The real impact of Payday Super on Australian small businesses

After a long lead-up, Payday Super arrived on 1 July 2026. Super now has to be paid with every pay run, and contributions need to reach each employee’s fund within seven business days of payday.

For the first year, to 30 June 2027, the ATO has said it will take a measured approach to enforcement for employers who pay on time and correct any errors quickly. But the effects are already showing up in cash flow, payroll and growth plans.

To see how it’s landing a few weeks in, we spoke with Sarah Bolitho, Founder and CEO of Sydney recruitment firm Levyl; James Scott, chartered accountant and Managing Director of JD Scott + Co; and finance broker Adrian Mula, Managing Director of Queensland Capital Solutions.

The gap between paying and getting paid just got wider

Levyl, like most small firms supplying larger ones, doesn’t set its payment terms, and in recruitment those terms run long.

“A piece of work we finish in January might not be paid by May or June, but in the meantime, you’ve had to pay wages, rent and now super on schedule,” says Sarah. “That’s what keeps you awake at night. We can’t always ask a client to pay us in 14 days, often the terms can be ‘take it or leave it’, that’s just how the industry works.”

According to accountant James Scott, the first thing to understand is your working capital requirement: “For many businesses used to paying super quarterly, this will be higher under Payday Super.” The size of that requirement comes down to the length of time between when you start the work and when the cash actually comes in the door. “For industries where that duration is long, like recruitment, there’s really no way around it. Meeting your obligations means having enough cash in the business to bridge the gap,” says James.

“The ones who get caught out are the ones without a plan,” he says. His fix is a simple cash flow forecast built with your accountant, which flags cash crunches early and shows when you may need working capital financing to cover the gap.

On the funding side, finance broker Adrian Mula has been taking the temperature across his client base. “We’re seeing some businesses extend their ATO repayment terms, and others refinance that debt into a facility that works better for their cash flow,” he says. “The right solution is different for every client. Sometimes it’s advice more than lending, and sometimes it’s a hybrid, using two facilities so the business runs more efficiently and at less cost.”

Casual and weekly payrolls feel it most

The more often you run payroll, the more often every super calculation and payment has to be right, and weekly cycles with penalty rates and variable hours multiply both.

“We work for a lot of food manufacturing businesses with huge blue-collar casual workforces, often on weekly payroll with penalties,” says Sarah. “The extra complexity from Payday Super has put real strain on them in more ways than one. It’s not just financial. It’s staffing, it’s time, it’s training.”

Payroll software has already adapted to the new rules, says James. Platforms like Xero handle much of the heavy lifting on more frequent pay runs, and for penalty rates and hourly workers, rostering tools such as Deputy help keep the numbers right. “Ask for help if you need it,” he says. “If you’re not sure your system is set up for pay-cycle super, ask your accountant or bookkeeper to check it.”

Hiring and growth plans are feeling it too

“It feels a bit like that scene in a film where the walls are closing in from both sides,” says Sarah. “From the top, there’s all this uncertainty. Everyone’s more nervous about growing or taking a risk than we used to be. From the bottom, there’s all this legislation tightening everything up and making it harder to operate. You’re left with a really tight space to move in.”

Like Sarah, around one in five business owners delayed or scaled back planned investment ahead of the change, according to Prospa’s SME sentiment research. “There’s a tension now between the great work we’re doing, when we actually get paid for it, and our obligations,” she says. “If that tension goes on too long, it’s easy to think, why would I add another five heads? Why would I grow?”

Among Levyl’s clients, Payday Super is never the whole reason a hire stalls, but it adds to the pressure, and it can be enough for a hiring manager to bin a role at the first sign of strain.

Adrian is watching the same shift from the broker’s side of the table. “Businesses are only just starting to grapple with this,” he says. “In some sectors we may see growth plans pull back as cash flow and trading conditions tighten. Any extra pressure on cash flow feeds straight into how an owner thinks about growth.”

What the businesses coping best are doing

Nothing about 1 July made super more expensive. The bill is the same, it just lands sooner, and a figure you can see coming is one you can plan for.

“The owners who push ahead document their processes, ask for help, get the right systems in place from day one and don’t put off solving compliance problems,” says James.

Day one means onboarding. “With the new deadlines, you cannot afford to fix this later,” he says. “Give every new employee a choice of fund. If they don’t nominate one, request their stapled fund details from the ATO, and keep a default fund set up for anyone who has neither.”

That’s been Sarah’s experience at Levyl. “My accountant updated me on all the changes, advised what we needed to do, and then his team took it on board and ran with it,” she says. “They’ve made it quite seamless and easy for us.”

For Sarah, part of the answer is also rethinking how the business is funded. “I’ve always been a bit hesitant to take on debt and funding,” she says. “But I’ve matured my views on this a lot. If we want to scale and grow, we may need to be in a position to access capital from different places.”

The walls Sarah describes are real, but the space to move isn’t as tight as it can feel, especially with a plan. When long payment terms keep that gap wide, a business line of credit can bridge it.