Personal Property Securities Register
In an environment that is likely to have a heightened level of volatility, SMEs need to consider using PPSR’s and how that affects your business operations and what implications this has on selling your business and impacting on settlement. The Personal Property Securities Register or PPSR, is an official government register where one registers their security interest held in personal property.
In what can only become a highly volatile trading environment post March, understanding and using PPSR should be included in your day-to-day business repertoire. Business credit, Australia-wide, equates to a lending facility that would have resource classified as Australia’s fifth-largest bank. With that amount of lending through 30 or 60 day trading accounts there is an enormous amount of potential liability.
What can you do?
Registering a security interest over the goods or services allows you to protect assets in the event there is a default. Chiefly this security interest is to protect your business from the insolvency of your customers. The retention of title that the registration of a security interest entitles you will allow you to; recover unpaid goods, claim an interest in the product in which of goods have been added or act as a defence to having received an unfair preference.
The use of PPSR’s are becoming more prolific as people weigh up the small cost of registration against the potential loss of stock and services.
We certainly advocate that this strategy be employed within your business given the small cost in the vicinity of seven dollars, may save your businesses cash flow being negatively impacted and potentially pushing you towards an insolvency.
On the other side of this equation, it’s safe to say that your business may very well have a myriad of PPSR’s registered against it. In one particular instance this year, we at GMO, were settling a business that had hired equipment on a regular basis from a known national brand and this business had taken out PPSR’s to secure their interest in the plant and equipment that they had hired. This was all well and good, however, the branch that had taken out the security interest had been closed down.
In the complication of having these security interests cleared during settlement, it became incredibly protracted and ultimately ended up in a delayed settlement.
Acquiring a PPSR report to provide you with comprehensive breakdown of all the security interests that have been taken out against your company is a housekeeping job that should be scheduled into your operations throughout the year.