This blog concerns the Personal Properties Securities Register (PPSR), without which your business could lose untold sums of money in the event that one of your customers becomes insolvent.
Who needs the PPSR?
A business that will benefit from the PPSR is any in which someone else is in temporary possession of their property. The property could be, for instance, retention of title goods sold, leased, rented or consigned; assets such as equipment/motor vehicles left on a customer’s site during a job overnight and/or on weekends; and assets belonging to an asset-owning entity that is used by or in the possession of a related trading entity.
You, the business owner
As business owners offering trade credit to customers, we can be vulnerable to potential disasters that are no fault of our own such as a customer that goes broke and doesn’t pay us. The major concern is that if that customer owes you a large amount of money and becomes insolvent, then your business could be in danger of insolvency as well.
To avoid these issues and protect ourselves, there are a number of measures we can take, each with its own limitations:
- Only provide goods upon receipt of cash payment (too limiting).
- Only provide credit to customers who you know for certain are a good credit risk (but things could change suddenly and without warning).
- Credit check customers who apply for credit so you can avoid those who are a known credit risk (again, things could change suddenly).
- Apply strict credit control so your exposure to bad debt is limited. This includes insisting your payment terms are honoured and agreed credit limits are not exceeded. Unfortunately, sometimes company reps can ‘bend’ the rules in order to close a sale.
- Implement effective credit control processes so you can easily identify problem accounts and act swiftly to prevent the situation from getting out of hand. This can be a case of closing the gate after the horse has bolted.
The PPSR gives you an extra level of protection; somewhat of a safety net if all the above measures happen to fail.
Too hard? Too expensive? Too time-consuming?
At Ledger Guard, we’re finding that many businesses are not doing registrations on the PPSR because it all sounds too complicated or because they don’t know how. Some business owners don’t know where to go for assistance; others have said they can’t afford the training and still others have reported that they don’t think it’s all that important. The problem is, this head-in-the-sand attitude can mean the difference between being at the front of the creditor queue or at worst, experiencing insolvency.
If you don’t register your interests on the PPSR, you are guaranteed to lose money if a debtor becomes insolvent.
After the first registration, it gets easier …
For most businesses that supply goods on credit – whether selling, leasing, consigning or otherwise – the registrations will be pretty straightforward. Each time, it will be practically the same approach so once you know how to answer the questions asked during the registration process, it should be far simpler from then on. It becomes an administration process like any other business function.
You will also need an understanding of how the Personal Property Securities Act (PPSA) legislation relates your business and your customers.
Ledger Guard can provide training at your office or via email and phone contact.
If you don’t think you have the time or confidence to manage your PPSR requirements in house, or you only need a few registrations each month, then you should consider Ledger Guard’s PPSR Do It For You Service where we process the registrations on your behalf. Incorrectly identifying your business (the secured party) or the other party (the grantor) or incorrectly describing your goods/assets, or incorrectly listing their serial numbers will invalidate your registration and you could end up with nothing if a customer became insolvent. This is where the “devil is in the detail”.
It makes sense to put in place as many safeguards as possible for your business as you do for your family so you are protected from disasters that could severely cripple or completely destroy the business or the personal life that you have spent time and money building up. That’s why we have insurance policies, fire alarms, security screens and so on. We hope that we will never have to rely on these securities, but we sleep better at night knowing we have protected ourselves, our families and our business as best we can.
To make a booking to have Ledger Guard train you in registering securities on the PPSR, or if you wish to discuss Ledger Guard’s PPSR registration service simply contact us on 07 3630 2533 today.