How to register on the PPSR, and whether it is worth it

To register on the PPSR, you register a financing statement online that names your customer exactly and describes what your security covers. It costs $14 + GST ($16.10) and lasts up to five years. You need your customer’s agreement first, usually in signed terms of trade or a general security agreement.

If the register is new to you, start with the PPSR explained, which covers what it is, the three ways a business can use it, and the timing rule. This page is about doing it, getting it right, keeping it right, and deciding whether it is worth it for the customer in front of you.

Before you register

Three things need to be in place first.

• Your customer’s agreement. A registration records a security interest. It does not create one. The security comes from an agreement your customer has signed: a security clause in your terms of trade for the goods you supply, or a general security agreement for wider cover.
• Their exact legal details. For a company, that means its registered name and NZ Business Number, which the PPSR requires for most organisations. For a sole trader, their full name and date of birth. Your credit application is where these should be collected. Your agreements only protect you if they are held with the correct legal entity.
• What it will cover. Security over the goods you supply is described item by item or by type. Security over everything the business owns is registered as “all present and after acquired personal property”, and that is what a general security agreement supports.

How to register, step by step

1. Set up an online services account on the PPSR, logging in with RealMe, and create a secured party group. That group is your business as it appears on the register.
2. Create a financing statement. The expiry date is set to five years unless you choose a shorter term.
3. Add the debtor, which is your customer. For a company, use the organisation lookup, which fills in the name, company number and NZBN for you.
4. Add the collateral: choose the type, then describe it. For a vehicle or machine, enter every number you have.
5. Review it, register it, and pay the $14 + GST fee.
6. Keep the email with your financing statement PIN. You need it to change, renew or remove the registration later.

A draft can be saved for up to 30 days, but it has no legal effect until it is registered. Once it is, the register emails you a verification statement. Your customer is entitled to a copy within 15 working days unless they have agreed in writing that they do not need one, and most terms of trade include that agreement.

When to register

Make it part of opening the account, so it is done before the first delivery. For goods you supply, the time you register decides whether you rank ahead of a bank, and the window is short. The timing rule is on the PPSR explained. And as a rule, the earlier you register, the better your place in the queue. The sooner you put it on, the further up the line you are.

After you register: keep it right

• Diary the renewal. A registration lasts up to five years and nobody reminds you. Renew it before it expires, for the same fee. An expired registration can only be restored by the High Court. If a bank has agreed to sit behind you, that agreement does not renew with your registration, so register it again at the same time.
• Update it when your customer changes. A new company name, or a change in who you are dealing with, needs an amendment. A registration against the wrong name may not protect you.
• Remove it when it is finished. When the account is closed and paid, discharge the registration. Your customer can require you to, and it keeps your own list of registrations clean enough to manage.

If a supplier has registered against your business

Search the register using your own company name or NZBN to see what is registered against you. If a registration should not be there, because the account is paid and closed, or it covers property that was never part of the agreement, or there was never an agreement at all, ask the supplier to remove it.

If they do not, you can give them a written demand under section 162 of the Personal Property Securities Act. They then have 15 working days to remove it or get a court order keeping it in place. If they do neither, you can register the change yourself.

If you never registered

You will often hear that a supplier who did not register loses everything when a customer goes into liquidation. That is the Australian rule, and New Zealand law works differently. If your customer signed terms giving you security, that security still counts against the liquidator, and it puts you ahead of the unsecured creditors.

Where an unregistered supplier loses is to anyone who did register security over the same goods. Most businesses that borrow have a bank with security over everything they own, so in practice the bank usually comes first, and what is left for you is often little or nothing. As the register itself puts it, if you have not registered, the property could be sold to pay other creditors who have.

Is it worth it for this customer?

Registering is a decision about risk, and the way to make it is the way a lender would. A bank does not lend first and think about security afterwards. When you supply before you are paid, you are lending, so weigh up the risk on the project before the work starts.

Three questions do most of the work:

• If you were not paid, and this customer went into liquidation, could you absorb the loss?
• If they simply chose not to pay you, with no dispute about the work, would you want more leverage than an invoice?
• If money they had already paid you was clawed back by a liquidator, could you absorb that?

If any answer is no, security deserves a serious place in the conversation. Then weigh that against how likely the customer is to sign. The larger the job, the more reasonable it is to ask.

A plumber owed $200,000 had a security agreement signed and registered it straight away. It changed where they stood while they waited. That story is here.

Talk to us about your security

What sits within your control

The best protection happens before an invoice is ever sent. Security is one part of that. The rest is how much credit you give, and for how long.

Too many New Zealand businesses are lending more than they should, and carrying the risk that comes with it. The biggest players in a market often set the payment terms. Some customers will not sign a security agreement or a personal guarantee. When that happens, the business doing the work is left holding the risk, and that is a problem for businesses right across the country, well beyond subcontractors.

Where you cannot secure a job, structure it so there is less to lose: smaller stages, deposits and progress payments, invoicing promptly, and getting paid faster. Where you can, register as part of taking the customer on, and keep it current for as long as you supply them.

This page is education and commercial insight from our own research and experience, not legal advice. Do your own research, and get legal advice for your own situation.