Login
iscover
Small businesses have been urged to secure their assets and business loans on the Australian government’s register of security interests ahead of an anticipated rise in insolvencies.
Newsletter
ASBFEO issues call to register assets ahead of insolvency spike
02 February 2021
•
12 minute read
You’re out of free articles for this month
To continue reading the rest of this article, please log in.
Create free account to get unlimited news articles and more!
Australian Small Business and Family Enterprise Ombudsman Kate Carnell believes many small businesses are not fully utilising the Personal Property Securities Register (PPSR) as protection in the event of an insolvency.
“Given the incredibly tough past 12 months we’ve had and predictions of a wave of insolvencies to come, PPSR has never been more important,” Ms Carnell said.
“Many small businesses are not aware that correctly registering their interests can save them a world of pain in the long run.
“So many small businesses have invested heavily in their businesses over the past 12 months, but few know that they can secure these loans, pushing them higher up the security chain if there’s an insolvency.
“More importantly, small businesses that register their interests won’t need to fight tooth and nail to retain title to their goods if a business customer winds up.”
Overhaul needed
==
==
While there are over 10 million registrations on the PPSR — with 77 per cent registered as commercial collateral — Ms Carnell believes an urgent overhaul of the PPSR system is required to make it more accessible to small businesses.
“The greatest pity is that many small businesses find it too difficult to use,” Ms Carnell said. “The name is confusing, the language is overly technical and the operation of the register is very complicated.
“Many small businesses we spoke to said they would need a lawyer to help them register their interests — an additional cost burden for struggling small businesses.”
The ASBFEO’s research paper on the PPSR has put forward 14 recommendations for the government to consider, including simplifying the registration process and leveraging small business accounting software to increase awareness of the register.
It believes accounting software firms such as “MYOB and Xero should develop functionality that provides a ‘pop-up’ reminder to small business owners who record a personal loan to the business in the balance sheet, alerting them of the option to register on the PPSR”.
“Put simply, systems and regulations imposed on small businesses by government need to be easy to get right and hard to get wrong. At the moment, PPSR is hard to get right and easy to get wrong,” Ms Carnell said.
“I urge the government to implement the recommendations in our report, to build a system that works for the small business community and provides them with the certainty they need.”
You are not authorised to post comments.
Comments will undergo moderation before they get published.