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Think ownership will protect your assets? Not anymore.

Just because you own an asset, doesn’t mean it’s yours to keep. If your business hires or loans equipment to third parties and you don’t comply with the PPSA, you have little protection over your equipment should your customer go broke. The collapse of Kentor Minerals proves spectacularly how security interest now beats legal title.

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PPSR and Trade Credit Insurance. Here’s what to know

When it comes to protecting your business from bad debt, where do you turn: trade credit insurance or the PPSR?

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How to Win Back Lost Assets from a Position of Power

When a customer goes out of business before you’ve been paid, there’s one important way to protect yourself: the PPSR. This court case shows how registering your security interests on the PPSR will give you a seat at the negotiating table and a real chance to recover goods or money owed. 

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How to beat the odds and get your PPS registration right

The odds are stacked against you when it comes to successfully registering on the PPSR. It’s just so easy to make a small mistake, which could limit or invalidate your security interest.

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5 Powerful Reasons to Register Your Small Customers on the PPSR

Too often businesses worry about the cost of registering on the PPSR while ignoring the cost of not registering. Some decide that the best way to control their costs is to register only their more significant customers – those with a high credit limit or actual exposure. It’s true you’ll pay less in registration fees by not registering all your customers, but it’s a false economy. Here we’ll show you why.

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4 Details About The PPSR That Will Make It Easier To Register

The devil is in the detail when it comes to registering on the PPSR. To register successfully, you need to understand the jargon and the fine print. Where to start? Take a look at your security agreement.

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Business registration, Company registration, Comply, Compliant, Compliance, Collateral Class, Correct registration, Grantor, Incorrect registration, PPS registration, Personal Property Securities Register, PPSR advice, PPSR, PPSR experts, PPSR consultants, Purchase Money Security Interest, PMSI, Registrar fees, Registration fees, Registration check, Registering a business, Serial number, Self-registration, Secured interest, Security interest, Security agreement

Don’t Make These Costly PPSR mistakes!

All it takes is a simple error like entering an incorrect serial number to invalidate your PPSR registration. Chances are you won’t even realise you’ve made a mistake. We’ve had countless businesses come to us assuming they are PPSA compliant only to find out that their registration is worthless.

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Homewares Company Finds Out It Can Recover $500,000 With Just One PPS Registration

A homewares company became worried about the financial stability of one of its customers and decided to use the Personal Property Securities Register (PPSR) as a way to protect their unpaid for goods should their customer collapse. To make sure they got the registration right, they asked EDX to do it for them.

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The Implications of Registering Late on the PPSR

What could be more frustrating than registering a security interest on the PPSR only to find out that you’ve still lost out? That’s what happened to equipment leasing company Doka Formwork Pty Ltd. They lost around $1 million simply because they registered too late. Find out what happened and how your business can avoid the same fate.

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FAQ

Seven-year registrations are the most common registration period. If you registered in 2012 when the PPSR commenced, your registrations are due for renewal from 30 January 2019.

If you leave your registration renewals to the last minute, you run the risk of your registrations lapsing. Renewing your registration even one second past the end date is too late. Once it expires, it can’t be renewed. 

Late registration can mean the claim to the property as registered on the PPSR is unsecured and all the property that was registered before expiration is up for grabs. Your business will go to the bottom of the list of claimants to that property.

Even if a business quickly re-registers after letting a previous registration expire, the security on your property can be ineffective if the debtor becomes insolvent within six months of the new registration being lodged.

A PPS lease is a lease or bailment of goods treated under the PPSA as creating a security interest in the goods leased or bailed. It only applies when the arrangement runs for more than two years. 

Registration of a security interest arising under a PPS lease provides notice of the owner's legal interest in the goods while it is in the possession of the lessee or bailee. Failure to register an interest can result in the owner losing priority in the goods.

Registrations of PPS leases on the PPSR must meet specific timing requirements to have priority over other security interests in the same personal property. If a PPS lease exists, register the security interest as soon as possible on the PPS to obtain priority in the property.

Every time a registration on the PPSR is created, amended or discharged, the secured party receives a verification statement confirming the registration details. There is no verification statement issued when a registration expires.

The verification statement is proof of the PPS registration. It’s essential to ensure the details listed on it are correct, as certain mistakes will deem the registration ineffective.

Use our software solution ESIS to avoid the time-consuming task of opening each registration confirmation email, extracting the relevant information, matching it to each customer and storing it safely. ESIS automates the process – creating registrations in bulk and storing the data in a secure, searchable database.  

Not all registrations on the PPSR can be amended. Go to the government PPSR website for a comprehensive list.

To amend a registration, you will need the PPS registration number and associated token or the secured party group (SPG) number and access code.

Use an EDX Assurance Review to find out if your existing registrations contain errors that need fixing. 

Data collected from six years of conducting Assurance Reviews shows us that more than 80% of businesses that have registered on the PPSR are making serious errors which may limit or invalidate their interests in the property in question should the debtor become insolvent.

