A creditor wants security before agreeing to repayments.
The supplier wants security over a working machine
A glazing company asks a supplier to spread overdue trade invoices over several months. The supplier requests security over a cutting machine used on every job. The director believes the machine belongs outright to the company, but the accounts include an old finance balance. Before offering it, the business needs to establish what it owns and whether the proposed arrangement would restrict essential operations.
Assemble the asset and existing-finance evidence
Identify the machine by its actual records, including purchase invoice, serial number, finance documents and any discharge evidence. Ask the accountant to reconcile the old balance rather than treating a zero repayment this month as proof that finance ended.
Give the lawyer the existing and proposed security documents. Ask which interests or consents need checking and whether the company has authority to grant the proposed security. Do not promise the asset is unencumbered before that review.
Explain how the machine supports repayment
List the work that requires the machine and the receipts that depend on completing it. Identify whether maintenance, relocation or replacement is likely during the proposed instalment period.
Ask the adviser how the proposed terms would affect those practical decisions. An arrangement that obstructs an essential replacement could weaken the very income expected to repay the supplier. Keep company-asset questions separate from any additional personal commitment.
Price the arrangement in the operating forecast
Include the instalments, current purchases, machine running costs and any proposed legal or registration costs. Business.gov.au cash-flow guidance supports dating the incoming and outgoing amounts. Security does not create the cash to service the plan.
Test a period of equipment downtime and the cost of a workable alternative. If the payments fail under realistic conditions, review the proposal before using a valuable operating asset to support it.
Document the grant and eventual release
Have the adviser explain the secured obligations, required approvals, default consequences and how release would be confirmed after performance. Retain the reviewed final version and assign responsibility for checking any completion steps.
Do not assume paying the last instalment automatically updates every relevant record. Where the company is in financial distress, obtain insolvency advice before granting new security; consider its wider obligations as well as this supplier request.
Check the asset before offering it for more time
Reconcile ownership and existing finance, then obtain advice on interests and consent.
Test the payments and machine dependence together; retain the agreed terms and release process.
Contact CRP about creditor negotiations and coordinating independent professional advice.