The Personal Property Securities Register (PPSR) is a noticeboard that lists security interests in personal property, including: vehicles of all kinds, livestock, plant and machinery, and leasing and rental agreements. These interests, alongside ownership, are essential to understanding the status of personal property. The PPSR offers businesses credit risk protection when buying, selling or renting out goods – and it can also help them raise finance using business goods and assets. Importantly, the PPSR has opened up opportunities to use a broader base of tangible and intangible collateral as security, such as helping small businesses to use accounts receivable as collateral to secure finance for growth.
Who’s using it?
Since becoming operational in 2012, the PPSR has played an increasingly important commercial role. Each year since 2012, we’ve had an additional 2 million new registrations. By the end of 2017, we had 7.2 million registrations over commercial collateral (of a total 9.7 million registrations). Looking at registrations by the industry offering collateral to secure payment, the top sectors include:
- Rental, hiring and real estate services
- Wholesale trade
- Transport, postal and warehousing
What are they using it for?
Last year, users conducted 8.8 million searches of the PPSR, indicating that businesses are using the register as a risk management tool to protect their business and their bottom line from nasty surprises. As a simple example, where businesses intend to purchase second-hand goods, they are searching the register to identify if the goods they are purchasing have money owing on them that can lead to the goods being repossessed.
Businesses and credit managers are also using the PPSR to mitigate the risk of bad debt. To start with, if a small business has doubts about whether a new customer is creditworthy, they can check the PPSR to see if other companies have security interests against the customer’s assets. More importantly, registering ‘protects’ security interests by defining the collateral’s priority status, so businesses can recover property that rightfully belongs to them when a customer becomes insolvent or defaults on payment.
Do you have to register?
Registration isn’t mandatory. You make that decision based on the risks inherent in your particular business. Certainly, if you are supplying on terms, leasing or undertaking other activities that may constitute a secured transaction, it’s likely that registering these interests will have a risk mitigation benefit.
But the PPSR is used by many other sectors, including primary producers who are offering the product of their harvest to a grain trader. As a credit manager, no matter what your industry, it’s worth conducting a cost/benefit analysis of registering with each of your transaction types.
It is important to remember that the PPSR is a noticeboard of your security interest. This means that you must have an underlying security agreement or contract in place and that the contract can be accessed at a later date, even if that’s years down the track.
If you have a registration on the PPSR, it’s vital that someone searching can find it easily and your details are correct if they need to contact you. Keep your registration accurate and up to date for the duration of your agreement. For businesses who registered when the PPSR commenced, renewals are coming up in January 2019 for 7 year registrations. Now’s the time to make sure your registrations are updated, properly managed and discharged in a timely manner.
Finally, remembering that the PPSR is only a noticeboard, if your customer defaults you need to proactively take action to enforce your rights.
Across Australia, thousands of businesses rely on the PPSR to help them make important financial decisions. The Australian Financial Security Authority supports this process by ensuring the data on the PPSR is secure and accessible. But it’s up to everyone using the register to help make sure the data on it is accurate and up to date.
By Gavin McCosker, Registrar of Personal Property Securities, Australian Financial Security Authority