Background

Since late 2018, many EDX customers for the first time have undertaken the somewhat complex process of renewing registrations on the PPSR. As most regos were typically for 7 years, then many regos first began expiring on 30 January 2019. If a rego is allowed to lapse because it has not been renewed, then the ramifications are serious. A lapsed rego cannot be restored. It will simply disappear, never to be seen again.

You may only become aware of it when a customer has become insolvent and a search of the PPSR reveals that your rego no longer exits.

Performing a replacement rego will result in a new start date. Consequently, you will not receive PPSR protection for past sales. Even future sales will not receive protection for another 6 months if you do not reissue your trading terms.

On the other hand, you shouldn't renew an already invalid rego, or a rego with a customer with whom you no longer trade.

How to best renew your registrations has been a steep learning curve. Many customers kicked off their registrations with a large bulk upload. So, the first renewals were invariably the most complex. However, once over that hurdle, subsequent regos can then often be renewed 'one by one' each month.

The aim of this newsletter is to reflect upon the lessons learnt so far from this process. Of course, the complexities will vary upon the numbers to be renewed and the timing of their expiry. Hopefully, these lessons will assist you when preparing for your renewals.

Lesson 1 – Allow plenty of time

As a rule of thumb, you should start planning this process at least 6 months in advance. The complexities of the issues encountered, coupled with allowing for staff being available, should not be underestimated.

Lesson 2 - Don't renew Transitional regos if you are relying upon post 30 Jan 2012 trading terms

Virtually all of our customers have at some time since the introduction of the PPSR on 30 January 2012, issued new trading terms to all of their customers. Reasons range from making their terms PPSR Best Practice to simply updating them for amendments for say, latest Privacy Laws. Whatever the reason, the moment new terms were issued, then your Transitional regos became obsolete for future transactions. Thereafter, only a non-Transitional rego can provide ongoing protection. So, if you have issued new trading terms, then do not renew your Transitional registrations.

Lesson 3 – Don't renew an already invalid registration. Typically, an incorrect grantor

Probably the steepest learning curve of all has been how to register your customer correctly. The landmark Alleasing v One Steel Manufacturing decision confirmed the critical importance of using the correct identifier for your customer. In that case, a company is required to be registered by its ACN and not by its ABN. Given the complexities of the PPSR legislation, you could be forgiven for having made such a mistake early in the registration process.

Many regos were performed when the PPSR was in its infancy. It is not surprising therefore that many regos contain this fatal flaw.

The solution is to take the 7-year anniversary as the ideal opportunity for conducting a grantor health check of all your registrations, not just the ones up for renewal. We perform such health checks regularly. They identify any potential grantor anomalies which can invalidate a rego. Many such errors can often be corrected by us in bulk at the 'push of a button'.

Lesson 4 – Don't renew a largely worthless registration – the PMSI

Typically, another error was not to select the PMSI (Super priority). In the early years of the PPSR particularly, this occurred frequently. The only solution is to perform a replacement rego.

Are there other errors that can be identified and corrected before you renew?

Lesson 5 – Are you sure every selected customer has a non-Transitional rego?

It was common to discover that many customers had 'slipped through the system' and had simply not received any type of registration. Or they had only received a Transitional rego in the mistaken belief that this was sufficient.

A comparison between your Accounts Receivable register and the grantors listed on each rego will identify any missing customers.

Lesson 6 – Only renew active customers

The above review will also list those registrations that do not need to be renewed as you are no longer trading with them.

How can EDX help?

All of the above tasks can be performed by EDX utilising our software and experience. In addition to this, our ESIS software provides a 120-day warning as to when a rego is due to expire. For our clients, reviewing the 'due to expire' button in ESIS has become a standard monthly registration procedure.

Should a bulk renewal or upload be required, then we can perform this for you as well.

Any questions, please feel free to contact me.

Andrew McLellan
Director
andrewm@edxppsr.com.au
0417 009 924

Level 9
697 Collins St
Docklands Vic 3008

The purpose of our newsletter is to keep clients up to date with important developments in the practical operation of the PPSA. Rather than committing to a regular newsletter and sometimes struggling for relevant content – we only publish when we believe there is something important to say

DISCLAIMER: This newsletter is provided for general guidance only and should not be construed as legal or professional advice.