Payday Super: a new era of superannuation compliance

With the introduction of Payday Super, Australian businesses are entering a new era of superannuation compliance. The changes place greater emphasis on paying super on time and staying on top of day-to-day processes. While this is a shift for many businesses, it also creates an opportunity to review how things are currently working.

In our most recent episode of The PKF Podcast, PKF Sydney Business Advisory Director, Nick Falzon, shared practical insights from working closely with clients as they prepared for this change and what businesses should be focusing on now.

What’s changed?

Under the previous system, superannuation could be paid up to 28 days after the end of each quarter.

With Payday Super, payments now need to be made much sooner, generally seven business days after payday (unless longer applies, such as for new employees).

The super rate has not changed and remains at 12 percent. However, the timing difference is significant. In some cases, businesses are bringing forward payments by several weeks or even months. This can have an immediate impact on cash flow.

There are also some technical changes behind the scenes, but for most business owners, the main shift is around when payments need to be made.

Getting set up for compliance

In the lead-up to these changes, many businesses reviewed how their payroll and accounting systems were set up to make sure they could meet the new requirements.

This has included:

• Updating payroll systems where needed
• Adjusting internal processes to meet new timeframes
• Ensuring payments can be made accurately and on time

Even businesses using cloud-based software found value in reviewing their setup. In many cases, small improvements could be made to simplify processes or make systems work more efficiently.

For some, it has also highlighted that their current systems may no longer suit their business as they have grown.

A stronger focus on cashflow

One of the biggest impacts of Payday Super is how it changes the way businesses think about cashflow.

Paying super earlier means having a clearer understanding of how much cash is available at any given time. Many businesses have used this as an opportunity to take a closer look at their overall financial position.

This includes asking questions like:

• Do we have a clear view of incoming and outgoing cash?
• Are we planning far enough ahead?
• Are our current tools giving us the information we need?

For many, this has been a positive outcome, prompting better planning and more regular financial check-ins.

The cost of getting it wrong

The penalties for not paying super on time are significant and are stricter than under the previous system.

These penalties can apply to both the business and its directors, which makes it especially important to ensure everything is set up correctly.

Having the right systems and processes in place is key to avoiding unnecessary risk.

It is not too late to act

If your business is not fully prepared for Payday Super, it is not too late to act.

The most important thing is to make it a priority and move quickly to:

• Review your current systems
•  Identify any gaps
• Put the right processes in place

Working with an adviser can help simplify this process and ensure you are set up correctly.

Turning change into opportunity

While Payday Super is a compliance requirement, it can also be a valuable opportunity to improve how your business operates.

By reviewing your systems and taking a closer look at cashflow, you can build stronger processes, gain better visibility, and make more informed decisions.

Final takeaway

Payday Super is a meaningful change, but it does not need to be overwhelming.

Start with the basics. Make sure your systems are set up, your processes are clear, and your payments are on time. From there, you can use this change as a stepping stone to improve your overall financial management.

Need support navigating Payday Super?

The PKF team is here to help you get set up, stay compliant, and make the most of this change. Get in touch to start the conversation.