Working capital expert James Beeson explains how Payday Super reforms starting July 1 will fundamentally change cashflow management for thousands of businesses.
What’s happening: From July 1, 2026, Australian employers must pay superannuation alongside wages rather than quarterly, with funds reaching employee accounts within seven business days. The reform removes the historical three-month payment buffer, creating cashflow adjustments for businesses.
Why this matters: Early planning enables companies to adjust debtor processes, arrange funding and avoid disruption as payment cycles accelerate.
Small and medium-sized enterprises face a significant adjustment 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.
Understanding the reform
The Treasury Department explains 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.
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 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.
Cashflow implications explained
Beeson said whilst most commentary has focused on compliance, the bigger issue for many operators is the forced change to the cashflow 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.”
Christopher White, Chief Executive Officer of specialised business services company Pay Australia, agrees that Payday Super is more than a compliance adjustment, 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.
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.”
Strategic preparation steps
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’.”
White recommends seeking specialist guidance early to understand the specific impact on individual businesses.
“The smartest move is getting specialist advice early — talk to your payroll provider, accountant or finance broker to model the cash impact,” White said.
“With the right plan, SMEs can tighten debtor processes, line up funding if needed, and avoid last-minute disruption and penalties.”
Expert recommendations
Understanding the mechanics of the reform helps businesses prepare strategically. The shift from quarterly to per-payroll payments affects different businesses in different ways depending on their customer payment terms, payroll frequency and existing working capital structure.
For businesses with weekly or fortnightly payroll cycles but customer payment terms extending beyond 30 days, the timing mismatch becomes particularly significant. The reform essentially accelerates when superannuation obligations must be met, whilst customer payment cycles remain unchanged.
Earlypay recommends SMEs get ahead of the change by reviewing their cashflow and payroll systems now to ensure they can support more frequent super payments alongside wages.
The preparation process involves several key considerations. Businesses should model their specific cashflow impact based on their payroll frequency, current superannuation obligations and customer payment terms. This modelling helps quantify the working capital adjustment required.
Understanding debtor processes and whether they can be tightened represents another important consideration. Faster collection of customer payments helps offset the acceleration of superannuation obligations.
For businesses where the timing mismatch creates genuine liquidity challenges, exploring funding options before July 1 provides a buffer. This might include invoice financing, working capital facilities or other arrangements that smooth the transition period.
The reform also requires reviewing and potentially upgrading payroll systems to handle more frequent superannuation payments. Ensuring systems can track and process payments correctly becomes essential for compliance.
White emphasizes that early action provides more options. “Waiting until June means scrambling. Starting now means you can model scenarios, test solutions and implement changes methodically rather than reactively.”
The reform represents a permanent change to how superannuation obligations are managed. Understanding the implications now and preparing strategically helps businesses navigate the transition without disrupting operations or facing penalties for non-compliance.
For many SMEs, the adjustment will require rethinking working capital management fundamentals. The businesses that approach this as a strategic planning exercise rather than a simple compliance task will be better positioned to manage the transition successfully.
Keep up to date with our stories on LinkedIn, Twitter, Facebook and Instagram.
