Over the past three years, both the Australian federal and state governments have been working behind the scenes to modernise laws relating to the registration of personal property securities by amalgamating a multitude of national and state-based securities registers, such as Register of Encumbered Vehicles (REVS), into one national system.

Suncorp's Mark Harper discusses the implications of PPSR on SMEs and how they can prepare for these changes.

Personal property is any form of property other than land, buildings or fixtures which form a part of that land. This can include tangibles such as cars, art, machinery and crops, as well as intangibles such as intellectual property and contract rights.

If your business supplies goods to customers on consignment or on finance terms, such as credit or lease arrangements, you may need to register your interest in the goods on PPSR. If you don't, you may lose title to your goods.

Up until the introduction of PPSR, businesses were protected by retention of title claims (also called a Romalpa clause in some jurisdictions). This is a common provision in a contract for the sale of goods, whereby the title to the goods remains vested in the seller until certain obligations (usually payment of the purchase price) are fulfilled by the buyer.

Under PPSR, a retention of title clause will still be valid, but the business supplying the goods must register their interest on the Personal Property Security Register.

If this does not occur then the supplier will have an unperfected (unregistered) security interest which will be capable of being defeated by a perfected (registered) security interest if the buyer grants such an interest to another party.

Many SMEs may be unprepared for PPSR, but it is vital to understand the impacts. The government has set up a comprehensive website here to help inform the community, along with many industry associations publishing material and alerting their members to the changes.

You can view Dun & Bradstreet's guide to PPSR here  and find out more on how the act will affect your business here.

The PPSR reform will take effect from 30 January 2012, so make sure you educate yourself on the implications for you and your business to ensure you're prepared.