Veda reveals SMEs are at risk of significant financial losses due to lack of awareness and understanding of the Personal Properties Security Register
At a recent industry forum hosted by Veda, Asia-Pacific’s leading provider of consumer and commercial data intelligence and insights, industry stakeholders claimed Australian small businesses are at risk of significant financial losses due to a lack of awareness and understanding of the Personal Properties Security Register (PPSR).
Speaking recently at Veda’s PPSR 12 Months in Review, 12 Months Ahead Forum, representatives from Veda, Commonwealth Bank, ANZ Bank, Gadens Lawyers, the Australian Institute of Credit Management and Insolvency and Trustee Service Australia urged Australia’s SME sector to begin using the PPSR or run the risk of learning the hard way when suppliers get into financial difficulty.
Carol Chris, Veda’s General Manager of Commercial and Property Solutions revealed that just 11 per cent of Australian SME’s are using the PPSR database to search for and register security interests.
A lack of general awareness on what the PPSR is, combined with a lack of knowledge of how the system operates, were cited as the main barriers to adoption within the SME sector. Other factors which are contributing to the limited use of the system include a prevalence of conflicting advice from parts of the legal sector due to a lack of detailed understanding.
While big banks and larger businesses have adapted well, smaller businesses are not protecting their interests adequately. The panel shared insights that some SME’s continue to rely on handshakes and verbal agreements in place of formal protection measures.
By failing to register security interests on the PPSR, SME’s risk dropping down the pecking order behind banks and big business when trying to recover their debt in the event of their debtor going into liquidation.
While acknowledging that the PPSR system is complex, the panel advocated for the legal and financial industries to take a proactive approach to educating the SME sector and the broader market on the benefits of the PPSR.
As part of their PPSR offering, Veda develops bespoke solutions that allow businesses to quickly and easily search and upload entries to the PPSR, saving them both time and money by removing the need for businesses to manage this process in-house.
Source: Veda Advantage Press Release