“I can’t do anything to get money owed to me by someone that liquidates”
If I had a dollar for every time I heard this, I would be rich.
Sadly, this often is not coming from small business owners themselves but rather from their accountants and solicitors. Whilst some advisors get it, others unfortunately provide advice without properly understanding how the Personal Property Securities Register (PPSR) works.
What businesses these days need to concentrate on is using the PPSR to register against the monetary value and the credit you are extending your clients.
The PPSR is a national online noticeboard which lists security interests over a company or piece of equipment.
If you are not using the PPSR to register against your clients, you are considered an “UNSECURED CREDITOR”. This often results in a write off of ALL money owed to you by a client if they go into liquidation.
What many may not know, however, is that if you are classified as “UNSECURED”, and your client enters insolvency, you may be exposed for money which you have already received as payment in respect of any work or service you have provided.
Under the Personal Property Securities Act (PPSA), a liquidator may claw back money you have already been paid over the last six months where it is deemed to be an unfair preferential payment.
By not making a PPS Registration, not only do you lack protection in respect of amounts owed to you but you may also face the prospect of repaying any money which you have already received. This may be the case even if you have paid for the material, performed your job to a satisfactory standard, paid your own staff and otherwise acted in good faith.
This really happens. I recently met with a chippy who ran a small business with a few workers. Not only was he forced to write off around $100,000 when the builder went bust, he also received a claw back letter for $80,000. It read, ’here are our bank account details. We require payment by EFT or cheque within 14 business days’.
These letters are ruthless, and the liquidators are usually backed by the legislation. If you extend credit without a PPS Registration you are an unsecured creditor and even if you are paid, you may be vulnerable to claw back.
The solution. EC Credit Control specialise in working with you to become a “SECURED CREDITOR”. PPS Registrations can be made on your behalf. EC Credit Control can also ensure you have a correctly written PPSA clause in your terms and conditions of trade.
The solution. EC Credit Control specialise in PPS Registrations – from the set up of your business on the PPSR, to making the registrations on your behalf and ensuring you have the correct terms and conditions of trade necessary – allowing you to become a “SECURED CREDITOR”
By taking these steps, you can ensure your registration is done correctly and therefore valid. A PPS Registration prevents a liquidator from claw back of money already paid and significantly increases your chance of being paid.
If you are not yet using the PPSR you need to. Call Damon at EC Credit Control on 0422 975 199 to get your business set up right away.
Do not listen to anyone who tells you it is not necessary. It is ALWAYS necessary.