Video Transcript
The PPSR is vitally important for business owners to understand, because by offering credit terms, what they are in fact doing, is offering a form of finance to their customers, because they are providing their goods or services for free, for the agreed credit period. Should that customer have an insolvency event, prior to making payment for those goods or services. The supplier is, unfortunately, just an unsecured creditor of the business, along with all other creditors, generally, in a liquidation unsecured creditors ranked last, behind the Liquidator, Employees and the Secured Creditors. If, however, the supplier had lodged a perfected security interest on the PPSR, they would generally be entitled to first repossess their goods as they have a first ranking security registration of those specific goods rather than the Liquidator. And secondly, they would also have a higher priority in the distribution of any dividends that the Liquidator may make from the liquidation of the business. So for these reasons, it’s absolutely critical that business owners understand the power and the purpose of the PPSR if they’re going to offer credit terms to their customers.
