What is The PPSR?
The Personal Property Securities Register (PPSR) offers your business excellent risk protection. It’s also a tool that can help you raise finance using your business goods and assets.
Using this register can protect you in the following ways:
- When buying goods
- When selling goods on retention of title or consignment
- When leasing, renting or hiring out goods
And… don’t rely on your contract’s retention of title clause or you may be bitterly disappointed.
When Buying Goods
Searching the register lets you know if the valuable goods you are interested in buying are being used as security for a debt or other obligation. The register won’t tell you the value of the obligation, but it lets you know who the obligation is owed to so you can find out more.
For example, someone may try to sell you used goods, such as a van or piece of machinery, without telling you they still have finance owing on it.
And if they stop making payments on the loan there’s a very real chance the finance company can turn up on your doorstep and take those goods away, without paying you a cent for your loss.
For the princely sum of $3.40 you can check that goods you want to buy are likely to be free of financed debt, and safe from repossession.
When Selling Goods on Retention of Title or Consignment
Making a registration shows searchers that you are claiming an interest in the goods or assets you are selling on retention of title terms, or have consigned to someone else to sell on your behalf. This interest means the goods or assets secure the debt or obligation that someone owes you.
The registration protects your interest in the goods or assets should the customer default or go broke.
If you don’t make a registration on those goods or assets and your customer goes broke before they have fully paid you, your property may be sold to pay secured creditors first. If you are not registered, you will be an unsecured creditor in an insolvency and may not recover much, if anything, of what you are owed.
If you register as early as possible, you stand the best chance of being first in line over other creditors. It also helps you to protect your interest even if the goods or assets are sold on, mixed or installed onto other goods.
When Leasing, Renting or Hiring Out Goods
If the lease or hiring arrangement is for at least one year, or may last for more than one year, or is for an indefinite period, then this applies to you.
Registering your goods or assets helps protect your interest in them when they are not in your possession. It shows you are claiming an interest over the goods or assets you are hiring, renting or leasing out.
If you don’t and your customer goes broke or is liquidated – your goods and/or assets may be sold to pay creditors.
Think You’re Already Covered by a Contract?
A retention of title clause (indicating that title remains with you until goods are paid for in full) in your contract or invoice, no longer protects you on its own. If you don’t make a registration, your retention of title clause is unlikely to stack up against others when you need to rely on it.
In other words, anyone else who has registered an interest will be ahead of you in the queue should your customer default or be wound up. Registering on the PPSR is a super smart move.
Article by Peter Kirkham, Business Development Manager, Professional Collection Services