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Debtor Finance Blog

What the PPSA means for your small business

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Generally I don't like dealing with boring legal acronyms that just suck the joy out of owning a small business, but there's one particular issue that's been irking me for a while - and one I feel should be on your radar too.

I'm talking about the PPSA (or the Personal Property Securities Act), which came into effect on January 31 2012. If you run a small business of any sort in this country, it's absolutely vital that you have a good understanding of what this entails as it is likely to affect you.

Put simply - and mind you, I'm trying to be as simple as I can - the PPSA is radically changing the way security interests are handled across Australia, by consolidating the previous territory and state laws into one national standard.

So what exactly is a security interest? Basically it's any form of interest in personal property, ranging from title arrangements to hire purchase and lease agreements.

Anyone who holds such security interests are required to register it with the Personal Property Securities Register (PPSR) on time to ensure they have a claim to the property in question.

Therefore, if your business deals with any of these forms of financial arrangements, you should be extra cautious as a failure to follow procedures could lead to you becoming an unsecured creditor, should a third party that owes you goods goes out of business.

The best way to ensure your business doesn't run into any trouble with the PPSA is to register all your security interests as early as possible. The nature of the Act means that you can register interests before you actually secure it, so there's no excuse not to get it done early.

Remember that the two-year grace period ends in just a couple of months, on January 31 2014, so act now to make sure you start the New Year with one less worry on your mind.

Wishing you all the best for your week in business.