From 1 July 2026, the Payday Super reforms will take effect, requiring employers to pay superannuation at the same time as wages. While the change aims to protect employees and boost retirement savings, it will significantly impact cash flow for small and medium enterprises (SMEs).
SMEs are being urged to start preparing now. While most discussions have focused on compliance, the real challenge lies in the cash-flow shift underpinning payroll.
If you run weekly or fortnightly payroll but customers pay on 30-day terms or longer, you face a liquidity mismatch. This is a major challenge for any business.
Why the reform matters
The reforms, passed by the Senate in November 2025, were welcomed by many in the superannuation industry. Treasurer Jim Chalmers said the changes will help stop “disreputable” employers from exploiting workers, noting unpaid super currently exceeds $5 billion.
Treasury highlighted that the new system will make it easier for employees to detect missed contributions and allow super balances to grow sooner through compounding. Frequent contributions could add thousands to retirement savings over time.
The ATO will also gain near real-time visibility of super payments through Single Touch Payroll, improving compliance monitoring and reducing unpaid super risks.
The cash flow crunch ahead
The reform adds pressure to already rising costs for SMEs — wages, insurance, inputs, and taxes. It has been dubbed by some as “the great cashflow compression of 2026”, with experts warning that even profitable businesses will feel the strain.
Key challenges include:
- Loss of the quarterly buffer: SMEs have historically relied on quarterly super payments as a short-term cash cushion.
- Frequent outflows: Super contributions (12% of ordinary earnings) will now leave your account every pay cycle.
- Liquidity mismatch: If your receivables are on 30–60-day terms, but payroll and super are due weekly or fortnightly, you’ll need extra working capital.
- One-off surge: Businesses will need to cover June’s quarterly super plus July’s payday super, creating a significant short-term hit.
How SMEs can prepare
- Model the impact now: Forecast cashflow under the new rules and plan for the July 2026 transition.
- Review payment terms: Negotiate shorter invoice cycles or consider progress billing to align inflows with outflows.
- Upgrade payroll systems: Ensure your software can process super each pay run and meet the seven-day payment requirement.
- Build a buffer: Consider increasing your working capital or arranging finance to manage the transition.
- Seek specialist advice early: Get in touch with us — we can help you stress-test your cashflow and avoid last-minute disruption and penalties.
With implementation looming, SMEs should act now to avoid being caught off guard. Proactive planning will turn this challenge into an opportunity to strengthen financial processes and maintain compliance without compromising business stability.