Hospitality super payments jump under payday super change

Weekly superannuation payments among hospitality and food businesses rose from 42% to 78% in the first month of Australia's payday super changes, according to MYOB. The figures point to a rapid shift in payment patterns across a sector that had expected significant cash flow pressure.

Data from about 1,387 hospitality and food businesses using MYOB's Pay Super system showed super payments were made 3.3 times more often in the first full week under the new rules than in a typical week before the change. The share of businesses paying wages and super in the same week rose to 70% in July from 25% before the reform.

The numbers offer an early view of how cafes, restaurants and similar operators are adjusting to a system that aligns super payments with wages instead of leaving them on a quarterly cycle. For businesses with uneven trading patterns, the change affects when cash leaves the business rather than the total amount owed.

Earlier MYOB survey findings suggested hospitality and retail would be among the sectors most exposed to the shift. In that research, 51% of retail and hospitality businesses said they expected payday super to affect their cash flow, compared with an average of 35% across all small and medium-sized enterprises.

Cash flow strain was already higher in those sectors. MYOB found 37% of retail and hospitality businesses reported either extreme or quite a lot of cash flow pressure, compared with 27% across SMEs overall. It also found 45% rated payday super as a cash flow concern, more than double the 21% average across all industries.

Payment rhythm

The latest payment data suggests many businesses responded quickly by moving to a weekly super payment routine. That marks a notable behavioural change in a sector where income can fluctuate sharply from week to week because of weather, seasonality and local trading conditions.

For small operators, the practical effect is that super now leaves the account closer to each payroll run. That means owners need a clearer view of customer receipts and the obligations due in the same period.

Businesses managing the transition well are focusing on the timing of receipts and payments, MYOB said. It pointed to tools such as faster online invoice payments, instalment schedules, invoice finance and tighter budgeting as ways to reduce the risk of short-term cash squeezes.

Kim Owen-Jones, General Manager, SME, MYOB, commented on the change in business routines.

"Payday Super hasn't changed the amount businesses pay, but it does have a material effect on payment rhythm. That's a big adjustment for small businesses used to managing their cash flow around a different schedule. The businesses that are adapting well are working out exactly when money is coming in, when super and other bills are going out, and making sure they're not caught short between the two. For many small businesses, that could mean putting money aside as they make sales, rather than waiting until the payment is due. Payday Super is pushing businesses to get much closer to their numbers. The sooner they understand what's coming in and what needs to go out, the easier it is to keep cash flow on track," Owen-Jones said.

Early evidence

The MYOB figures are based on anonymised payment data and track the speed and frequency of super outflows rather than the overall level of super contributions. In other words, the reform has not increased the total super owed by employers, but it has shortened the payment cycle for many of them.

That distinction matters for hospitality businesses, which often operate on thin margins and deal with daily swings in revenue. A quarterly system allowed operators to hold cash for longer before remitting super, while the new model requires funds to be available much closer to payday.

The rise in same-week payment of wages and super indicates many employers are integrating the obligation directly into payroll processes. That could reduce the risk of missed or delayed super payments, but it also removes some of the flexibility businesses previously had in managing working capital over a quarter.

MYOB's broader Business Monitor surveyed 1,019 Australian SME owners and operators with up to 199 employees. The payment analysis for hospitality and food businesses covered a cohort with a median of 2.4 full-time equivalent staff, indicating the early adjustments are being made largely by very small employers.

For that group, the challenge is less about compliance systems than preserving cash at the right time in the week. The first month of data suggests many have already changed their behaviour to match the new schedule, with weekly super payments becoming the norm rather than the exception.