VACCINATE - PPSA REGISTRATIONS
Some terms to remember:
PPSA – Personal Property Securities Act 1999
PPSR – Personal Property Securities Register
PMSI – Purchased Money Security Interest
The PPSA allows you to cheaply and easily take an interest in any goods that you sell. If you have a properly perfected security interest in goods supplied then:
• You have a “super priority” in goods still in the possession of your client and can repossess those goods.
• If your client has used your goods in the manufacturing process, you have a PMSI in the manufactured goods (up to the value of your goods that have been used).
• If your client has onsold your goods you have a PMSI in the proceeds and if the debtors client has not yet paid – you can claim the book debt so created.
• You have powerful rights of enforcement, including rights of entry into your client’s premises and removal of your goods.
• You may have a defence against a voidable preference claim from a liquidator.
• You may find your clients asking to pay you when they are trying to sell their assets and bail out from their business.
If you are a supplier of goods under a retention of title clause, you do not need to register every transaction. You simply register your security interest once (a PMSI) – and the registration lasts for up to 5 years.
Cash Flow Doctors can take away the pain of registration by doing them on your behalf. Just complete one of our PPSA Registration Forms and fax it to us on 06 843 3348.
If you choose to make use of your right under the PPSA it is a good idea to review your business procedures to make sure that you maintain your “super priority” and maximise your ability to cure slow payers disease. The most important rules include:
• Get your clients to sign your terms of trade. Your terms of trade are normally the security agreement that gives you the right to register on PPSR. Your security agreement is only enforceable if the debtor has “assented in writing” – which for all practical purposes means signed.
• Do not dispatch goods until you have registered on the PPSR. You will only have priority in goods dispatched after the registration has been “perfected”. For all practical purposes this means properly registered on the PPSR.
• Ensure you can match goods to unpaid invoices. You will only have a PMSI in goods to the extent that those goods have not been paid for. It is therefore important that you can show that the specific goods (in your client’s hands) can be tied in to specific unpaid invoices. The Court will assist with identification, but your methods must be reasonable.
• Ensure that payments received from clients are allocated to specific invoices. Since you can only have a PMSI in unpaid goods, it follows that you must be able to identify unpaid invoices. This is particularly important where a debtor is making lump sum payments on account of a large debt.
And the most important rule of all – when trouble strikes – act fast! Contact us now or download our PPSR registration form and start registering now.
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