The PPSR search function can help your business make better credit decisions. If you’re considering opening a trade credit account with a new customer, a PPSR search will give you an insight into their financial stability. If you’re buying an asset, a PPSR search will reveal any creditors with security interests in the purchased asset.

If your search shows there is outstanding debt registered on the PPSR for the goods you are interested in buying, it’s unwise to go ahead with the purchase as there is a genuine chance the finance company listed on the PPSR will repossess the goods. 

Perform fast and accurate searches from a database of registered security interests using our search solution ESIS.
 

The secured party group (SPG) is made up of one or more secured parties. Every secured party must be part of a secured party group and cannot exist separately on the PPS registry.

Once you have set up an SPG, you cannot change the secured parties within it. If you need to add or remove secured parties, you must create a new SPG.

The secured party is the body holding a security interest in personal property. Examples include financier, mortgagee, chargee, lender, Retention of Title supplier, lessor. 

In the trade credit industry, the secured party is usually the supplier, and the grantor is the debtor (the one who owes the debt). The secured party can register a security interest on the PPSR against the personal property of a grantor. 

The grantor is the body granting the security right over the collateral. In other words, an individual or organisation who owns or has an interest in the personal property to which the security interest is attached.

In the trade credit industry, the grantor is usually the debtor (the one who owes the debt), and the secured party is the supplier. Grantors include those who use their business assets as security for a loan, receive property under a Retention of Title arrangement, or lease personal property from another party for an extended period.

PPS regulations prescribe the way you must describe grantors. If you don’t use the correct grantor identifying information in your PPS registration, you risk your registration not being valid.

There are many benefits for businesses to register security interests on the PPSR. A successful registration gives you a valid security interest over the personal property you’ve sold on payment terms or leased to a customer. If a customer goes bust before paying you, PPS registration helps you recover your goods or money. This protection even applies if your goods or assets are sold on or installed onto other goods.

Registration on the PPSR also determines the priority of security interests – which security interest should take precedence over another. When there is not enough money to pay back all the creditors, a super-priority (PMSI) <link to page 4.3 Resources/Jargon Buster> interest will put you at the head of the queue.

Insolvency practitioners will ignore a security interest not registered on the PPSR, and it will be the last you see of any collateral or property subject to that security interest.

There is a grey area here in the PPSA, so best practice is for the terms of trade to be signed. 

The alternative is if you can show that the customer – either by something they have done or haven't done – intends to be bound by the terms. Of course, it's hard to show this, particularly when it comes to the issue of terms of trade. To overcome the problem of getting customers to sign the terms and send them back, including a cover letter with a sentence like: "Here are the new terms. The placing of your next order is deemed to be the acceptance of these terms". 

The Personal Property Securities Act 1999 (PPSANZ) came into force in New Zealand in May 2002, bringing with it the Personal Property Securities Register (PPSR).

It was another ten years before the PPSR came to Australia. The Personal Property Securities Act 2009 (known as PPSA or PPS Act) was introduced in November 2009 and commenced in May 2011. The PPSR came into effect on 30 January 2012.

PPSR stands for Personal Property Securities Register. The PPSR is a national online database that shows all registered security interests that businesses have in their personal property. Personal property includes goods, crops, livestock, debtors, cash, vehicles, plant and machinery.

Yes, EDX can manage the registration process for you or alternatively, provide you with the custom software and procedures you need to do it yourself. We’ve been simplifying the PPSR for businesses around Australia since the legislation was first introduced.   

There are benefits to adding low-value accounts, such as preventing shoot-throughs. Most of our clients register all their active accounts although we have a few clients with large ledgers that have a minimum threshold. Contact our team of PPSR experts for specific advice related to your business.

You can start registering if you have a Retention of Title clause in your terms and conditions (T&Cs). Regardless you should review your T&Cs regularly to ensure they meet best practice. PPSA clauses, the Privacy Act and Unfair Contracts legislation, should be included in your T&Cs.

Yes, if the account is closed and you don’t anticipate any further purchases. However, you may leave the registration if it’s an ongoing account that gets paid up and the customer makes regular purchases.

No, you register the grantor, not the goods. There are no amounts or credit limits required.

Glossary

Term Meaning
Asset

An asset is a resource with economic value. It can mean anything that is of use to a business or individual, or which will yield some return if it’s sold or leased.

Bailment

Bailment refers to the transfer of personal property by one party (the bailor) to another (the bailee) for safekeeping.  Because the bailee doesn’t own the property, they must take reasonable care of it. A bailment is a form of contractual arrangement that is wider than a lease. It is covered by a PPS lease for situations where the bailor is regularly engaged in bailment transactions, and where the bailee gives value for the bailment.

Collateral

Collateral is personal property or goods that have security interest attached.

Creditor

Someone who money is owed to.

