Does your business sell goods?  Do you sometimes allow your customers to take those goods from your business before the customer has fully paid for the goods?  If yes, then this article is for you.


In an earlier blog (8 Tips for Getting Paid and Managing the Cash Squeeze ) we talked about the importance of ‘retention of title’ arrangements in managing your business’ credit risks and we mentioned that there are steps that you need to take to make sure those arrangements are enforceable.  Today we’ll go through some of those steps.


What do we mean by ‘retention of title’?

If your business doesn’t get paid before providing goods to its customers, then it is at risk of loss if the customer later fails to pay for the goods.  A retention of title arrangement is like keeping the goods on a leash.  It means that the business remains the true owner of the goods until they are paid for in full, and if a customer fails to pay for the goods once supplied, the business can recover the goods from the customer.

In the past, it was possible to enforce retention of title arrangements by simply including a particular type of clause (commonly known as a retention of title clause or “Romalpa” clause) in your trading terms.  The clause would usually say something like this:

“The Seller retains ownership in the Goods until all accounts owed by the Buyer to the Seller are fully paid.”


What’s new since January 2012?

This all changed when the Personal Property Securities Act commenced operation on 30 January 2012.  It is no longer enough to include a retention of title clause in your trading terms.  Now, you need to take extra steps to get the full benefit of a retention of title arrangement.  If you don’t take those extra steps, you run the risk of not getting paid for the goods and not being able to recover the goods from the customer.  Depending on the value of goods that you supply on a ‘take now, pay later’ basis, this could be a significant risk for your business.


What are the steps?

The biggest change is that, in order to get the full benefit of a retention of title arrangement, you need to register your interest in the goods on the Personal Property Securities Register (“the PPS Register”).   The PPS Register is a national, online, publicly available register located at  We’ve previously talked about the PPS Register in an earlier blog.

There are strict deadlines by which your interest must be registered.  Depending on the type of goods you supply, the relevant deadline could be either:

  • Before you supply the goods to your customer; or
  • Within 15 business days of supplying goods to the customer.


Where do I start?

If you are relying on retention of title arrangements in your business it is very important that you make sure the processes you have in place are suitable for your particular needs.  Although you can find some helpful general resources on the PPS Register website , this really is an area where you are likely to need some specific professional legal advice.

In providing assistance, your legal adviser may need to:


1.  Ask you questions about your business

This might include questions about:

  • The industry in which you operate;
  • The type and value of goods that are supplied to customers on a ‘take now, pay later’ basis;
  • The nature of your customer relationships;
  • The processes that your business uses to identify and assess credit risks and conduct background checks on customers; and
  • Your business’ accounts receivable and debt collection processes.


2. Check your Trading Terms and Credit Applications

If you have trading terms and credit applications or any other documents that you ask your customers to sign or acknowledge before placing an order with your business, you should gather these documents together to provide to your legal adviser.


3. Complete registrations on the PPSR

If your business would benefit from using the PPSR, then your legal adviser should be able to help you to set up your business as a ‘Secured Party’ on the PPSR.  They should also be able to assist you to register any applicable ‘security interests’ as they arise to make sure that goods you have supplied to certain customers can be recovered if the customer fails to pay for them.


4. Provide you with Practical Guidance

Using the PPS Register for retention of title arrangements is an ongoing process that will require you to implement new procedures to make sure your business is getting the full benefit of the arrangements.  Your legal adviser should be able to provide you with some practical guidance about:

  • How to use the PPSR;
  • The details that need to be included in new PPS registrations;
  • How to monitor registrations; and
  • How to enforce ‘retention of title’ arrangements in the event that a customer fails to pay for goods that you have supplied.

This might involve providing training to your accounts and sales department and providing you with recommended policies and checklists.  The level of assistance required will depend on your particular circumstances.



We can help you make sure that goods you supply on a ‘take now, pay later’ basis are kept on a leash until they are paid for in full.  If you’d like some assistance in this area, please contact our office.



For further information, please contact the author.

This article is posted in Adelaide, South Australia by Tri-meridian Corporate & Commercial Law and is intended to be used as a guide only. It is not, and is not intended to be, advice on any specific matter. We do not accept responsibility for any acts or omissions resulting from reliance upon the content of this article. Before acting on the basis of any material in this article, we recommend that you consult your professional adviser.