PPSA and the '7-year itch'
The Personal Property Securities Act is all about protecting suppliers from the insolvency of their customer. For far too long, suppliers of goods/equipment have been treated as unsecured creditors when their customer's collapse, leaving them at the end of a very long line of other creditors and with little likelihood of recovering what they are owed.
If you've suffered a client's insolvency, we're sure you understand this situation only too well.
The PPSA changes all of this, allowing complying businesses to gain secured creditor status over the goods/equipment they've supplied, with an even higher priority than the Banks.
So, if you're selling goods/equipment on credit terms or hiring out equipment, you really should consider the many benefits compliance with the PPSA offers.
If you're already complying with the PPSA you should also be aware the PPSA recently celebrated its 7th birthday. This is important because the most usual PPS registration is performed for a duration of 7 years and as a result you'll need to start considering the renewal of your existing registrations.
All registrations automatically discharge at the end of their registration period, without exception. To avoid this, you will need to renew your PPS registration for a further term. You don't need to wait until the 7 years is up. We recommend updating your registrations at least 1 month prior to their expiry.
It's also a good time for some PPS 'housekeeping':
- Review your PPS policy – is it 'best practice' has it kept up with changes to the PPSA?
- Review your existing PPS registrations – are they compliant?
- Review the trading relationship with your customer – are they still a customer, do you have a copy of your terms of trade executed by the customer?
If you're interested, PPSAdvisory offer an affordable ($170) Assurance Review service where they will review your policy and existing PPS registrations to ensure they are 'best practice' and compliant.
If you're not complying with the PPSA then why not? If you sell goods/equipment on credit terms or hire out equipment, the PPSA was written with you in mind.
Introduced to help protect suppliers from their customer's financial collapse, the PPSA is the best news no one has heard of. And best of all, it's not expensive. One, $6 (Government charge) PPS registration, protects a supplier for every supply they make to the registered customer for 7 years, less than $1/customer/year.
The supplier's rights are set out in their terms of supply (usually as a retention of title claim, coupled with some PPSA specific terms). If accepted by the customer (usually through their execution of the supplier's credit application) the supplier is entitled to perform a PPS registration against the customer.
If you're interested in learning more and understanding how the PPSA can help protect your business, PPSAdvisory provide an Impact Assessment service. For the small fee of $170, they'll review your business, identify where the PPSA applies and detail the benefits as well as the costs of compliance, allowing you to make an informed decision of whether the PPSA is suitable for your business.
Simon Read CA
Founder & Director