Payday Super moves cash out of your business sooner and more often, and it removes a short-term buffer many small employers relied on. Here are the changes and what you can do about it.
What changes for cash flow
From 1 July 2026 you must pay super for each payday instead of quarterly, and the money must reach the employee's fund within 7 business days after payday (some exceptions apply, such as for new employees). Under the old system,super contributions had to be received within 28 days of the end of the quarter, so the first payroll of a quarter was funded months later.
In practice
1. The float is gone
Under the old quarterly system, a business could hold up to 3 months of super contributions before paying. Now that money leaves with every pay run.
2. Budgeting changes
Instead of budgeting for quarterly outflows, businesses need to manage cash flow with greater precision so super is processed promptly with every pay run.
3. The deadline is the fund's receipt, not your payment.
4. It's the receipt by the fund that counts, not the day you hit send.
If you use a clearing house, its processing time counts against your 7 days.
5. The calculation base is wider.
Super is now 12% of "qualifying earnings", which includes ordinary time earnings, all commissions, salary sacrifice contributions and similar amounts. One source says the amount owed doesn't change for most employers. Another says qualifying earnings is broader than ordinary time earnings, so check your own payroll.
Illustrative example:
A business with $50,000 of monthly wages owes about $6,000 a month in super. Before, that money sat in the business for up to a quarter. Now about $6,000 goes out in step with each pay run. The total is the same, but the timing moves and the buffer is gone.
What a mistake costs
If super isn't received on time, the Super Guarantee Charge applies. It's assessed per payday and the ATO issues the assessment.
It includes the shortfall, daily interest and an administrative uplift that starts at 60% (reducible with a voluntary disclosure).
The ATO has set a risk-based approach for the first year to 30 June 2027. Employers who start paying on payday but have occasional late payments, such as from incorrect details, are likely to be classed as low risk.It takes a firmer stance on serious or deliberate cases, including employers not attempting to pay for each payday.
The charge is tax-deductible for paydays from 1 July 2026, unlike under the old system.
What small businesses can do
1. Fund super every pay run, not once a quarter.
Move 12% of wages (more if commissions or salary sacrifice apply) into a separate account on each pay run so it's never mixed with operating cash. Model it in your cash flow forecast, and consider a 13-week forecast to spot gaps early.
2. Pay early enough for the 7-day clock.
Pay on payday where you can, and don't wait until the deadline. Allow for clearing house and fund processing time.
3. Replace the old clearing house if you haven't.
The ATO's Small Business Superannuation Clearing House has closed, so you need to switch to an alternative provider. Many commercial clearing houses and super funds offer this service.
4. Fix your employee and payroll data.
Under Payday Super, even small errors can trigger the charge. Check fund details and pay codes, and make sure your payroll software handles qualifying earnings and Single Touch Payroll reporting each payday.
5. Speed up the money coming in.
This is the biggest lever. If wages and super now go out faster, shorten the time customers take to pay:
shorten payment terms
take deposits or progress payments
send automatic invoice reminders and follow-ups
offer easy payment links
6. Review pricing and margins.
If the lost float creates a funding gap, check whether your pricing covers it, particularly if you carry costs before customers pay.
7. Line up a buffer before you need it.
Talk to your bank or accountant about an overdraft or working capital facility while your finances look healthy. If you're already behind on tax or super, contact the ATO early about a payment arrangement rather than waiting for an assessment. Banks have become more conservative with SMEs that have existing ATO debt.
8. Ask your accountant about pay frequency.
Your pay cycle affects how often super leaves your account. Awards and agreements govern pay frequency, so get advice before changing it. This is my general suggestion, not from the sources.
What you can do next
Open a dedicated super account and set up an automatic transfer on each pay run.
Check your payroll software is updated for qualifying earnings and your clearing arrangement is in place.
Set up automated invoice reminders in your CRM to bring payments in faster.
This is general information, not tax or financial advice. Confirm your obligations with the ATO or your accountant. If you have any questions please reach out to me paul@congdonfuzi.com.au