Insolvency specialists are warning that Payday Super won’t create new business failures, but it will bring them forward.
If you currently pay your employees’ super quarterly, that arrangement ends on 30 June 2026.
From 1 July, super contributions must reach employees’ super funds within seven business days of each payday, whether that payday falls weekly, fortnightly or monthly. The total amount owed does not change. What changes is the timing, the frequency, and the consequences of getting it wrong.
Put simply, from 1 July you will need to have an extra 12 per cent of your total payroll available on every payday. So if your monthly payroll is $50,000, you need to have an extra $6,000 in super contributions ready at the same time.
For businesses that have grown accustomed to holding that money for up to three months before remitting it, the adjustment is immediate and non-negotiable.
Why this hits harder than it looks
Chris Baskerville, Partner at national insolvency and business recovery firm Jirsch Sutherland, frames the shift in terms that go beyond compliance.
“Payday Super is a cash flow reform as much as a compliance one,” Baskerville said. “For businesses already operating close to the line, removing that quarterly buffer is likely to accelerate when financial pressure becomes unmanageable. In effect, super has operated like a ‘buy now, pay later’ mechanism for some businesses, and that flexibility is about to disappear.”
The data behind that warning is significant. The ATO estimates that around $5.2 billion in super went unpaid in the 2021 to 2022 financial year, with annual unpaid super now estimated to exceed $6 billion. More than $1 billion in unpaid super was recovered by the ATO in 2024 to 2025. Those figures point to how widely the quarterly buffer has been used, in some cases, to keep businesses trading.
Treasury has openly acknowledged the reform may trigger an increase in insolvencies among businesses that have been using quarterly super as an informal cash flow tool.
Baskerville says the reform will change how directors respond to early financial stress. “When super is paid in real time, there’s far less ability to defer decisions or trade through short-term pressure. Directors will need tighter oversight of payroll liabilities and liquidity. What we’re likely to see is a compression of the timeline, the gap between early warning signs and formal restructuring is likely to narrow significantly.”
He is clear, however, that the reform is not creating new problems. “Payday Super won’t create new problems, but it will bring them to the surface much sooner,” he said.
There is also a compliance sting attached. Under the new rules, the Superannuation Guarantee Charge is assessed per payday, not per quarter. If a contribution does not reach an employee’s fund within seven business days, the employer faces the shortfall amount, interest, and an administrative uplift of up to 60 per cent.
The sectors most at risk
Not every business faces equal pressure. Baskerville points to industries where payroll costs are high and margins are thin as the most exposed.
“These are industries with very little margin for error,” he said. “When super has to be paid every cycle, there’s far less capacity to absorb uneven or seasonal cash flow.”
ASIC data shows construction accounts for around one in four external administrations, making it the most affected sector for insolvencies nationally. Accommodation and food services accounts for around 15 per cent of insolvencies, approximately one in seven appointments nationally. Labour hire and healthcare are also flagged as high-risk categories under the new rules.
Research from Employment Hero found that 40 per cent of businesses reported they may need access to credit or financing to support cash flow during the transition. For businesses in those high-risk sectors, that figure is likely to be higher.
What to do before July 1
The good news, Baskerville says, is that this is a reform businesses can plan for. “The earlier a liquidity gap is identified, the more options are available. Waiting until the first missed payment significantly limits those choices,” he said.
There are four practical steps every SME employer should take immediately.
First, model the cash flow impact now. Update your cash flow forecast to reflect the new payment timings and amounts, so you can understand where any shortfalls might occur and whether you need overdraft or credit support to make the transition.
Second, check your payroll system. Going from four super submissions a year to 12, 26, or 52 is a significant jump in processing volume. If you are still relying on manual processes, spreadsheets, or disconnected systems, those gaps will be exposed quickly under Payday Super.
Third, if you use the ATO’s Small Business Superannuation Clearing House, act now. The SBSCH stopped accepting new registrations in October 2025, and existing users have until 30 June to transition to an alternative clearing solution. Migrating takes time, and testing a new setup before the deadline is essential.
Fourth, if you suspect your business may struggle to meet super obligations on every pay cycle, speak to an adviser before July 1. Baskerville frames this as the most important step of all. “Unpaid or delayed super has long been one of the first red flags of financial distress. With real-time payments, those warning signs will become visible almost immediately, prompting earlier conversations with advisers.”
The July 1 deadline is firm. For SME owners who act now, Payday Super is a manageable transition. For those who do not, it may be the change that removes the last buffer they did not know they were relying on.
Keep up to date with our stories on LinkedIn, Twitter, Facebook and Instagram.
