The PPSA for Dummies - Introduction
Please excuse the title but you’ll be familiar with the series of “Dummy” books created to simplify complex concepts. And, if you know anything about the Personal Property Securities Act (PPSA), you’ll certainly know it’s complex.
Simon Read, founder of PPSAdvisory, is going to help unravel the mystery (and reduce the headache) of the PPSA and detail why it’s so critical you appreciate its application for your or your client’s business.
It’s a big topic so we’re breaking it down into “bite sized” pieces, discussing the five principle ways in which the PPSA is likely to have application to Australian businesses:
- Business loans;
- Selling goods/materials on credit to your customers
- Leasing or renting equipment to customers
- Asset protection structures
- Buying/selling businesses
One of the chief purposes of the PPSA is to protect your property from the insolvency of your customers. PPSAdvisory assists by ensuring your ongoing compliance with the PPSA.
We’ve all experienced (and will continue to experience) the insolvency of customers 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.
If you have business loans (in fact any loans at all), sell goods on credit, lease or rent equipment to customers, use an asset protection structure or are thinking of buying or selling a business, the PPSA provides significant protection.
Remember, we’re not lawyers, this is not legal advice and you should obtain confirming legal advice before acting.