Australia’s shift to payday super from 1 July 2026 is set to expose underlying financial stress across businesses, removing what has effectively functioned as a cash flow buffer under the quarterly payment system.
Jirsch Sutherland partner, Chris Baskerville, said the move to real-time super payments would reveal pressures that had been partially masked by timing flexibility. “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.”
Sectors with high payroll costs and thin margins, including construction, labour hire, hospitality and healthcare, are expected to face the greatest strain as payment obligations tighten.
Baskerville said these industries have limited capacity to absorb uneven or seasonal cash flow, increasing vulnerability once super must be paid each cycle.
Data from ASIC shows construction accounts for around one in four external administrations, while accommodation and food services represents about 15 per cent of insolvencies nationally, underscoring existing fragility in key sectors.
The scale of unpaid super also highlights systemic stress, with the ATO estimating $5.2 billion went unpaid in 2021–22 and annual unpaid super now exceeding $6 billion, despite more than $1 billion recovered in 2024–25. Baskerville described these figures as a “barometer for underlying cash flow stress”, adding that the reform “won’t create new problems, but it will bring them to the surface much sooner.”
Additionally, research from the ScotPac SME Growth Index suggests many businesses remain unprepared for that shift, despite high awareness.
While 88 per cent of SMEs report some understanding of the changes, 68 per cent have made no cash flow preparations, with smaller firms particularly exposed as 78 per cent of micro-SMEs have yet to act.
ScotPac CEO Jon Sutton said the gap between awareness and readiness points to a material liquidity risk.
“On the surface, it’s encouraging that most SMEs are aware of the changes,” Sutton said. “But when a majority have failed to make any financial preparations, it’s clear there is a risk that many businesses are underestimating the cash flow impact.”
Rising input costs and global uncertainty, including the flow-on effects of Middle East tensions, are compounding those pressures, with Sutton warning that businesses must focus on cash flow planning ahead of the transition.
“From July, that flexibility disappears. For businesses already operating with tight margins, that could create real pressure if they’re not prepared.”
Among SMEs that have taken steps to prepare, most have sought advice from accountants, while only a small proportion have secured new funding, highlighting limited structural adjustments ahead of the reform. At the same time, 21 per cent of businesses indicated they are considering reducing headcount to manage anticipated cash flow strain.
Baskerville said the introduction of real-time payments would compress decision-making timelines for directors, reducing the ability to defer action during periods of financial stress.
“What we’re likely to see is a compression of the timeline – the gap between early warning signs and formal restructuring – whether that’s Small Business Restructuring or voluntary administration – is likely to narrow significantly.”
With unpaid or delayed super historically acting as an early indicator of distress, he added that real-time payments would function as an immediate trigger for action.
“With real-time payments, those warning signs will become visible almost immediately – prompting earlier conversations with advisers.”
The closure of the ATO’s Small Business Superannuation Clearing House from 1 July 2026 is expected to add further complexity for smaller operators, requiring a shift to alternative systems that may involve additional cost and administrative burden.
Sutton said the transition reinforces the need for early planning and access to flexible working capital to manage ongoing obligations.
