The Australian small business landscape is about to face one of its most significant regulatory shifts in recent years. As we

approach 1 July, the introduction of Payday Super is set to fundamentally alter the rhythm of cash flow management for

every employer in the country. For decades, the quarterly payment cycle provided a buffer that many businesses used to

navigate lean periods, but that safety net is being pulled away in favour of real-time contributions.

In this episode, I break down why this change acts as a warning siren for business owners who may already be feeling the

squeeze of rising interest rates and operating costs. We explore the practicalities of updating payroll systems, the closure of

the Small Business Superannuation Clearing House, and the very real threat of personal liability for directors who fail to keep

pace with these new obligations.

This is not just a compliance update, it is a test of business viability. If your business cannot meet its debts as they fall due

under this more frequent payment schedule, it is time to have a serious conversation about your future. Join me as I unpack

the steps you need to take today to ensure your business survives the transition.

What You Will Learn:

• Why the move to Payday Super is being introduced and what it means for your weekly cash flow

• How the closure of the Small Business Superannuation Clearing House on 30 June affects your operations

• Why the first 12 months of this transition are expected to be chaotic for unprepared businesses

• What the Superannuation Guarantee Charge entails and why its costs are not tax deductible

• How to identify the triggers that suggest your business might be heading toward insolvency

• Why being a good operator is no longer enough without being a diligent business person

Notable Quotes:

• If the business is unable to pay its debts as and when they fall due, question really needs to be asked as to the viability

of the business.

• You don't know what you don't know, and the problem is the risk and personal exposure that can come from being a

director.

• Cash flow management will be key, particularly where contributions are to arrive in super funds within seven business

days of the payday.

• The earlier that the business owner looks at what needs to be done and makes sure they are ready for it, the better they

will be during the transition period.

Key Takeaways:

• Payday Super requires contributions to be made at the same time as salary and wages from 1 July.

• Directors face personal exposure for unpaid superannuation through the director penalty regime.

• Accounting and payroll systems must be updated immediately to handle real-time calculations.

• Voluntary disclosure is required if a payment deadline is missed to manage the Superannuation Guarantee Charge.

• Proactive cash flow monitoring is essential to ensure all employment costs can be met on every payday.

PaydaySuper

#SmallBusinessAU #InsolvencyOptions #CashFlowManagement #Superannuation #DirectorLiability #BusinessViability

#ATOCompliance

Who Should Listen: Business owners, company directors, lawyers, accountants, and anyone wanting to understand financial distress warning signs.

About the Host:

Darren Vardy - Managing Director of Insolvency Options and Registered Liquidator with over 30 years of experience in business recovery and debt solutions. Darren has helped thousands of businesses and individuals navigate financial distress and find practical solutions to complex problems.

Connect With Us:

• Website: insolvencyoptions.com.au  • Phone: 1800 463 328 • LinkedIn: https://www.linkedin.com/in/darrenvardy/

Subscribe & Follow:

Don't miss future episodes! Subscribe to i.O. - Insolvency Options

Like this episode? Please leave a review and share with colleagues who might benefit from these insights.

Co-host: Anthony Perl

Produced by: Podcasts Done For You

The Payday Super Shift.

2

Welcome to IO Insolvency Options with

Darren Varney, the managing director

3

of Insolvency Options and a registered

liquidator with over 30 years of

4

experience helping businesses and

individuals navigate financial challenges.

5

In today's episode, Darren examines

the massive changes coming to

6

payroll and superannuation, and

reveals how these shifts will

7

impact small businesses' cash flow.

8

He explains the risk of personal

liability for directors and why

9

the 1 July deadline is a critical

turning point for business viability.

10

You'll learn about the transition

to Payday Super, the closure of

11

the Small Business Superannuation

Clearing House, and how to manage

12

more frequent cash outflows.

13

I'm your co-host, Anthony Pearl.

14

Let's dive into unlocking

more about insolvency options.

15

We're about to air this episode where

this should come perhaps with some warning

16

sirens going around for small businesses.

17

There are massive changes to

payroll, to superannuation that

18

impact all small businesses.

19

Talk me through the changes and indeed

what the impact is going to be and how

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we're gonna see some people falling

into perhaps knocking on your door.

21

Darren : Yeah.

22

So what we have coming 1 July is a

change to the National Superannuation

23

legislation, and what is being introduced

is what is to be known as pay day super.

24

Now, what that means is that Australian

employers must pay their employees

25

superannuation guarantee contributions

at the same time as their normal

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salaries and wages, rather than what

has typically been on a quarterly basis.

27

So this mandate is actually aimed to

further reduce that unpaid superannuation

28

obligations to the employees.

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Superannuation is part of

an employee's entitlement.

30

It is something that must be paid at the

rate over and above their gross wages.

31

We've seen with the director penalty

regime and making directors personally

32

liable for outstanding super, that has

had a, a significant impact in reducing or

33

minimizing any unpaid super to employees.

