Small and medium-sized enterprises (SMEs), including community pharmacies, are being urged to prepare for a significant cash flow shift as the Federal Government’s Payday Super reforms take effect on 1 July 2026.
Under the changes, employers will be required to pay superannuation alongside wages, with Superannuation Guarantee (SG) contributions received by an employee’s fund within 7 business days of payday.
This is subject to limited exceptions, including a deferral for a new employee’s first two weeks and for small, irregular out-of-cycle payments.
The reforms replace the long-standing quarterly payment system and will be enforced 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.
A change to cash-flow systems
James Beeson, CEO of working capital specialists Earlypay, says the 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 3-month delay,” he says.
“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.”
‘Get specialist advice early’
Christopher White, CEO of Pay Australia, a specialised business services company, says that Payday Super is more than a compliance adjustment.
“With the superannuation guarantee equating to 12% 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.
“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,” he says.
‘The great cashflow compression of 2026’
Calling it “the great cashflow compression of 2026”, Mr Beeson says the reform sits on top of rising wages, insurance premiums, input costs, and tax obligations, creating a permanent layer of compression across the economy.
“Even for businesses with strong accounting profitability, if cash is arriving later but obligations are due sooner, the stress shows up fast,” he says.
He says 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,” says Mr Beeson.
“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 1 July, with access already restricted for new users since late 2025.
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.
