Payday Superannuation: What It Means for Business Owners and How to Prepare
What is Payday Superannuation?
Payday superannuation is an upcoming change in Australia where employers will be required to pay their employees’ superannuation contributions at the same time as they pay wages, rather than quarterly. This shift ensures that employees’ super contributions are deposited more frequently, helping them grow their retirement savings faster.
For business owners, this change means superannuation obligations will become a more regular part of payroll, rather than a lump sum paid every quarter.
What This Means for Business Owners
- Increased Frequency of Super Payments: Instead of paying superannuation every three months, you’ll need to align super payments with your pay cycles, whether that’s weekly, fortnightly, or monthly.
- More Consistent Cash Flow Management: Super payments will become a more frequent outflow, which requires ongoing attention to your business’s cash flow, unlike the previous quarterly lump sum. While this could mean less risk of forgetting or missing payments, it also means adjusting your financial planning.
- Compliance and Penalties: Missing payday super payments will carry penalties, just like the current quarterly system. Staying on top of these payments will be crucial to avoid fines.
How to Get Ready Now
- Upgrade Your Payroll Software: Ensure your payroll system can handle payday superannuation. Many cloud-based accounting platforms, like Xero or MYOB, already have the functionality to automate super contributions with each pay run.
- Review Cash Flow Forecasts: Since super will be deducted more frequently, your cash flow will need to be monitored more closely. Revisit your cash flow forecasts to factor in the new super payment schedules and make sure you have enough funds to cover wages and super on payday.
- Set Up Automated Payments: Automating payments through your accounting software can ensure you never miss a super payment. This will reduce the chance of manual errors and make compliance easier.
- Consult with Your Accountant or CFO: If you’re unsure how this change will impact your business financially, now is a good time to consult with your Accountant or CFO. They can help you plan for the transition and optimise your cash flow management.
- Build a Cash Reserve: To manage more frequent outflows, start building a buffer of cash reserves now. This will help ensure that you can comfortably meet both payroll and super obligations without stressing your cash flow.
Final Thought
Payday superannuation is an important change that will impact how you manage your payroll and cash flow. Getting prepared now by upgrading systems, reviewing cash flow, and consulting with financial professionals will ensure your business stays compliant and financially healthy. Reach out to the team @HKSRussell to assist you and your business navigate these changes that could impact your business
t: + 61 3177 4120
e: advisors@hksrussell.com
Posted on September 24, 2024 by Charisse Russell - Articles