The PPSR explained: why it matters when a customer goes under

The PPSR — Personal Property Securities Register — is one of those bits of New Zealand commercial law that everyone has vaguely heard of and almost no one really understands. It quietly runs in the background of half the B2B trade in this country, and when it bites, it bites hard.

Here's what it is, why it matters when a customer's business fails, and what happens if you've ignored it.

What the PPSR actually is

The PPSR is a public, online register run by the New Zealand Companies Office. It records security interests in personal property — that is, who has a legal claim over what.

"Personal property" in this context means almost anything other than land. Stock you've sold to a customer on credit. Equipment you've leased to a contractor. Vehicles under finance. Inventory used as security for a loan. Receivables. The lot.

If you have a security interest in someone else's property — for example, a retention-of-title clause in your standard terms saying "the goods stay ours until paid for" — the PPSR is where you formally record that fact, in a way that the rest of the world (banks, insolvency practitioners, other suppliers) is legally taken to know about.

Why it matters: the day a customer goes bust

Here's where the rubber hits the road. When a customer enters liquidation, receivership, or no-asset procedure, every supplier they owe money to becomes an unsecured creditor — at the back of the queue, and usually paid cents on the dollar (often zero).

But if you have a registered, perfected security interest in goods you supplied, you can claim those specific goods back, ahead of unsecured creditors, ahead of (in many cases) even the bank's general security agreement. That's the difference between writing off the debt and walking out with most of your stock.

The catch: you only get that priority if you registered correctly, and on time.

Who actually needs to register?

You should be on the PPSR if any of these apply:

• You sell goods on credit terms with a retention-of-title (Romalpa) clause
• You hire, lease, or supply equipment for a term of more than a year
• You provide consigned stock
• You finance another business's equipment, vehicles, or inventory
• You take an assignment over receivables (this is what we do when we factor invoices)
• Your trading terms include any kind of security or charge over a customer's assets

If your business is purely service-based with no physical goods supplied on credit and no leased equipment, the PPSR is largely irrelevant to you — though it can still be useful for protecting deposits or work-in-progress in some situations.

How registration works

Registration itself is quick and cheap. The Companies Office charges a small fee (currently around $16 per registration, with discounts for bulk filers), and the register is online. The form is called a financing statement, and it captures:

1. Who you are (the secured party)
2. Who the customer is (the debtor)
3. What kind of property is covered (specific items, or general categories like "all present and after-acquired property" — known as an AllPAAP)
4. How long the registration lasts (you choose: 1 year, 5 years, infinity, etc.)

Once registered, that financing statement is searchable by anyone — and that public visibility is exactly what gives you priority over later, unregistered claims.

The mistakes we see most often

1. Never registering at all

The most common mistake. Owners assume their retention-of-title clause does the work. It doesn't — the clause creates the security interest, but registration is what makes it effective against third parties. Unregistered security is almost worthless when liquidation hits.

2. Registering against the wrong entity

Customers operate through holding companies, trading subsidiaries, partnerships, and trusts. Registering against the wrong legal entity is the same as not registering at all. Always check the IRD/NZBN number — not just the trading name.

3. Letting registrations lapse

If you register for five years and don't renew, your security drops off the register. We've seen suppliers find out their registration expired six months before a customer collapsed.

4. Forgetting to register before the goods are delivered

Under the Personal Property Securities Act, a "purchase money security interest" (PMSI) needs to be registered before the goods are delivered (or within a short grace period) to keep its super-priority status. Late registration can cost you the priority you thought you had.

5. Not searching the register before extending credit

The register cuts both ways. Before you extend significant credit to a new customer, search the PPSR to see who else already has security over their assets. If their bank has an AllPAAP and three other suppliers are queued ahead of you, that tells you something about the credit risk.

How we handle the PPSR for our clients

If you're using our factoring or working capital facility, we register on the PPSR ourselves to perfect our security in the assigned receivables. That part's our job, not yours.

Where it matters for you is on the goods side — the stock or services you've sold to your own customers. Our TradeSafer service includes registering and maintaining your PPSR positions against your customers, monitoring for changes (e.g. customer entity changes), and renewing before expiry. For most SMEs, that's enough to convert the PPSR from "thing I keep meaning to look at" into "handled."

The bottom line

The PPSR is one of those quiet pieces of NZ commercial infrastructure that sits invisible until the day you need it — and then it makes the difference between recovering your stock and losing six figures. If you're selling on credit and you don't currently register, you've effectively got an uninsured business: it works fine right up until it doesn't.

Five minutes of admin per customer is the cost. Six-figure write-offs is the alternative.