There has been a lot of conjecture and speculation about the Personal Property Securities Act 2009 (Cth) and its impact and effect on business owners since being introduced back in 2012. The below example is one where it can be applied by almost any business owner who supplies a service and extends credit to their clients. This can provide some additional protection as a Secured Creditor which does not apply to a business who does not use the PPS Register (www.ppsr.gov.au).
In any business that supplies a service to their clients, where services are rendered and invoices issued for such services, then a Personal Properties Securities Registration can be lodged, by the business supplying the services, over their client. In order to do this a valid security interest needs to have been created by way of a written agreement that secures payment of a debt or other obligation. This written agreement (correctly worded and signed by both parties) is then lodged on the PPS Register. If this occurs the business will be classed as a Secured Creditor over their client (the grantor).
For example, if an Accounting Practice required a security interest over a client's personal property which could be perfected by way of Registration, then the Practice would need a written agreement with their clients which contains specific clauses whereby the client charges all present and after acquired property which they own now or in the future as security for the obligation of the client to pay for the services provided to the client by the Accounting Practice. Ultimately, these clauses provide security for the performance of payment for the Accountant's services by their client.
Upon the security interest being created (by way of the agreement being executed by the client of the Accounting Practice), then the next step would be for the practice to register the security interest on the Personal Property Securities Register against the grantor entity (the client entity) making them a Secured Creditor. Please note the strict time frames within which registrations need to be made from the security interest being created, as governed by the Personal Property Securities Act 2009 (Cth).
On the security interest being created, the registration will need to specify the collateral class of personal property for which the security interest relates. As the client would be charging all present and after acquired property owned now or in the future, the collateral class would be General Property All Present and After Acquired Property.
If you would like any further details regarding the PPSA including the registration process, then please don't hesitate to contact my office.