Making sense of the PPSA
If you know anything about the Personal Property Securities Act (PPSA), you’ll certainly know it is complex.
Simon Read, founder of PPSAdvisory, is going to help us unravel the mystery of the PPSA and detail why it’s so critical you appreciate its application for your business.
It’s a big topic so we’re breaking it down into “bite sized” pieces, identifying in future newsletters the five principle ways in which the PPSA is likely to have application to your business:
- Business loans;
- Selling goods/materials on credit to your customers
- Leasing or renting equipment to customers
- Asset protection structures
- Buying/selling businesses
Whilst the PPSA is confusing, one of its most significant benefits is its ability to improve the likelihood of a return from the insolvency of your customer. It can provide a very significant degree of protection from your customer’s insolvency.
We’ve all experienced (and will continue to experience) the insolvency of a customer and we resign ourselves to getting little if anything back on the money we’re owed. Often whilst the secured creditor’s (usually the Banks) recover their debts.
Well the PPSA changes all of this. Compliance with the PPSA promotes suppliers to secured creditor status for the goods/equipment they’ve supplied. Your security ranks ahead of the traditional secured creditors, you can now outrank the Banks!
The cost of compliance is very reasonable (you’ll likely spend more on coffee each year). Usually, only one registration over your customer is required, attracting a Government charge of $6. This registration will cover every transaction you have with your customer for the next 7 years (about 85c a year for each customer).
So, if it helps protect you from the insolvency of a customer and costs so little why aren’t you complying with the PPSA? Most likely because it hasn’t been explained clearly enough to demonstrate how it impacts your specific business.
So, if you have business loans (in fact any loans at all), sell goods on credit, lease or rent equipment to your customers, use an asset protection structure or are thinking of buying or selling a business, the PPSA provides you with significant protection. Stay tuned to our future Newsletters in which these topics will be discussed.
Our thanks to Simon for his help. With over 25 years experience as a former Insolvency Practitioner and having advised on the PPSA since before its commencement (in early 2012), he’s one of Australia’s leading advisors on the practical application of the PPSA.
If you can’t wait for the next newsletters please contact us directly and we’d be happy to facilitate a meeting with Simon (he loves the PPSA).