Debt collecting 101: register a security interest over goods you sell on credit

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When selling goods and services on credit (on a “buy now pay later” basis) you are taking on a huge risk and it is important to do everything you can to get paid. It is a good start to have terms and conditions of trade that allow you to register a security interest over your customer’s assets. It is even better to take that next step and actually register the security interest.

If your customers obtain goods and/or services from you on credit it is a good idea to attach your terms and conditions of trade to your credit application form. All of your customers should sign the credit application form (containing the terms and conditions) before you do any work for them or supply any goods to them. The only instance where you might not need to have your customers sign the credit application form is if they are paying cash at the time you provide the goods and/or services to them. You can send your credit application form to your customers via fax, post or email and have them sign and fax, post or scan and email it back to you.

Those terms and conditions of trade should contain a “PPSR” clause (Personal Property Securities Register). In that clause your customer will give you permission to register a security interest over the asset they are purchasing, or over all their present and after acquired personal property.

Whenever goods are sold on credit, it is prudent for you to register a security interest over those goods. By registering your interest over goods you supply to your customers on credit, you will secure the right to repossess and sell the goods if your customer does not pay you as required.

To register a security interest you will need to go to the official website http://www.ppsr.govt.nz. When registering a security interest over a vehicle, you will need to record the registration number, the vehicle identification number (VIN), the chassis number, the year of manufacture, and the vehicle make and model. Also if the security interest is over parts that have serial numbers you will need to record those details as well.

It is best practice to register a security interest before, or at the same time as, you supply the goods. We appreciate that it can be difficult to register a security interest, especially for the first time, and our business law team will be happy to help you.