Issue 39 – June 2012
Manage key compliance dates with B-CAL
Managing key business dates just got easier thanks to a new calendar from Business.govt.nz, called B-CAL. The calendar helps businesses to find a range of opportunities, training, general compliance dates, and related tasks from across Government quickly and easily.
Using the Personal Property Securities Register to reduce your business risk
Did you know that not using the Companies Office Personal Property Securities Register (PPSR) could expose your business to unnecessary risk? A surprising number of small business owners are not aware of the reduced financial risk that comes with registering security interests on the PPSR.
In the event of a company failing, it is likely that a small business will lose any property provided to a debtor if its interest in the property is not registered on the PPSR – this includes goods provided on consignment or credit.
'The first time many small businesses learn about the importance of the PPSR is when a debtor has gone into liquidation,' says Michael Brosnahan, Operations Manager – Registries at the Ministry of Economic Development. 'It only costs a few dollars to register a financing statement and it could well be the deciding factor in the future of a business in the case of a debtor becoming insolvent.'
Let's look at an example of the PPSR in action with a company supplying sound systems to retail stores. This company installed a $20,000 sound system in a store. The equipment was supplied under their standard terms of trade – that is, the customer would receive an invoice and payment was due by the 20th of the month. Such arrangements were also known as Romalpa or Retention of Title clauses.
Two days after the sound system was installed, the store was placed into liquidation and the company supplying the sound system sought legal advice to recover the goods. As the company had not registered a financing statement on the PPSR for their security interest they became an unsecured creditor. Secured creditors (those who have registered their security interests on the PPSR) were given a higher priority over unsecured creditors in the liquidation. If the sound system company had registered its security interest on the PPSR, they may have been able to recover the goods or money owed in the liquidation.
Since its inception 10 years ago, the PPSR has seen 65,000 secured parties (or creditors) register 5.7 million financing statements over a range of personal property. Personalproperty interests that can be registered on the PPSR include interests in equipment, hire purchase agreements, livestock, machines, money, and motor vehicles – but exclude land and large ships.
Note: This article is not intended to provide legal advice. The Companies Office recommends discussing your security interests with your lawyer or accountant.
Mobile Business Toolbox helps new businesses grow
The Mobile Business Toolbox from Business.govt.nz is designed to help you start, manage, and grow your business. It doesn't matter if you haven't started trading yet or if you have been running your business for a few years – the toolbox contains a range of tools designed to ensure your business has a healthy future ahead.
Summarised from Business.govt.nz's 'Business Insider', May 2012.