Australian SMEs are encouraged to use the Personal Property Securities Register (PPSR) database to search for and register security interests and avoid running into financial difficulty.
In the PPSR 12 Months in Review, 12 Months Ahead Forum, Carol Chris, Veda’s General Manager of Commercial and Property Solutions, revealed that only 11 percent of Australian SMEs are using the PPSR database.
A lack of awareness on what PPSR is, combined with a lack of knowledge of how the system operates, were cited as the main barriers to adoption within the SME sector, as well as the prevalence of conflicting advice from legal professionals.
So what is PPSR?
The PPSR is a national commercial law on secured finance involving personal property. It emerged as a result of bringing together 26 different Commonwealth, State and Territory laws and registers regarding security interests in personal property under one national system.
Before the PPSR was introduced, the law and practice regarding personal property securities differed between states and territories within Australia. It caused a lot of uncertainty among individuals and business owners and was increasing the cost of transactions involving property securities.
Benefits for SMEs
Following its success in the US, Canada and New Zealand, the PPSR was introduced in Australia to improve credit management and the ability of individuals and businesses to use all their property in raising capital. However, while big banks and larger businesses have adapted well, smaller businesses are not protecting their interests adequately.
“Registering your interests on the PPSR should be an integral part of good practices in credit management but it is clear that this is not happening within Australia’s small business sector,” said Chris.
While acknowledging that the PPSR system is complex, Chris along with representatives from Commonwealth Bank, ANZ Bank and the Australian Institute of Credit Management and Insolvency and Trustee Service, ascertains that using the PPSR database will make it significantly easier for businesses to protect their interests in the event of their business partners and suppliers going into liquidation.
“By registering your interests on the PPSR, small businesses can realise secured creditor’s status to better their position in the list of creditors in the event of insolvency or liquidation,” said Chris.
More information on the PPSR is available here.
Or to find out about the solutions Veda has to offer that allow businesses to search and upload entries to the PPSR database more quickly and easily, click here.