Sale of Goods on Credit Terms (PPSA)

Now, more than ever, ensuring your customers pay you has become critical, particularly if you sell on credit terms.  Securing your debts makes a lot of sense and the PPSA was introduced to assist suppliers do just that.

Remember, the PPSA is all about security; if you have security for payment you better register it on the PPS Register if you want to use it when your customer collapses into insolvency.

Register your security and you become a secured creditor, fail to register your security and you’re an unsecured creditor and we all know what this means on the insolvency of your customer, last in line to receive a dividend, if any at all.

Suppliers of goods sold on credit terms often include security for payment in their trading terms.  Such security may vary from retention of title in the goods sold, to charges over the customer’s personal property, helping the supplier secure payment from their customer.

Your terms of trade may very well already include such security (most do), and if that’s the case, then you only need to register the security to be able to use it.

How many times has a customer collapsed and you end up with nothing, whilst secured creditors (usually the Banks) get repaid?  Well, the PPSA changes all of this.  The PPSA was introduced to ‘level the playing field’ where the insolvency of a customer occurs.

In fact, your security can rank ahead of the traditional secured creditors, you may now outrank the Banks!

For example:

  • ABC sells packaging material to the Healthy Chocolate company.
  • ABC’s terms of trade include retention of title (a security interest). Healthy Chocolate agreed to this security when signing ABC’s credit application.
  • In 2018 ABC registered its security (for $6) on the PPS Register against Healthy Chocolate.
  • Two years later and Healthy Chocolate collapses into Voluntary Administration, owing ABC $35k.
  • At the time of their collapse Healthy Chocolate held quantities of ABC’s packaging material as:
    • Raw material
    • Empty chocolate boxes
    • Full chocolate boxes
    • Chocolate boxes which had been sold but for which Healthy Chocolate had not been paid by their customer

ABC now has security for the payment of its $35k in all of the above.  It still owns all of the materials and boxes in the possession of Healthy Chocolate.  It also has security over the money owed (as far as it relates to the packaging material) to Healthy Chocolate, by its clients.

ABC’s registration of its security interest means it can exercise its security to recover its goods.  If ABC had not bothered to register its security the Administrator would simply have taken their goods for their own use.

So, what?  Does ABC really want its materials and boxes back?  No.  But the Administrator or new owner will certainly need them to carry on the business.  ABC now has a lot of leverage and can use it to negotiate an appropriate settlement.

This is a real-life example and we’ve seen many of them.  Creating security and registering it on the PPS Register can be the difference between getting a return from an insolvent customer and getting nothing.  And the cost?  ABC spends $6 to perform a registration over each customer, providing ongoing protection for every transaction with the customer for the next 7 years.

It doesn’t matter what you sell.  If it’s sold on credit, secure your payment and comply with the PPSA.  We have clients selling concrete, asphalt, fuel, spare parts, chemicals, fertiliser, windows, plumbing, piping, containers, packaging – you name, it they secure it.

But please, if you sell anything on credit terms you must consider how you can better secure your payment.

It is becoming much more common to incorporate charging clauses in trading terms, enabling suppliers to take security over all of their customer’s assets (previously referred to as a fixed and floating charge).  Once again this is a security and will need to be registered if it’s to be relied upon in the event of a customer’s insolvency.  The security will be lost if not correctly registered, a real waste.

Protecting your business from the insolvency of your customers is critical and we’re here to help.  Our Introductory Services will identify and assess your existing security and discuss how to ensure your business is complying with the PPSA.  It’s what we do.


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Be prepared for an uncertain economy

We’ve seen it many times before – when the economy nosedives, many businesses follow. Protect your business from the insolvency of others.

Long-term security

Trying to recover your debt and/or equipment after your client becomes insolvent is too late. Tighten your security to protect future payments and/or hired equipment.

Complicated paperwork done for you

Don't stumble at the final hurdle. We handle all the crucial paperwork to ensure you are correctly registered and your assets protected.

PPSAdvisory advises against several proposed revisions to the PPSA legislation due to potential increased costs, complexity, and uncertainty for businesses.


On Friday 17 November 2023, PPSAdvisory submitted a detailed response to the proposed amendments in the Personal Property Securities (PPS) framework. They challenge a number of the 345 proposed amendments made in the government’s response to the 2014 Whittaker report.


After almost 12 years of implementing the register, PPSAdvisory is concerned that these revisions will burden businesses with additional costs, complexity, and uncertainty instead of providing tangible benefits.


Users of the PPSA have adjusted their policies and registration practices to comply with the current legislation. Implementing such significant changes as proposed would require a complete overhaul of policies and practices. Additionally, these proposed amendments would render the policies and practices of many Australian businesses and financiers, particularly those involved in equipment hire, unworkable.


As result, the availability of finance for mining, construction, and heavy earthmoving equipment would be directly impacted. If financiers are unable to register their security interest in specific items of equipment (as only equipment with a Vehicle Identification Number can be registered by serial number), obtaining finance for such equipment will

become even more challenging.


We now await the response from Government to the submissions which have been made.


Feel free to reach out to us via the ‘contact us’ page on the website if you’d like any further information.