How to use the PPSR to protect your business…

The Personal Property Securities Register (PPSR) has been operational since 30 January 2012.  It is a register that was introduced by the Australian Government to record claims, not just for assets such as vehicles, equipment, crops and inventory but also general claims for payment.

Say you obtain financing for a new business vehicle. The lender will register a claim over that vehicle and sometimes over all the assets of your business. Your suppliers can do a similar thing over the goods they supply.  This being the case, clever businesses are using the PPSR to protect their profits, so why don’t you?

When you make a sale on credit, you have two choices:

1. Do nothing – in the case of your customer/client encountering financial difficulty, you risk standing in line with all the other unsecured creditors and you may even be forced to hand back payments received from that customer over the preceding 6 months.
2. Register an interest on the PPSR – elevate yourself to an equal standing with the secured creditors, and take advantage of the chance to receive any available funds before the ‘do nothing’ creditors receive a cent.

The steps to ‘perfecting’ your claim are broadly as follows:

1. Decide what level of risk you are happy to take i.e. do you need to worry about all your clients or are some small enough to leave?
2. Obtain written consent from those chosen customers/clients to allow you to register interests. This is most often done via clauses in your terms of trade.
3. Register your interest on www.ppsr.gov.au. This can be one of two broad categories:
   • Purchase Money Security Interest (PMSI)  – a claim for a tangible goods you supplied that you would take back i.e. you retain title to an item until payment in full has been received.
   • All Present & After Acquired Property (APAP) – a general claim for payment. This can be used in all cases i.e. an architect that give 30 day terms of payment. There does not need to be an asset/item involved, monies owed for services will also be included.

So, if like us, your business has account customers, the PPSR is relevant to you.  HQB Chartered Accountants will be holding a seminar in early 2016 for you, our clients to explain the ins and outs of the PPSR.  Register your expressions of interest by emailing us today!

-James Davis, CA. 15.12.2015