Australian small-to-medium enterprises (SMEs) are bracing for a cash flow crunch as significant new payroll and tax legislation rolls out over the next two years.
The changes will force SMEs to adjust their financial and administrative practices in order to remain compliant and put further pressure on their ability to effectively manage their cash flow.
Earlypay CEO James Beeson said: “At a time when SMEs are already battling a tight labour market and rising operational costs, these changes will only add more pressure to their cash flow.
“Many businesses will need to rethink their finance strategies,” he said.
Key changes impacting SME cash flow
From 1 July 2025:
Super Guarantee Increases to 12%
The Superannuation Guarantee (SG) rate will rise from 11.5% to 12%, increasing payroll costs for employers. Businesses must check employee contracts to see if super is included in salaries or needs to be paid on top. Late payments will attract the Superannuation Guarantee Charge (SGC), which is not tax-deductible, adding further financial strain. While this benefits employees’ retirement savings, the downside is it potentially increases payroll expenses for employers.
ATO interest charges no longer tax deductible
New tax laws will remove the ability to claim deductions for General Interest Charge (GIC) and Shortfall Interest Charge (SIC), making overdue tax liabilities even more costly for SMEs. Currently, businesses can claim these interest charges as tax deductions, but the proposed change aims to remove this benefit, making overdue tax liabilities more costly for SMEs in an attempt to further discourage late tax liability payments.
From 1 July 2026:
Payday super introduced
Superannuation contributions will need to be paid with every wage cycle instead of quarterly, requiring businesses to have funds available more frequently. Late super payments are not tax-deductible, intensifying cash flow pressure. Payday super was announced as part of the 2023-24 Federal Budget and is yet to be legislated.
ATO’s free clearing house to close
The shutdown of the Small Business Superannuation Clearing House (SBSCH) means SMEs will need to find and pay for alternative platforms, such as Xero or MYOB, to process super payments.
Preparing for the changes
“SMEs need to act now to stay ahead of the changes and set themselves up for success,” Mr Beeson said.
To help navigate these shifts, SMEs should:
- Review budgets and payroll structures to account for increased SG rates and tax law changes.
- Ensure payroll systems can handle more frequent super payments.
- Explore alternative superannuation payment platforms before the SBSCH closure.
- Consider invoice finance to maintain steady cash flow and meet payroll and superannuation obligations.
Supporting SME cash flow with invoice finance
For businesses concerned about managing cash flow through these changes, invoice finance can provide access to working capital by unlocking funds tied up in unpaid invoices.
Invoice financing allows SMEs to secure funding against the value of their outstanding invoices, providing a much-needed alternative to traditional bank loans that often require real estate as collateral.
“Invoice financing smooths cash flow, enabling businesses to pay staff, suppliers, and invest in growth - all without relying on their personal assets like the family home,” Mr. Beeson said.
Earlypay also integrates with platforms like Xero and MYOB, streamlining access to funds for SMEs.
Key Facts:
Australian small-to-medium enterprises (SMEs) are bracing for a cash flow crunch as significant new proposed payroll and tax legislation rolls out over the next two years.
Super guarantee increase to 12% and - ATO clearing house to close
- Proposed ATO interest charges no longer tax deductable and proposed payday super
About us:
Earlypay (ASX: EPY) is a leading provider of working capital finance to Australian small to medium sized businesses with its invoice finance and equipment finance products.
Earlypay’s invoice finance helps SMEs bridge the cash flow gap between issuing invoices and receiving payment from customers by providing early payment of unpaid invoices. Earlypay also provides equipment finance to SMEs to assist with capital expenditure.
Earlypay has been supporting Australian SMEs since 2001 and has built a trusted legacy of delivering reliable, flexible and innovative working capital finance.
Contact details:
Anthony Spargo
New Romans
0400 688 525