Small businesses can still get real value for $2. Just ask Tim Beresford, chief executive of the Australian Financial Security Authority (AFSA), who says a quick $2 search of the Personal Property Securities Register (PPSR) could protect entrepreneurs from unexpected financial setbacks.
The big end of town is already aware of its benefits: Australia’s banks and financial service powerhouses are the system’s primary registrants.
Speaking to SmartCompany, Beresford said AFSA is now on a mission to expand its use among small businesses, which might significantly benefit from the PPSR.
“It’s actually in your interest, in your financial protection interests,” he said.
The PPSR is a government-backed register of security interests in private property.
Since launching in 2012, it has grown to cover assets with a potential economic value of $400 billion.
Put simply, the PPSR tracks individual claims over assets, allowing businesses to prove they own the goods they lease out, or the assets they consign to a third-party retailer.
If a business that uses leased assets goes bust, a PPSR registration can help the true owner of those assets quickly retrieve them from the liquidation process.
Some of the most commonly-registered assets include cars and “yellow goods”, or cranes, bulldozers, and diggers leased out for construction projects.
Court-ordered liquidations effectively have doubled over the last financial year, and tough economic conditions continue to imperil construction businesses.
Given those factors, Beresford said PPSR registration, starting from $6, can shield businesses that lease out yellow goods and construction-site essentials.
But registration can protect assets far beyond the construction site, too.
“You may be a flower shop selling flowers to a retail provider” on consignment, Beresford said.
“You may be a grape grower selling something that’s on consignment.
“So the assets are still yours, even though you’ve given them to a retail provider.”
Intellectual property can also be registered under the system, which Beresford said is useful for professional services organisations dealing in cyber products or project management assets.
It can also help businesses looking to buy second-hand goods.
For $2, users can search the PPSR for outstanding security interests on goods they wish to purchase.
This can protect an SME from purchasing a used work ute that is actually being used as security for a loan, which could be repossessed if that loan goes unpaid.
The PPSR also links to the Written-Off Vehicles Register, allowing businesses to check if the vehicle they’re about to buy was significantly damaged in an accident.
Beresford said the check is doubly helpful: not only can the PPSR alert buyers before they purchase a lemon, but vehicles considered a write-off by a previous insurer may be refused future insurance policies, leaving their new owner in the lurch.
“You’re about to buy some second-hand goods? Just do a $2 search,” Beresford said.
“And if you do that search, and you find out that there’s an encumbrance on the asset, don’t purchase the second-hand good.”
Despite its purported benefits to small businesses, AFSA reports show banks and financial service providers dominate new PPSR registrations.
Of the 2 million new assets listed in 2021-2022, 1.3 million were registered by businesses in the financial services or insurance sectors.
Just 158,000, or 8%, were registered by wholesale trade businesses, followed by 120,000, or 6.1%, in the rental, hiring and real estate services sector.
“The big end of town use it and use it well,” Beresford said.
“Because if you’re Westpac, of course, you’re going to actually register the security interest you have on that boat, or on that crane, or on those tools of trade.
“If you’re BOC, the gas company, of course when you lease out some goods to someone, you’re going to register that lease.
“What we’re really trying to encourage is actually the small end of town,” Beresford continued.
While acknowledging that small businesses are “often flat out on their day-to-day” tasks, Beresford encouraged SMEs to keep the PPSR in mind when leasing out assets, or considering the purchase of used goods.
“We’re trying to make this as easy as possible, and provide no reason not to do it,” he said.
“Particularly for small businesses: we know that they’re busy, we know that they’re flat out on the tools, whatever their tools might be.
“We want to make it as easy, as cheap, and as cost-effective as possible, to give them peace of mind.”
The PPSR can be accessed online.
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Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
