Payday Super set to cause SME cashflow shock
Small and medium-sized enterprises (SMEs) will be hit with a cashflow shock when the federal government’s Payday Super reforms come into effect on July 1 this year.
James Beeson, Chief Executive Officer of working capital specialists Earlypay, urges SMEs to begin preparing for the Payday Super reforms now, as superannuation payments shift from quarterly employer payments to every payroll.
The reform requires employers to pay Superannuation Guarantee (SG) contributions alongside wages, with funds received by an employee’s super account within seven business days of payday (subject to limited exceptions). These rules will be administered by the Australian Taxation Office (ATO).
Failure to comply will result in the Superannuation Guarantee Charge (SGC), comprising the unpaid super, interest charges and administrative fees, with late payments not tax-deductible.
The Treasury Department says the reform is designed to make it easier for employees to spot missed contributions sooner, and to get funds into super earlier so balances can benefit from compounding. Treasury has also outlined limited exceptions, including a deferral for a new employee’s first two weeks and for small, irregular out-of-cycle payments.
Beeson said while most commentary has focused on compliance, the bigger issue for many operators is the forced change to the cash-flow system that sits underneath payroll.
“Quarterly super has historically acted as an unofficial cash buffer for thousands of businesses as Super could be paid with up to a three-month delay,” Beeson said.
“Moving to Payday Super removes that buffer overnight. If you run weekly or fortnightly payroll but get paid by customers on more than 30-day terms, you suddenly have a liquidity mismatch, which is a huge challenge for any business.”
Chief Executive Officer of specialised business services company Pay Australia, Christopher White, agrees that Payday Super is more than a compliance tweak, as it removes the quarterly cash float many SMEs have quietly relied on.
“With the superannuation guarantee equating to 12 per cent of ordinary time earnings, employers will feel faster, more frequent outflows, and a one-off working-capital hit roughly equal to a quarter’s contributions,” White said.
“The smartest move is getting specialist advice early — talk to your payroll provider, accountant or finance broker to model the cash impact.”
“With the right plan, SMEs can tighten debtor processes, line up funding if needed, and avoid last-minute disruption and penalties,” White said.
Beeson said the reform lands on top of rising wages, insurance premiums, input costs and tax obligations, creating a permanent layer of cashflow compression across the economy.
“This will be the great cashflow compression of 2026,” he said.
“Even for businesses with strong accounting profitability; if cash is arriving later but obligations are due sooner, the stress shows up fast.”
Beeson said Earlypay has unique visibility into real-world working capital cycles because it finances invoices across multiple industries and tracks debtor days and payment behaviours in practice.
“We can quantify how payroll obligations collide with receivable cycles, and we can see early warning signs well before they become distress,” Beeson said.
“The question for SMEs is not just ‘how do I comply’, but ‘how do I reshape my working capital structure so I can comply without starving the business of cash’.”
The ATO has also confirmed that, as part of the reform, the ATO’s Small Business Superannuation Clearing House will be closed from July 1, with access already restricted for new users since late last year.
Earlypay recommends SMEs get ahead of the change by reviewing their cash flow and payroll systems now to ensure they can support more frequent super payments alongside wages.
