Does your business buy or sell goods under retention of title or consignment arrangements? Hire, rent or lease valuable goods, machinery or equipment to others? Buy or sell valuable used goods? If you do, then you need to know about the Personal Property Securities Register (PPSR).
The PPSR is an online register where the holder of a security interest in personal property can register their interest to ensure they have a priority claim to that property.
So what is personal property? It generally includes all property (tangible and intangible) other than land, fixtures, most water rights and some statutory licences. It includes goods or inventory, intellectual property, share debts and contractual rights.
A security interest in personal property is created by a transaction that secures payment or performance of an obligation. Security interests can include interests created by leases, hire purchase agreements and retention of title arrangements.
Seems straightforward enough, doesn’t it? But why is it so important to you as business owner?
Because consumers, businesses and the finance industry search the PPSR when they need to determine whether certain personal property has a security interest registered against it. And it becomes especially important when a third party business you are dealing with doesn’t pay you or becomes insolvent.
As a business owner, it’s essential that you manage your credit risk by ensuring you register security interests for any personal property you supply or lease. This will ‘perfect’ your rights. If you don’t register, then you may not be able to get your property back or receive payment if the third party business becomes insolvent. You may also lose your rights to another creditor of the third party business who has registered or ‘perfected’ their security interest over the property.
Could your business withstand the loss of thousands of dollars – in some cases, hundreds of thousands or maybe millions of dollars – worth of property if one of your customers goes bankrupt? Most businesses can’t and that’s why it is so important to register your security interests in personal property on the PPSR. The cost is minimal. The time is takes is nominal. You simply can’t afford not to.
If you provide finance, supply, lease, hire or loan property to third parties, it’s essential to obtain expert advice and register your interest in the property to protect your position. Failure to properly register your interest could potentially result in the loss of the property in the event of insolvency. Emjay Insurance Brokers can provide you with the advice you need. Contact us today to discuss your needs on (02) 9796 0400.
To find out more about the PPSR visit: www.ppsr.gov.au
