PPSR Ignorance – SMEs Need Accountants Help!

Accountant's Minute 160

Welcome to Accountants Minute.

Unfortunately, the majority of SMEs are unaware of the potential consequences of ignoring the operations of the Personal Property Securities Register (PPSR).

Millions of dollars have been lost by SMEs and some big businesses through ignorance of how the Personal Property Securities Act operates.

If your accountancy firm is the “trusted advisor” (and I’m sure that this is how you see your role) for your clients, surely you need to be advising your clients, especially those in the “PPSA High Risk Categories” of the consequences of not registering on the PPSR – which could be very costly and, in some cases, lead to business failure.

Have you prepared a list of your “PPSR High Risk Category Clients”?  The clients which could be classified as “PPSR High Risk Categories” would probably be involved in the following business activities:

• Having stock stored on someone else’s premises.
• Supplied consignment stock to businesses.
• Have assets located at someone else’s premises.
• Have motor vehicles, boats, aircraft, plant and equipment leased to other businesses for more than 2 years.
• Have motor vehicles etc., leased for an indefinite period that could be extended past 2 years.
• Trades subcontractors who have contracts with contractors and other businesses that they are receiving progress payments from could have problems with liquidators for alleged preferential payments and potentially have to repay the amounts received, if a liquidator is successfully able to claim that those payments were “preferential payments”.

Why not identify who these clients are and then have a meeting with each of these clients to advise them that “personal property” is in fact “business property” and, even though they own the assets or owe substantial amounts to banks or financiers for those assets, they could lose those assets if they have not registered their customer, or the business that they are dealing with relative to those assets, on the PPSR.

You could discuss some of the problems that have been documented over the last few years including:

• Consignment stock, valued at about $29M, which was located in a retail business at a number of locations that had a liquidator appointed, that was claimed by the liquidator for the benefit of the secured creditor.
• Cabinetmaking business which constructed a number of kitchens in display houses and then rented their kitchens to the developer on a three-year deal. Unfortunately, a liquidator was appointed to the developer – the cabinetmaker had not registered this transaction on the PPSR and the cabinetmaker lost the kitchen suites to the liquidator on behalf of the secured creditor and then, to rub salt into the wound, received a preferential payment claim from the liquidator relating to rental payments that had been made to the cabinetmaking business.
• Incorrect “Retention of Title” clause used – therefore registration on the PPSR was ineffective.
• Confusion with terminology in the registration process causing the registration to be rejected.
• Not completing the registration process in time. (There are strict lodgement deadlines for various matters relative to the PPSR which must be abided by if the applicant wants to have full protection).

These problems cost those businesses a lot of money, time and worry.  You wouldn’t want any of your clients to go through these problems, would you?

SMEs need help from their “trusted advisor” to help overcome their PPSR ignorance.

Businesses in the “PPSR High Risk Categories” will benefit from accountants conducting a PPSR Due Diligence Review annually or more frequently if there has been staff changes within the client’s business.

ESS BIZTOOLS has developed a complete PPSR Due Diligence Package to assist accountants to undertake the review process.  The indicative fee for the annual due diligence review is around $900 plus GST.

The ESS BIZTOOLS’ Personal Property Securities Register Product Package is available for an individual subscription of $550 including GST – for details click here.

The package is also available as part of the ESS BIZTOOLS’ Silver Package which is the featured “New Financial Year Promotion” with a 25% discount for 24/7 access for 12 Months of $1,641.75 (incl GST) (Normally $2,189) – for details of the Silver Package click here.

If you would like to view a 40-minute webinar on “Personal Property Securities Register Due Diligence” click here.

You are invited to attend our FREE webinar series featuring other product packages available from ESS BIZTOOLS for individual subscription or you can obtain access to all of the individual product packages as part of the Silver or Gold packages:

• Budgets and Cashflow Forecasts – Wednesday, 11th July 2018 12:30pm AEST (Click here) to register.
• Capital Raising for SMEs – Tuesday, 24th July 2018 at 12:30pm AEST (Click here) to register.
• Identifying Grants for Clients - Monday, 30th July 2018 at 12:30pm AEST (Click here) to register.
• Chief Financial Officer Services - Tuesday, 31st July 2018 at 12:30pm AEST (Click here) to register.

If you have any questions, please do not hesitate to send me an email – peter@essbiztools.com.au or telephone me on 1800 232 088.

Posted in Accountant's Minute on Monday, 09 July 2018