PPSR Selling Goods and Services on Terms

Once you allow your customer to book up your products you are entering into a credit situation.  This really means they are lending money from you to pay for the products they have purchased, this is with the intention of paying you back in the future.  Now there is nothing wrong with this, this is how commerce works and how we create income and wealth for ourselves.  This system has worked for thousands of years and mostly on face value or a handshake.

But times have really changed and up until 2008 when the global financial crisis occurred, trusting others in this manner had largely worked out alright.  

Thankfully, there have been some significant changes because our government has reacted in a very positive way, this was to implement a fair system that benefits all businesses, not just big organisations or banks.

By introducing the Personal Property Security Act in 2009 or PPSA, all businesses can now be protected.  What this means is that if you enter into a commercial arrangement with someone, you can register your arrangement through the PPSA register, called the PPSR and become a secured creditor.

Let me explain this is simple terms with a scenario we all understand if you have ever had a loan with a bank you would have signed a contract, in that contract you give the bank security over certain assets.  In the event, you could not meet your financial commitments the bank would seize assets owned by you to the value of what was owed, including any cash, property or inventory if you had a business.  The bank always sat on the top of the food chain in this respect, it made no difference if you owed money to other creditors the bank came first.  With the introduction of the PPSA in this scenario the bank would only be able to seize assets it had a legitimate right to, let say your inventory includes products used to build something, say it was timber and you build sheds and your timber supplier registered the timber on the PPSR then the bank would have no rights over that timber and could not seize it.  The timber vendor through a retention of title on the PPSR, would be secured and have the right to come and take his timber back.

Thousands of successful business across Australia are taking advantage of this system, if you are a business owner and sell products on credit we urge you to put this in place or risk loss due to these changes.

You see these changes protect those who are registered, in the case where a company goes into liquidation when appointed the first step a liquidator will take is to check the register to see who has security over any of the assets, those on the register are secured by this.  If you have any products or inventory present on the premises at the time of liquidation they become assets to the liquidators and will be sold off to pay the debts and the first debts to be paid will be those from the registry.

Putting this together does not have to be difficult everything you need to be PPSA compliant is included in our Credit Management Toolbox.

Following is a list of things you need to do to implement the PPSA in your business:

  1. Watch the youtube video below, this explains how the PPSA works if you sell goods on credit.
  2. You must have Terms and Conditions that include the provision for PPSA clauses
  3. your Terms and Conditions must include a financing contract.
  4. You must have Privacy Policy

Then your customers must give their expressed permission for you to pass their information onto the PPSR (registry), that means they must sign a contract with your organisation to give permission to put their information on the registry.

Once you have all the above sorted out you can start using the PPSR and truly be a secured creditor.

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