Sell goods on credit? Have you registered on the PPS Register?

It can be very stressful and painful when you find out that a customer that you sell goods to becomes insolvent. Especially if they still owe you money for the goods supplied. It is even more frustrating when the Insolvency Practitioner (IP) advises that not only will not be paid, but that you have received an Unfair Preference and you need to repay monies.

This is becoming quite common at the moment when dealing with builders, as we see many of these operations winding down in the current economic crisis.

What can I do to minimise bad debt loss?

But it doesn’t need to be that way. You can minimise a bad debt loss by registering your customer on the Personal Property Securities Register (PPSR). A national PPSR came into effect on 30 January 2012. It allows individuals and businesses to record where they have a security interest in assets while those assets are not in their possession. The register is publicly accessible and updated in real-time.

What is the PPS Register?

The PPS Register is a national online database that shows all registered security interests that businesses have in their personal property. Personal property includes vehicles, plant and machinery.

The PPS Act is the main piece of legislation that underpins the operation of the single national register, the PPS Register, for the registration of security interests in personal property. This legislation affects any business that hires, leases or rents goods without being paid first. So, if you’re a trade creditor, a financial institution or you hire equipment, it’s important to understand the impact that the PPS Act may have on your business.

Benefits of registering with the PPS Register?

Registering your business with PPS Register provides the following protection and benefits;

  1. Ability to collect or even receive payment for unpaid stock still with your customer when the IP was appointed. You could even collect stock previously paid for by the
    customer;
  2. Ability to be paid from trade debtors;
  3. Most likely, immunity from receiving an Unfair Preference; and
  4. Increases the likelihood of being paid in full when a customer sells their business.

 

What impact does the PPS Register have on your trade insurance?

If you currently have trade debtor insurance, your insurer will most likely ask whether you’re PPSR compliant. If you are not, then you represent a greater risk to your insurer. A fact that we suspect will lead to increased premiums. We suggest that you reach out to your insurer once you have registered and notify them to make the necessary adjustments.

What is the cost registering on the PPS Register?

The cost of registration is just $6 for 7 years. That $6 investment provides protection for an unlimited number of transactions for an unlimited value. Cheap as chips!

How can Morrows help?

The PPS Act is quite complex, and registration can be a tricky process. Before you get started, we suggest you speak with your Morrows Tax and Business advisor.  Our advisors can assistance in determining your exposure and helping you understand the registration or renewal process.

 

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