Financing statement

Although the security agreement creates or provides for a security interest, this is not what is registered on the PPSR. In its place, a notice of this agreement – the financing statement –  is posted on the registry. 

The financing statement contains the particulars of parties to the transaction, the collateral and the security interest. It is the responsibility of the secured party to keep the information up to date if any of the details change.

On the registration of the financing statement, the PPS registry issues a verification statement

Registering a financing statement is one way of perfecting a security interest and determining priority.
 

Grantor

The grantor is the body granting the security right over the collateral. In other words, an individual or organisation who owns or has an interest in the personal property to which the security interest is attached.

In the trade credit industry, the grantor is usually the debtor (the one who owes the debt). Grantors include those who use their business assets as security for a loan, receive property under a Retention of Title arrangement, or lease personal property from another party for an extended period.

Perfected

Perfected is the term used to describe the process of finalising the registration, possession or control of personal property security interests to ensure the interest is enforceable. It is a means by which the holder of a security interest can protect its security interest. If secured parties (as PPSA calls them) choose not to perfect, they risk losing their property or rights.

There are three methods of perfection:

  • Possession of the security property
  • Control of the secured property (in the case of a limited class of property)
  • Registration of a financing statement (PMSI) on the PPSR.
Personal property

Personal property is any property that is not land, buildings or fixtures. Examples include:

  • motor vehicles, boats or aircraft
  • crops, cattle and other livestock
  • stock in trade, artworks and equipment
  • other goods, new or second-hand, whether owned by businesses or individuals
  • intangible property, such as patents, copyright, commercial (not government-issued) licences, debts and bank accounts
  • financial property such as shares, cash or cheques.
PPS lease

A PPS lease is a lease or bailment of goods that is treated under the PPSA as creating a security interest in the goods leased or bailed. It only applies when the arrangement runs for more than two years. 

Registration of a security interest arising under a PPS lease provides notice of the owner's legal interest in the goods while it is in the possession of the lessee or bailee. Failure to register an interest can result in the owner losing title or priority in the goods.

Registrations of PPS leases on the PPSR must meet specific timing requirements to have priority over other security interests in the same personal property. If a PPS lease exists, register the security interest as soon as possible on the PPSR to obtain priority in the property.

Purchase Money Security Interest (PMSI)

A PMSI is a special category of security interest that may have super-priority over other types of security interests. A valid PMSI registration which has super-priority means you go straight to the top of the creditor list whenever you need to recover your property or its value from insolvency practitioners.

There are strict requirements to create a PMSI and these include:

  • The financing statement must identify the security interest as a PMSI at the time of registration.
  • The PMSI must be registered on the PPSR before delivery of the inventory or within 15 days after delivery (if the personal property is not inventory).

The main types of PMSIs include PPS leases and the sale of goods on a Retention of Title basis. 

You must choose PMSI when you first register your security interest, as you can’t change it later to indicate PMSI.

Retention of Title (ROT)

A Retention of Title (ROT) clause is a provision in a contract for the sale of goods. It indicates that the seller retains legal ownership of the goods until the buyer fulfils certain obligations – usually that they pay for the goods in full. A ROT is only effective if you have registered on the PPSR.

Secured creditor

A person to whom money or an obligation is owed, where that person has a security interest in personal property, such as the owner of equipment subject to a PPS lease.

Secured party

The secured party is the body holding a security interest in personal property. Examples include financier, mortgagee, chargee, lender, Retention of Title supplier, lessor. In the trade credit industry, the secured party is usually the supplier. The secured party can register a security interest on the PPSR against the personal property of a grantor. 

Secured party group

A secured party group is made up of one or more secured parties. Each secured party must be part of a secured party group and cannot exist separately on the PPS register.

Security agreement

This is an agreement that creates or provides for a security interest. Terms and conditions, loan agreements and hire agreements are the most common. A security agreement provides evidence of the grantor’s intention to grant the security interest to the secured party. Under the PPSA, holding title to personal property is not relevant – so it doesn’t matter if a party other than the grantor holds the title to collateral.

Security interest

A security interest is an interest in an asset (item of personal property) that secures payment of a debt or obligation, regardless of the form of the transaction. A security interest arises out of contracts or agreements between parties.

Serial numbered goods

One of the changes brought about by the PPSA was the introduction of serial numbered goods. When registering on the PPSR, it is essential that goods like motor vehicles, watercraft and aircraft are described by the correct serial number. If they are not described, or incorrectly described, the registration of the security interest may be deemed defective. 

Transitional Provisions

Transitional provisions refer to the transitional period under the PPSA that ended on 30 January 2014.

Unfair Preference

An Unfair Preference refers to payments or transfers of assets that give a creditor an advantage over other creditors. You can avoid falling victim to an Unfair Preference claim by registering on the PPSR. If you register correctly on the PPSR, you become a secured creditor, and the Unfair Preference regime typically applies only to unsecured creditors

Unperfected security interest

Unperfected security interest refers to a security interest that has not been registered on the PPSR.