34

However, with superannuation, particularly

where it's paid on a quarterly basis, if

35

a business is incurring some cash flow

difficulties or financial hardship, quite

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often they find it hard to provide for

that lump sum quarterly payment of super.

37

So what the purpose of the pay day

super is for it to be paid at the same

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time as wages and for the cash flow,

for want of a better term, streamed,

39

so there eliminates the lumpy payments

to be made on a quarterly basis.

40

Anthony: Yeah.

41

It seems logical on that level that it

will help small businesses in the sense

42

that there isn't this huge amount all

the time, and it's a consistent amount.

43

But of course, the problem with

small business as well is that

44

you're impacted by cash flow, and

it has a domino effect, doesn't it?

45

You get one key client that is impacted

by its own cash flow problems and someone

46

being slow to pay, et cetera, and then

it has a flow-on effect down the line.

47

Darren : Yes.

48

That's it.

49

And look, cash flow management will

be key with all this, particularly

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where contributions are to arrive

in super funds within seven business

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days of the pay day to avoid SGC,

superannuation guarantee charge.

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And we all know that any monies

owing on SGC, any interest payable on

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SGC isn't claimable as a deduction.

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So it's really important that business

owners review their cash flow and

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look at getting that right with the

quarterly payments becoming obsolete.

56

And businesses now need to

actually pay more frequently.

57

But I do believe that whilst

there will be more frequent cash

58

outflows, I would suggest that that

might be a lot easier to manage.

59

Anthony: So from your perspective,

Aaron, and you've dealt with a lot of

60

businesses over an extended period of

time, there are, you know, these kinds

61

of payments, superannuation and the

like, often being accrued and leading to

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businesses going insolvent and closing up.

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Do you think that they were going to

have a period now where this shift may

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actually impact and increase that for

a little bump in the road, and that,

65

that it should actually slow down

the impact that you've seen over the

66

years of, of businesses being unable

to pay some of these things and being

67

part of the reason why they close?

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Darren : I'd suggest so, yes.

69

I, I think that probably for the first

12 months, it will be a little chaotic,

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and there may be an acceleration of a

number of businesses that enter into

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external administration because they need

to pay the superannuation sooner, i.e.

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payday, rather than later, i.e.

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quarterly.

74

Because I think the position is this: if

the business is unable to pay its debts

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as and when they fall due, question really

needs to be asked as to the viability

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of the business and why the business

is continuing to exist if it can't

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pay those liabilities as they are due.

78

Anthony: Yeah, I mean, it's going

to be an interesting ride, isn't it?

79

I mean, I think the question for small

business is, and this might be something

80

that you look at when you go into a

business where they are knocking on

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your door because the administration

is a real possibility, what sort of

82

systems do they need to have in place?

83

How do small businesses need

to change and cope with this?

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Darren : Look, it's expected that

the majority of accounting systems

85

will have an upgrade to enable the

payment of Payday Super come July.

86

But what business owners will need to

do is need to review their accounting

87

systems and ensure that they will

be updated to provide for the new

88

Payday Super regime coming in.

89

You know, payroll systems must be

updated to ensure the calculations

90

are correct, but also to ensure

that the super is paid in real time.

91

And what we're finding is that from

the 30th of June, the small business

92

superannuation clearing house will

no longer be available, so users

93

really need to look to transition to

an alternative option to enable the

94

payment of their employees' super.

95

So we're now seven weeks out from

30 June, so time is now for business

96

owners to start looking at that.

97

Anthony: When it comes to all of this

sort of stuff, there's a lot of pressure

98

on small business, and now they're

looking at their books and they're going,

99

"Oh, we're going to have a problem."

100

Is it going to lead to

potentially some unemployment?

101

Are businesses going to say, "Well, look,

we've got one staff too many now, and

102

whilst when the cash flow is a little bit

better, we can afford to carry that, and

103

on a quarterly basis, you can potentially

carry that a little bit further."

104

Now because of this, is that going

to be a reality, do you think?

105

Darren : I think there's probably

a couple of different scenarios

106

that will be the reality.

107

Firstly, if a business is carrying

too many staff and is unable to cover

108

the cost of employment, there will

need to be some redundancies We also

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look at the situation where we talk

about capacity and productivity, and

110

where instead of employing a new staff

member, a business owner will look

111

at the productivity within and the

capacity within and look to absorb the

112

additional work that needs to be done as

opposed to employing a new staff member.

113

And that will have a critical impact on,

in my view, the country's unemployment.

114

Anthony: Yeah.

115

I mean, there's a lot of pressure

on at the moment, isn't there,

116

with all of these things?

117

I mean, in many respects, with all the

pressures on externally that are going on

118

in the world at the moment, interest rates

going up and the like, this is another

119

hard thing for small business, isn't it?

120

Darren : It's another change.

