By David Rose
Welcome to the October edition of VIN-sight – delivering small business advice to our clients on a regular basis that moves beyond the accounting foundations we already provide and focuses on business strategies that help automate, simplify and advance systems, procedures and profits.
In this issue we will:
- Advise businesses of the rapidly approaching SuperStream deadline;
- Provide some food for thought for those looking to take their first steps on the export ladder;
- Update clients on the changes to the Personal Property Securities Register;
- Highlight some problems with the Personal Property Securities Act that the media have released; and
- Reveal the recent rise in Preferential Payment Claims and what businesses can do to mitigate their risks.
As always, please contact your usual Vincents advisor if you would like more information on any of the issues raised in this issue of VIN-sight.
SuperStream – Are you Compliant?
Forming part of the Federal Government’s ‘Stronger Super’ legislation, SuperStream necessitates the implementation of data and payment standards. Simply put, this means that employers can no longer send paperwork and cheques to super funds; and must instead submit these details electronically via a special ‘gateway’. This ‘gateway’ hub allows the electronic transfer of data and money between super funds and employers.
The goal is to improve the efficiency of the superannuation system, to improve the timeliness of processing of rollovers and contributions and reduce the number of lost accounts and unclaimed monies.
Businesses with 20 or more employees must be compliant from 31st October 2015 and those with 19 or fewer employees must be compliant by 30th June 2016.
Vincents can provide you with a copy of a step by step guide to preparing for SuperStream. Please contact us if you would like a copy or if you require assistance on the implementation of SuperStream.
Expanding your Business through Exporting
Exporting can open a business to new markets, spread risk by reducing dependence on the local market and increase competitiveness. With 38 percent of Australian exporters being small businesses this is an avenue for consideration but there are steps that should be taken prior to taking the export path.
Doing Your Research
Before you export, you need to learn as much as you can about the markets you’re considering and whether your products suit those markets.
The Australian government has an organisation called Austrade, represented in every state capital, which can assist in identifying potential export markets for your business. Each state also has a department to assist in export sales.
Holistic exporting research should also involve some time travelling overseas, meeting people and determining if and how you need to modify your product, at a reasonable cost, to suit the requirements of a particular market. The political environment and stability of the any potential export markets should also be carefully assessed.
The key overseas markets currently identified as growth markets for Australian small businesses include China, New Zealand, USA and India, with education, tourism, agribusiness, professional services (including scientific and technical services) and health care being the industries in demand.
Formulating a Plan
After conducting your research an export strategy plan, should be prepared. . This document should identify the products you would like to export and the markets you’re targeting and should also include the details and outcomes of any market exploration trips you’ve undertaken, your potential partners, distributors, customers, custom requirements in overseas countries and the regulations relative to your products. A detailed financial analysis of the business plan and the funding requirements should be included. This document can then be provided to any potential partners and financiers and will provide them with the assurance that you have considered all aspects of the proposal.
Funding your Initiative
One of the biggest problems most small/medium enterprises have when considering exporting is access to finance. This is caused by the business tending to grow very fast and, in many cases, products need to be developed or modified before export activities can commence (which can be a drain on cash flow).
The Export Finance Insurance Corporation (EFIC) can supply financial assistance for small/medium enterprises to help them into the export market. The process of applying for this assistance requires a number of forms to be completed and can also include a guarantee being issued by the EFIC to your bank in order to facilitate extra facilities for the production of stock that is destined for export markets.
If you would like to have discussions with us relative to the preparation of an export strategy plan, please don’t hesitate to contact your Vincents advisor.
Personal Property Securities Register – Changes
The Personal Property Securities Register (PPSR) is an Australia-wide online register that allows secured parties to give notice of actual or prospective security interests.
The Australian government has recently amended the Personal Property Securities Act (PPSA) to reduce the number of lease transactions deemed to be “PPS leases” so that deemed leases of serial numbered goods for 90 days or more no longer need to be considered a “security interest” and don’t have to be registered on the PPSR.
From 1 October 2015, businesses that lease out serial numbered goods for 90 days or more, but for less than one year, may no longer need to record these transactions on the PPSR. PPS lease rules relating to leases of one year or more, or of an indefinite term, remain unchanged regardless of whether the goods are serial numbered.
It is important to note that these changes are not retrospective.
If you would like to have a discussion with us relative to these changes, or any other item relating to the PPSA, please don’t hesitate to contact us.
Problems with Personal Property Securities Act
A recent media release from Elevating Work Platform Association Australia Inc. has highlighted the ongoing issue under the Personal Property Securities Act (PPSA) and the associated Personal Property Securities Register (PPSR).
The article indicates that “the Australian construction hire companies are losing millions of dollars through the PPSA, which allows creditors to seize rented equipment as part of a liquidated business’ assets.”
“Under the Personal Property Securities Act, hire company assets can be seized by another secured creditor (usually a bank) when in the possession of a liquidated business – ignoring the fact that this equipment is owned by the hire company.”
The spokesman said, “Since the Act was introduced three years ago, it is estimated to have cost the industry tens or even hundreds of millions in lost assets and legal fees, saying nothing of the administrative burden.”
“There is a misconception that the Personal Property Securities Act protects these businesses. On the contrary, it legislates for ownership to be taken away from these companies and handed on a plate to the banks.”
“On top of this, the hire company may still be liable for any monies owed on the assets that have been taken from them.”
If you have any concerns about your potential exposure to the PPSA, please contact your Vincents advisor for a review of your systems.
Preferential Payment Claims Increasing
In challenging times, companies under financial pressure will often request payment arrangements with their creditors with the view to maintaining cash flow and making some headway in reducing the debt. Creditors consenting to these payment arrangements should be aware of the ramifications of accepting the portioned payments (known as preferential payments) if the payee business is placed into Liquidation within six months of receiving the money.
Pursuant to the Corporations Act 2001, a transaction is deemed an unfair preference given by a company to a creditor of the company if, and only if:
(a) the company and the creditor are parties to the transaction (even if someone else is also a party); and
(b) the transaction results in the creditor receiving from the company, in respect of an unsecured debt that the company owes to the creditor, more than the creditor would receive from the company in respect of the debt if the transaction were set aside and the creditor were to prove for the debt in a winding up of the company;
even if the transaction is entered into, is given effect to, or is required to be given effect to, because of an order of an Australian court or a direction by an agency.
One way that this type of claim may be avoided is for a business to register their customer on the PPSR. This requires a Terms of Trade Agreement and a Retention of Title Agreement to have been submitted to and signed by the customer prior to making the necessary registration on the PPSR
If you would like to have a discussion with us relative to the establishment of a due diligence review to protect your business from potential problems associated with the PPSA, please contact your Vincents advisor.
An Important Message
While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.