iscover Payday Super transition to accelerate insolvency timelines, warns insolvency firm
BusinessThe shift to Payday Super on 1 July will mean employers can no longer rely on superannuation as a de facto cash flow buffer, potentially bringing forward insolvency events, according to Jirsch Sutherland.
Insolvency firm Jirsch Sutherland is advising businesses to stress-test their cash flows and ability to meet super payments every pay cycle, with the start date for Payday Super quickly approaching.
Jirsch Sutherland partner Chris Baskerville said the shift to payday super could compress restructuring timelines and bring forward insolvency events as businesses won't be able to rely on super as a cash flow buffer as they once did.
“Payday Super won’t create new problems, but it will bring them to the surface much sooner – particularly in labour-intensive sectors like construction, hospitality, labour hire and healthcare,” he said.
“For businesses already operating on tight margins, removing that quarterly buffer is likely to accelerate when financial pressure becomes unmanageable."
Baskerville explained that the shift to real-time super payments will remove the ability for businesses to hold onto funds for up to three months – a practice that has, in some cases, operated like an informal “buy now, pay later” mechanism within payroll cycles.
Real-time payments also mean that these warning signs will become visible to the ATO and employees almost instantly, he added.
“This will force earlier, and often necessary, conversations between directors and their advisers before a situation becomes terminal,” he said.
The warning from Jirsch Sutherland comes as broader indicators point to persistent financial strain across the economy.
ASIC data shows construction accounts for around one in four external administrations, while accommodation and food services represent around 15 per cent of insolvencies nationally.
At the same time, the ATO estimates around $5.2 billion in super went unpaid in 2021–22, with annual unpaid super now exceeding $6 billion. More than $1 billion in unpaid super was recovered by the ATO in 2024–25, the firm said.
“These figures are a barometer for underlying cash flow stress,” Baskerville said.
“Real-time payments mean those warning signs will become visible much earlier – to both regulators and employees.”
The shift has direct implications for employers, as super becomes a real-time obligation tied to every pay run, he added.
“Super has effectively been used – intentionally or not – as a timing lever within payroll.”
“That flexibility is disappearing. From 1 July, super becomes embedded in every pay cycle, which changes how employers approach hiring, rostering and workforce planning.”
With the transition approaching, Baskerville said employers should use the coming weeks to review payroll processes and ensure they can meet their obligations each pay cycle.
“This is a reform you can plan for, but not one you can leave until the deadline.”
“The earlier a gap is identified, the more options there are to address it.”
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Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.