Cash Flow Is More Important Than Ever

The biggest adjustment with Payday Super isn't necessarily the payment itself - it's changing the way you think about payroll.

Previously, many businesses budgeted for wages every pay cycle and then dealt with super separately at the end of each quarter. That approach no longer works. From now on, businesses must pay superannuation at the same time they pay their employees’ wages.

If your cash flow forecast only includes wages, you're only allocating part of your employment costs. Building both expenses into your cash flow forecast gives you a much clearer picture of what every pay run is going to cost. It also helps avoid nasty surprises when payday arrives.

If your business doesn't currently use a cash flow forecast - or you're not confident that yours is giving you the information you need - it's worth getting some advice. A well-prepared cash flow forecast isn't just useful for Payday Super, it's one of the best tools for making informed business decisions throughout the year.

If you’re struggling, the team at WestBAS can help you build a practical budget and cash flow forecast that works for your business and gives you confidence around upcoming payroll commitments.

What If You Can't Pay Super On Time?

One question we've already been asked several times is:

"What happens if I process payroll today but can't pay the super until a few days later?"

Firstly, don't panic.

Ideally, super should be paid at the same time as payroll is processed. However, if cash flow means that's simply not possible on that particular day, make the payment as soon as you can.

The ATO uses sophisticated data matching between payroll reporting and super payments. If a contribution is paid late, the ATO will identify this through its systems. Acting quickly will significantly reduce any penalties that may apply. If payment is going to be more than a ‘few’ days late, speak with your bookkeeper or accountant about any disclosure requirements.

You can find more information about this at the ATO website, here: https://www.ato.gov.au/businesses-and-organisations/super-for-employers/missed-or-late-payday-super-payments?

Of course, the goal should always be to pay on time wherever possible, but if you're only a few days behind, focus on getting the payment made rather than assuming you've immediately created a major compliance issue.

Don't Forget About Contractors

Another area that often catches businesses by surprise is when superannuation is due to contractors.

It’s a tricky area, but some businesses still assume that because someone is an independent contractor, super doesn't apply. Unfortunately, that's not always the case.

If a contractor is engaged principally for their labour rather than supplying materials or achieving a specific result, you may be required to pay superannuation on their behalf.

Under the new Payday Super rules, where super is payable for eligible contractors, those contributions are also due when you pay their invoice.

One practical tip is to align contractor payments with your payroll process.

If appropriate for your business and payroll system, consider paying them on your normal payroll day and lodging their super contributions at the same time as you lodge your employees' super.

Having everything happen together can make the process much simpler and reduce the chance of something being overlooked.

Again, if you’re unsure about whether to pay your contractors’ super, don’t hesitate to reach out to us to find out more.

A New Routine

Like any legislative change, Payday Super requires businesses to adjust their processes and routines.

The first month may have been challenging as employers navigated the transition and managed the impact on cash flow, but it should become much more predictable from here.

With a realistic cash flow forecast and a clear understanding of your payroll obligations, Payday Super will become just another part of your normal payroll process.

If you're unsure how the new requirements affect your business, and need help to set up your payroll systems or a cash flow forecast, the team at WestBAS is here to help. A little planning today can save a lot of stress on payday tomorrow.