Why Is the PPSR Important for Small Business Owners?


From understanding the importance of the PPSR registration to its benefits, learn how PPSA security interest can help your small business.


As a small business owner, you need to protect your business from various unexpected issues such as overspending, loss of collateral, or trade losses. Being well-versed with the security interests held by your customers and suppliers will significantly protect your business. Additionally, you need to ensure your purchased goods are free of security interests, especially in the event of a customer or supplier’s liquidation.

Sometimes small business owners are unaware of the tools that can help them understand the security interest status of a customer or supplier. Using an appropriate database will ensure that the purchased property is in the clear or suggest ways to register their own security interests.

There are more than thousands of businesses in Australia and learning about Personal Property Securities Register (PPSR) will essentially protect your business and security interests.

What Is The PPSR?

The PPSR is an online register that provides complete information and related data on security interests held in personal property. One of the major roles of the PPSR is to protect businesses when a customer becomes insolvent by sorting out any confusion about the ownership of goods.

The PPSR act also ensures business owners are not sold goods or equipment with pre-existing security interests registered against them. Many small businesses have their first encounter with the PPSR when they want to recover their goods after the insolvency of a customer.

Business owners should ensure their business is correctly registered under the PPSR, as incorrect registration can lead to loss of goods. Similarly, if you can’t recover unregistered goods it may impact your cash flow and payment procedure.

A few key terminologies in the PPSR that you need to be aware of:

  • The PPSR act applies to all security over personal property (land and building excluded).
  • Personal property owned by an individual or organisation.
  • Businesses can consider using personal property as collateral (goods leased or hired, received on consignment).
  • The seller, owner, lessor, lender, consignor or financier having a security interest in the collateral is a secured party.
  • The debtor or buyer who offers the collateral as security is a grantor.
  • The secured party needs to register their security interest on the PPSR.

Why Is The PPSR Important For Small Business Owners?

  • The PPSR is imperative for business owners who offer credit terms in the form of finance to their customers, as they are basically providing their goods or services for free at the given agreed credit period. Offering your goods on credit has several complications as in case the customer goes insolvent, business owners will not be able to make further payments for those lent goods or services.
  • The supplier of the goods becomes an unsecured creditor of the business and ranks last during the liquidation process, making things more complicated for lenders. However, if you have perfected your security interest on the PPSR, chances are you will be the first to repossess the goods and amount during the liquidation process. This is simply because you have a first ranking security registration of those goods. Besides, you will gain priority during the distribution of any dividends in case of liquidation of the business.

Benefits Of Registering On The PPSR

  • Priority in the event of a liquidation
  • Improve data accuracy with correct information
  • A cost-effective approach
  • Protection to cash flow from effects of liquidation

If you want to learn more about the regulations of PPSA in Australia, call Ledlin Lawyer on +61 28488 3389 today.

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