PPSR for Businesses
The Personal Property Securities Register is a noticeboard of sorts, important to both individuals and businesses. The PPS Register shows the outstanding debt stacked against a personal profit. For individuals, the PPSR is significant because it helps them make decisions such as whether to not to purchase a particular property. The PPS Register is also important to businesses because it protects them against financial risk in their dealings with each other and with the final consumer. Similarly, the register can be used by a business as a source of finance for its operations under certain circumstances. Businesses should register any interest they have in personal property to ensure their survival and perpetuity in the event of a negative economic climate.
Which businesses could benefit from PPSR?
Businesses can register their interest in the Personal Property Securities Register or they can use the resource to find out more about the money owing by their partners and other parties. There are three main businesses that can benefit from utilizing the PPS Register in Australia:
- Businesses that operate as middlemen, that is, those that buy products from other organizations to sell to customers or to manufacture end products that eventually sell to consumers. These benefits benefit from the lower risk posed by checking out their suppliers.
- Business-to-business enterprises that sell their goods and services to other firms on a consignment basis or those that operate under title-retaining agreements. Registering interest in the supplied goods protects these firms from bankruptcy and other negative financial conditions for their customers.
- Those that sell, hire out or rent their goods to other businesses or consumers.
For these enterprises, being a secured party or looking up their partners using the PPSR search option enables saving on expenses. The following are some of the gains that a company can get from using PPSR services.
The Pros of using the Personal Property Securities Register
As a business owner, you want to make a profit and provide the highest quality of goods and services on the market. There are two ways for you to do that. The first is to bring in more funds into the business through financing and increased sales. The second is to cut down on expenses as much as possible. Using a PPSR helps businesses achieve both goals in the following ways:
Lowers Risk when Buying Goods
Businesses buy goods from other enterprises to conduct their operations. For instance, factories purchase machines from manufacturers to process agricultural products. Similarly, they buy cars or vans from car dealerships to transport their products to the market. PPSR checks can help businesses minimize their risk of loss when purchasing these goods by illuminating the financial risk involved in purchasing a good.
When a business is about to purchase a good, it can look up that equipment on the PPS Register. An asset that yields affirmative results under the PPSR check has outstanding debt stacked against it. Should a business acquire this product, it faces the risk of having its property repossessed if the selling party defaults on paying off the lender. Therefore, a business could refrain from buying personal property with security interest after using the PPSR, which could save it from losing out on the value and potential utility of a property with interest.
Lowers Risk when Selling Goods
Numerous firms within Australia sell their goods on a consignment basis. These businesses only receive payment after their customers have sold the supplied goods and been paid for them. To lower the risk of lost payment in case of default, the owners of such firms can register the goods they supply as security interest. In case their customers do not sell the products or default on payment, the PPSR registration entitles these enterprises to the goods or the value of the goods. As such, the PPSR protects these businesses from losses.
Similarly, businesses that retain the titles for their products even after sale, such as those that deal in licenses, can prevent themselves from losing out when their consumers fail to pay by registering the intellectual property or licensed rights. This entitles them to compensation in case of the dissolution of the party they sold their products to.
Lowers Risk when Leasing, Renting or Selling Goods
This case applies to any businesses that lease or rent out their products to others, and those that sell them on a regular basis. Under certain circumstances, a PPSR registration protects these businesses from loss. For instance, if a customer defaults on a lease payment or is declared bankrupt, businesses with PPSR registrations declaring an interest in that payment or business will be compensated before those with unregistered interest.
In the past, a Retention of Title clause in your invoice or contract would be enough to guarantee you compensation for goods sold or services rendered. The clause stipulates that the title of the goods sold belongs to you until the buyer completely pays for the good, such as in hire purchase. A PPSR registration supports this clause and enables businesses to repossess goods when the buyer fails to pay for them. The compensation claim for businesses with registered interest in a personal property is stronger than that of a business which only has a Retention of Title Clause in their contracts.
How to use the PPSR as a Business
The process for utilizing the PPS Register varies depending on the needs of the business. For this reason, we have divided this section into three segments: for businesses which want to check the money owing on goods, those that want to verify already-conducted searches and those looking to register an interest in a property.
While looking up a Financial Owing
For this, the business can look up the good or customer (individual or company) directly using the Quick PPSR service. Simply input the required data and view the search report on the good. Properties with financial owing are those that can be repossessed by lenders should your seller default in their payment for that good.
While verifying a Search
In case a partner claims to have conducted a PPSR search, you can ensure that this information is accurate by inputting the number on the search certificate. This service helps you view the information on the original PPSR certificate.
While Registering an Interest
Businesses can register their interest in a personal property by following these steps. First, they can start by creating a PPSR account. After that, they can fill in the details of the secured interest before finally paying for the service to generate a registration.