Jan 29, 2018
We have spoken previously about the implementation of New Year’s resolutions relative to the delivery of a wider range of professional services to your clients. Today, I'd like to respectfully suggest that resolution number one for 2018 should be “Help Your Clients Avoid the Personal Property Securities Register Quicksand!”
Over $400 million has been lost by Australian businesses, both large and small, since the Personal Property Securities Register regime commenced in January 2012.
Unfortunately, a significant number of small/medium enterprise operators have no knowledge of the Personal Property Securities Register and indeed, when told about this legislation, many people question why they have to register on a government register to protect their own assets!
There is no doubt, in my mind, that the vast majority of your small/medium enterprise clients need their accountants’ assistance in navigating the requirements of this legislation.
The best place to start is the definition of Personal Property which is defined as “all forms of property other than real estate”.
This covers an enormous range of “business assets”, including:
leases of more than two years (was one year up to 20th May 2017)
stock – stored on someone else’s premises/on consignment
livestock – especially livestock on agistment
plant and equipment
motor vehicles, boats, aircraft
licenses and trade marks
service entity arrangements
One of the biggest problems is business assets that are stored on someone else’s premises – in someone else’s warehouse or on consignment to another business.
There needs to be a “triggering event” for a potential problem to emerge. This will always be the appointment of a liquidator, receiver or trustee in bankruptcy to a customer, licensee or the owner of premises where your client has business assets situated.
One of the biggest problems is a liquidator being appointed to one of your client’s customers who has been making payments to your client that a liquidator determines as being “preferential payments.”
Some accountants claim that all work aspects of the Personal Property Securities Register are legal work. I disagree.
I have talked to many legal practitioners who have all indicated that their role is to prepare the two key documents that businesses require –
Terms of Trade Agreement
Retention of Title Agreement
There is a lot more involved in an effective system to protect your client from the consequences of not registering on the Personal Property Securities Register other than these two agreements.
Businesses need systems to ensure that the Terms of Trade and Retention of Title Agreements are sent promptly to any new customer for signature prior to the supply of any goods and to ensure that there is a follow-up system to ensure that your client receives the signed documentation and that a decision is then made whether to register this customer on the Personal Property Securities Register. All of this must be done promptly so as to comply with the legal requirement to process a registration on the PPSR prior to any goods being sold and within 15 days of the date of the agreement.
The legal practitioners that I have spoken to have indicated that they do not do this work. When I’ve enquired of them who they think does this work they have replied – consultants, accountants, someone within the business’ office.
Why not hold some briefing seminars for the various subgroups of clients that you probably have, such as:
wholesalers and retailers
This will enable you to talk to a group with common interests in the operation of this legislation.
ESS BIZTOOLS has developed a Personal Property Securities Register Product Package to assist accountants and business advisors to conduct due diligence reviews on your clients' systems to assist your clients to navigate this complicated legislation, the registration requirements and seminar material for the presentation of seminars to your clients and prospects.
If you would like to obtain more details why not click on to www.essbiztools.com.au and then click onto the Personal Property Securities Register Product Package.
If you have any questions relative to the ESS BIZTOOLS' Personal Property Securities Register Product Package or any of the other product packages that have been produced to assist accountants/business advisors to offer a broader range of professional services, please do not hesitate to contact us.
1800 232 088