What does it mean for your business?

The Personal Property Securities Register (PPSR) is the register where details of security interests in personal property can be registered and searched.

What is the PPSR?The Personal Property Securities Register (PPSR) is the register where details of security interests in personal property can be registered and searched. The Australian Financial Security Authority (AFSA) is the Australian Government agency responsible for administering the PPSR.Personal Property that can be included on the PPS Register includes almost anything, except for land and fixtures (such as buildings). Machinery, livestock, grain, crops, shares, boats, art, intellectual property and contract rights can all be offered as security for a loan and therefore included on the PPS Register. Initially, it is expected a large proportion of registrations will be company charges and interests over motor vehicles.If you are a business owner, the PPS Register can help you to:

■ Manage credit risk ■ Check whether personal property you plan to buy has a security interest in it ■ Register assets used to secure a loan you have made, or where goods are

supplied on credit terms.Transitional arrangements have been in place since 1st February 2012 and will cease on the 31 January 2014.

How does this affect your business?From an agribusiness perspective, the benefit of PPSR is to improve the ability, particularly for small-to-medium size businesses, to use more of their property, such as crops, livestock, farm machinery, agricultural assets and other assets (other than land) to secure lending.

Personal Property Securities Register

ACCOUNTING & BUSINESS ADVISORYCONSULTING & PERFORMANCE COACHINGFINANCIAL PLANNINGTECHNOLOGY SERVICESFINANCE

Hood Sweeney’s Accounting & Business Advisory team is a leading provider of professional services to regional business enterprises in South Australia. We understand the complex needs of rural and farming businesses, with an exhaustive range of services, including:

■ Financial and management accounting ■ Taxation advice and business structuring ■ Taxation compliance and reporting ■ Budgeting, cash-flow forecasting and financial

modelling ■ Merger, acquisition and divestment support ■ Succession planning ■ Strategic business planning ■ Governance and business performance

improvement ■ Business coaching.

For assistance with registering your Personal Property or for further information please contact our office or alternatively refer to the PPSR link. http://www.ppsr.gov.au/Pages/ppsr.aspx

Scott YoungSenior DirectorAccounting & Business Advisoryscott.young@hoodsweeney.com.au

Jim PinkneyManagerAccounting & Business Advisoryjim.pinkney@hoodsweeney.com.au

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A secondary benefit is that businesses can improve the way that they manage credit risk by registering their security interest in the goods (grain, hay, livestock, silage etc) supplied or leased on the PPS Register. Businesses may continue to include the retention of title clause in their terms of trade, orders and invoices. However, to be enforceable against third parties, the purchaser must have signed or accepted the documents which incorporate the retention of title and the business must have registered their interest on the PPS Register. If a business does not register their security interest and a debtor goes into bankruptcy or is placed into liquidation, the position of the business will be like that of an unsecured creditor. Secured creditors will be ahead of your business when payments are made or assets distributed. Additionally without registering the businesses interest the business may lose the right to repossess the goods, if the customer failed to pay.For continuous supply of goods situations, the business only needs to register once for each customer – not for every supply.

Example – Retention of titleFarmer Ltd is a producer and supplier of grain to a number of customers such as Viterra, Centrestate and a local feedlot. Farmer Ltd supplies its grain on retention of title basis. That is, it retains ownership until the buyer pays for the grain. The retention of title clauses add a substantial amount of complexity to the terms under which both Farmer Ltd and its customers are required to work. Furthermore, as Farmer Ltd’s terms are unique to them, liquidators and creditors of Farmer Ltd’s customers need to be persuaded of Farmer Ltd’s rights in each case.The new PPS Act will treat Farmer Ltd’s retention of title based rights as security interests because they secure payment for the grain supplied. As security interests they will need to be perfected (i.e.: registered and acknowledged by AFSA) by Farmer Ltd, most usually by registration on the PPS Register, to be fully effective under the PPS Act. Generally after PPS commencement a single registration in respect of each customer will cover ongoing supply agreements with that customer. Once Farmer Ltd’s interest is perfected, it will be able to rely on clear, statutory rights in the grain, and, if it is sold, in proceeds from its sale.

ACCOUNTING & BUSINESS ADVISORYCONSULTING & PERFORMANCE COACHINGFINANCIAL PLANNINGTECHNOLOGY SERVICESFINANCE