The Personal Properties Security Register and your business

We have previously written about the Personal Properties Securities Register (PPSR). The PPSR allows businesses to register security interests over personal property, giving them rights over the personal property in exchange for the security of payment or the performance of a particular obligation.

Personal property is property that is not land, buildings, or fixtures. Personal property can be items such as machinery, stock, shares, debts, or even rights under a contract.

As previously discussed in the past these security interests would have been registered on a number of separate registers, such as with ASIC (if the security interest was over shares), or with REVS (if the security interest was a motor vehicle). The PPSR now streamlines all of that into one central register.

The PPSR also allows businesses or individuals to check whether the personal property they are purchasing have a security interest over them. This can provide potential buyers with a way how to double check and make sure that when the transaction is completed, the purchaser will have full rights to own the personal property. If there is a security interest attached to the car, then the vendor may not actually have the right to sell the car – but in the worst case scenario, the owner of that security interest (for example, the finance company who loaned the money for the car) can repossess the car if the loan has not been paid.

Because there is now a central register noting down all security interests, as a small business it should be theoretically easier to offer your plant and equipment / machinery as security for a loan, as it is easier for the bank to check if the equipment or machinery is either owned by someone else, or if someone else has already lodged their security interest on the equipment.

If you are a small business who sells goods on credit, you should consider registering your security interest on the goods, so that if your debtor does not pay your outstanding amount, you may try to repossess the goods. If you rent or lease out machinery and equipment, it might also be a good idea to register your security interest on the machinery and equipment.

For a small fee, the PPSR can be searched for a fee via http://www.ppsr.gov.au. If you are a small business, you should consider incorporating the PPSR and its features into your business processes!

Terms of Trade – Protect Your Business

Why do you need terms of trade?

Your terms of trade define how you do business. You might consider that some terms are implied, but implied terms will never replace expressed terms or terms that are in writing. You might already be familiar with the concept of an ‘agreement’ or a ‘contract’ (ie, a legally binding agreement), so consider your terms of trade as your contract with your customers or clients.

In that contract you can determine things like what you’re going to do for them and what they’re going to do for you in return (ie, payment).

You might cover other things like time for payment and penalties for late payment, or you might detail issues like warranties, guarantees and maybe return policies. The extent and detail of your terms of trade really depend on the nature of your business and the risks that you wish to manage.

If your business is all about ‘point of sale’ transactions that happen over the counter, you might not have a written contract with each of your customers but you may need to have notices regarding return policies clearly visible around your shop. If you extend credit to your customers, you might require your customers to provide security in the form of personal guarantees or maybe even an interest over some kind of property. If you trade over the internet, your website might contain your terms of trade as part of the website or the online shopping cart. Or if you do business by quoting and signing up customers, you might place your terms and conditions on the back of your quoting form and ask customers to sign their acceptance of the quote as well as your terms.

The bottom line is that there’s no specific rule regarding how your terms of trade should be reflected in your business, and you need to assist your business or sales procedure to determine at what point in time do you ‘have a deal’. That’s when you need to concentrate on ensuring that your customers or clients have clearly understood your terms of trade and have accepted them. Finding the right balance between what is commercially acceptable and legally enforceable is not easy, and sometimes you need to find an acceptable compromise that protects your interest but does not hinder your ability to do business – and that’s exactly where we can help.