What can you do if you supply goods on credit and your customer doesn’t pay?

Published by Megan Bawden on October 22, 2010

You have sold $10,000 of goods to a customer on credit, but after 3 months he still hasn’t paid. Then you hear his business is going badly and there is a long line of creditors waiting to be paid. Can you repossess the goods? If the goods have been on-sold, can you do anything to get paid ahead of other creditors?

The short answer is – it depends on how good your terms of trade are and whether or not you have properly registered a security interest over the goods on the Personal Property Securities Register (PPSR).

A carefully worded “retention of title” clause in your terms of trade is the first step, but not enough. You risk losing your right to repossess your goods if you don’t register your security interest. Even worse – if you don’t register your security interest your customer may grant a security interest that gives someone else priority to the goods ahead of you!

As a creditor your best protection is preparation. See your lawyer to talk about your terms of trade and how to use the PPSR to protect your interests in goods you have provided on credit.

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