates
payroll and annual leave commitments
existing finance
ATO position
January restart costs
amount required
purpose of funding
likely timing
expected repayment source
The goal is to explain clearly why the business expects the temporary gap and what is expected to restore the cash position afterwards.
Five questions Dandenong South businesses may ask while planning ahead
Can working capital finance help cover costs across a Christmas shutdown?
Potentially. Depending on the lender and circumstances, commercial finance may be considered for eligible business operating expenses. The business’s overall position, purpose and repayment capacity will still need to be assessed.
What if customers owe us money but will not pay until January?
For eligible B2B businesses with qualifying invoices, debtor or invoice finance may be worth considering. Requirements vary between lenders.
Can trade finance help with raw materials or stock needed before the shutdown?
Some trade finance facilities may fund eligible supplier, stock or raw-material transactions. The structure will depend on the lender and purchase.
Should we finance equipment rather than use cash before Christmas?
That depends on the asset, available cash, existing commitments and the amount of working capital the business wants to preserve. Asset finance may be worth comparing for eligible equipment.
Is 22 September too early to plan for a Christmas shutdown?
No. For businesses that already know they are likely to close, reduce operations or complete a final production cycle before Christmas, late September is a reasonable time to start estimating the associated cashflow requirement.
Plan for the weeks when the factory is quieter but the bills are not
For businesses in Dandenong South VIC, the Christmas cashflow discussion does not need to be limited to preparing for higher demand.
Manufacturers, wholesalers, warehouse operators and industrial businesses may also need to prepare for the financial effect of a shutdown, reduced trading or customer closures.
Thrive Broking can help Dandenong South businesses review that full cycle and compare working capital, debtor finance, trade finance, asset finance and other commercial funding options across our lender panel where appropriate.
The objective on 22 September is not to assume Christmas cashflow pressure has arrived.
It is to understand what the business may need to carry before the doors close, while activity slows and when operations restart in January.
A Broker’s Observation
Businesses often calculate what they need to get through their last trading day before Christmas.
I would keep going.
What bills fall due while the business is closed?
Which customers will still owe money?
What does the first January payroll look like?
How much stock or material needs to be purchased to restart?
The cash required to reopen comfortably can be just as important as the cash required to reach the shutdown.
That is why I would forecast past Christmas and into the point where normal customer payments and trading genuinely resume.