121

And, you know, people traditionally don't

like change, and it's something that

122

is being forced upon all businesses.

123

So the earlier that the business owner

looks at what needs to be done, make sure

124

that they're ready for it and they're

comfortable with it, the better they

125

will be during the transition period.

126

Anthony: And how does the

process going to work if a small

127

business misses a deadline?

128

Like, how much leeway is there?

129

Is it right, you know, it's 12:01,

so just after midnight, and are we

130

getting an alert from the ATO saying,

"You haven't paid your superannuation"?

131

How will the process work?

132

Darren : As I understand it,

it's a voluntary disclosure.

133

So if payment is not made on time to

the superannuation funds, the business

134

owner has a voluntary disclosure regime

whereby they must complete the ATO forms

135

to advise the ATO that they've not paid

on time, and which will then give rise

136

to SGC, which is the Superannuation

Guarantee Charge, whereby the ATO will

137

then calculate any outstanding interest,

any admin fees and charges payable, and

138

that will then add to an amount additional

to the super payable by the company.

139

Anthony: And there are increasing

obligations as well around

140

superannuation in terms of the, the

amounts that are being paid into

141

superannuation these days as well.

142

So that again, is something else

for business to be aware of.

143

Darren : Yes.

144

Anthony: All right.

145

And so with all of these things that are

going on, I mean, what are the triggers

146

that you see people coming to you from,

and what can you do when you go into a

147

business that this may have triggered

a discussion around administration?

148

Darren : I think it will all come back

down to businesses proactively looking at

149

their cash flow, looking at the business

they're doing, their debtors, where their

150

aged payables and receivables sit, really

drilling down to that monthly, if not

151

more frequent, cash flow statements to

ensure that they have money, sufficient

152

funds coming in to enable all employment

costs to be paid on the payday.

153

Anthony: And those sorts of triggers and

things that people are going to have to

154

be looking at, it's interesting when you

think about it, you don't have to have any

155

qualification to set up a small business.

156

You can open a business immediately, and

yet there are all of these obligations and

157

things that people are expected to know.

158

And I think that's the hard part, isn't

it, as well, is that I imagine you

159

encounter plenty of people where it's a

degree of ignorance that would happen that

160

finds them in some of these situations.

161

Darren : And also, you don't

know what you don't know.

162

I think there's a difference

between ignorance and just simply

163

not knowing, and I think a lot

of people fall into the latter.

164

They just don't know what they don't

know, and the, the problem is the

165

risk and personal exposure that

can come from being a director.

166

Because if the company is unable to make

payment for the superannuation, there's

167

a personal exposure to the director.

168

If it's unable to pay its debts as

and when they fall due, there's a

169

personal exposure to insolvent trading.

170

So whilst a business owner may be a

good operator, they also need to be a

171

business person to ensure that those

risks, those personal exposure risks,

172

are properly and appropriately managed.

173

Anthony: And I guess this all falls

back down to as well, a simple thing

174

as a business owner, that if you've

got an accountant or a bookkeeper or

175

both, that hopefully that level of

communication to let you know about what

176

these changes has happened and systems

and processes are being put in place

177

because you've got those resources.

178

'Cause if you don't have those, then you

might be the one sitting there going, "I

179

didn't know any of this was happening,"

and the first time you're hearing

180

about it is listening to this podcast.

181

Darren : Yeah.

182

No, that's true, and I know that there's

a lot of the accountants that are

183

business advisors, they are all proactive

with their clients, getting them ready

184

for the introduction of payday super.

185

And if a business owner out there

is finding that they're not getting

186

information from their accountant

or business advisor, maybe that's

187

a trigger for them to seek out

an alternative advisor who will

188

be able to make sure that their

compliance issues are all dealt with.

189

Anthony: And that's all we have time for

in this episode, but I hope you found

190

some value in Darren's advice on being

proactive with cash flow and understanding

191

the personal risks directors face

regarding superannuation and insolvency.

192

Before we go, I want to mention that

there is a workbook available for

193

this episode of the podcast with

questions to ask yourself, as well as

194

some key quotes and an action plan.

195

Just head to the show notes and you'll

be able to download a copy from the link.

196

Next time on IO and Insolvency

Options, we're going to take a look

197

at a major shift coming to small

businesses as charging a separate

198

fee for credit card payments is

199

Darren discusses the controversial

impact of businesses being forced to

200

absorb these transaction costs, the

potential for increased inflation,

201

and why high transaction industries

like retail may be hit the hardest.

202

Make sure you're subscribed

so you don't miss it.

203

For details on how to get in touch

with Darren and his team on insolvency

204

challenges, please consult the show notes.

205

This podcast is produced by my

team at podcastdoneforyou.com.au,

206

helping professionals share

their expertise through

207

powerful podcast content.

208

If you found value in today's episode,

please like, comment and subscribe

209

to IO and Insolvency Options.

210

Until next time, remember, there's always

a way forward when you know your options