Register It or Risk It: Why the PPSR Matters for Your Business

Tuesday 22 April, 2025

Protecting your Rights

If you are: 

• selling goods on credit;
• leasing or hiring goods to customers;
• lending money; or
• buying goods;

you want to protect your rights (known as security interests) in those goods and any amounts owing to you.  That’s where the Personal Property Securities Register (PPSR) comes in.

What is the PPSR?

The PPSR serves as an online noticeboard recording and establishing the priority of security interests in personal property (i.e. goods, excluding land, buildings, and large ships).   

The relevance of the PPSR is not limited to big lenders providing business loans or other finance. On the contrary, it is of critical importance to any business providing goods on credit, or for lease or hire, to New Zealand customers.   

PPSR Protecting Suppliers 

The sad reality is that thousands of New Zealand businesses fail every year. There is a common misconception that if you provide goods to a customer on credit (or for lease or hire), and that business then fails, you have first right to get your goods back. Particularly if you have terms of trade that contain a “retention of title” clause, stating that you retain ownership in the goods until fully paid. That is not the case! 

It is not enough to have an ownership interest in goods which have been provided to a customer who then fails to pay. This is because more than one person can have an interest in the same goods. For example, if a customer has (whether before or after you provided the goods on credit) borrowed money from a third party and provided that lender with security over all of the customer’s business assets as security for payment, both that lender and you as the supplier of goods on credit will have a security interest over your goods.  

If you provide goods on credit, or goods for lease or hire, registration of your interest on the PPSR is essential to have any realistic chance of getting any of your goods or their value back if a customer’s business collapses. If you have not registered your interest, secured creditors will have first right over your goods in priority to you. So, the lenders will get any money available on the liquidation to satisfy their secured debt, including proceeds from selling your goods, and you may well miss out on any recovery! 

Registration:

• provides notice to third parties of your interest in the goods; 
• establishes priority between competing security interests in the same goods; and
• increases your chances of recovering your goods or their value if a customer defaults and other creditors have security over the customer’s assets. 

PPSR Protecting Buyers 

The PPSR can be used to check if any goods you want to buy have any associated debt or obligation.   

If a third party has a registered security interest over the goods you want to purchase, and that interest is not discharged before your purchase, then that person may well have the right to take those goods from you, even if you have paid full price to the seller. You do not want a piece of pre-owned machinery repossessed because the previous owner did not keep up with their payments and didn’t tell you that!

PPSR Protecting Lenders

The PPSR can be used to check if the assets a borrower has offered as security for repayment have already been given as security to any other lender.  

Any prior registration will take first priority unless you, the customer, and that third party lender, negotiate a different priority position. 

The Effect of Registration - Priority

Generally, priority will be given to the person who registers their security interests first.  So, it is important to protect the priority of your interest by registering it as soon as you can.

One important exception to the “first in time” priority rule is the supply of goods on credit, which is called a purchase money security interest or PMSI. Provided a supplier actually registers their interest with the PPSR (again, registration is a must!), a PMSI gives the supplier first priority in respect of any goods they have supplied and any proceeds from the sale of those goods. That supplier’s interest will take priority over all other secured creditors (e.g. financiers) of the customer, even if that secured creditor had registered a general security interest over all of the customer’s assets of the debtor before the goods were supplied.  

Registration on the PPSR

The registration process is straightforward. Once you have set up an online account and your details as a secured party, you can register the security interests you have with each of your customers for a small fee, registering a separate financing statement for each. Information on setting up an account and using the PPSR is available on the New Zealand Companies Office website. 

It is important to register your security interest correctly, and to maintain registrations for ongoing interests.  Incorrect information (for example, errors in the customer’s name, company number, or serial numbers of goods, or an incorrect description of the secured goods), or the expiry of a financing statement, may result in the loss of your priority.  

Tompkins Wake are here to help

Using the PPSR places your business in the best possible position if your customer defaults. We work regularly with the PPSR process and we are here to help: 

• with any questions about how to protect your interests; 
• assisting with your establishment as a secured party and the registration of your security interests; 
• with managing your expiring financing statements, or the discharge of financial statements when you cease providing goods to a customer; and 
• completing searches when you are looking to buy goods, make a business acquisition, or lend money.  

Please get in touch with one of our experts below if you have any questions. Our thanks to Summer Intern Ashley Zhuang for her contribution to this article.