Small businesses back Payday Super but late payments are a major compliance barrier

Melbourne — 23 March 2026 — Late payments are the biggest threat to Payday Super compliance, with 84% of Australian small business owners warning that delayed customer payments could force them to miss deadlines, according to new research from global small business platform Xero.

The survey of 500 employing Australian small businesses reveals they lost $15,257 on average over the last financial year due to late payments from customers. The shift to more frequent super payments is set to compound cash flow pressures across the sector.

While an overwhelming 91% of small businesses are supportive of Payday Super as a positive change for employees, 87% say paying super more frequently will put pressure on their cash flow. More than half (58%) cite customer payments as their biggest challenge to managing ongoing cash flow, closely followed by rising cost pressures (57%).

The strain is already personal. Almost one third (31%) expect to dip into personal savings to meet compliance obligations, while 31% anticipate needing to borrow money. Others plan to delay paying business expenses (41%), or delay paying themselves (38%) to manage the strain.

Key findings:

• 84% say late payments could prevent Payday Super compliance
• $15,257 lost by small businesses on average over the last financial year due to late payments
• 31% expect to dip into personal savings to meet obligations
• 82% anticipate delaying growth or investment plans in 2026

Angad Soin, Managing Director ANZ and Global Chief Strategy Officer at Xero, said: “When one in three small business owners say they may need to use personal savings to meet Payday Super obligations, it’s clear this change is about more than compliance. It’s about whether businesses have the visibility and control to manage their cash flow with confidence. As margins tighten and pressure builds, real-time insights become essential.”

Small business growth plans on hold

The cash flow squeeze won’t only affect day-to-day operations – it threatens to put the brakes on growth across the sector. Some 82% of small businesses anticipate they will need to delay or reduce investment or growth plans in 2026.

Soin said with the 1 July deadline fast approaching, the findings highlight the urgent need for small businesses to prioritise operational efficiency to mitigate these growing pressures.

“The right digital tools and automation can make a real difference. They give businesses better visibility, reduce manual admin, and help bring payroll and payments into a more connected workflow. Even simple steps like offering online payments on invoices — whether that’s card, digital wallets, PayTo or direct debit — can help businesses get paid up to twice as fast and improve cash flow.”

“With late payments and tighter margins still putting pressure on small businesses, strengthening your systems now will put you in a much better position to meet Payday Super obligations with confidence and let you focus on what matters most for your business.”

Despite the pressures ahead, many small businesses are confident they can adapt. Almost a third (31%) expect to adjust to any business impacts within three months, and nearly two‑thirds (62%) believe they will be fully up to speed within six months.

Now is the time for small businesses to get ahead - by adopting digital tools to strengthen cash flow visibility, streamline compliance, and be ready for Payday Super from day one.

For more information, visit Xero’s Payday Super hub.

ENDS

Media Contact

Xero Australia | Jess Brophy | Director of Communications, ANZ | +61 431 268 549 | jess.brophy@xero.com

About Xero

Xero is a global small business platform that helps customers supercharge their business by bringing together the most important small business tools, including accounting, payroll and payments — on one platform. Xero’s powerful platform helps customers automate routine tasks, get timely insights, and connects them with their data, their apps, and their accountant or bookkeeper so they can focus on what really matters. Trusted by millions of small businesses and accountants and bookkeepers globally, Xero makes life better for people in small business, their advisors, and communities around the world. For further information, please visit xero.com.

About the research

Xero commissioned One Picture to survey 500 Australian small businesses who employ up to 200 employees via an independent online panel between 19th February & 4th March 2026. Data has been weighted to be more representative of the employing small business market. Responses were collected from a mixture of job roles across a range of sectors. Some survey options have been edited throughout for readability.