Unclaimed property tends to lie below the surface within a company’s day-to-day operations—until it doesn’t. And then suddenly, because things have gone wrong, abandoned and unclaimed property can become highly visible.
It takes confident action to keep unclaimed property from being noticed
In many organizations, unclaimed property has been a second thought for a number of years, and coming into compliance can require a substantial investment of time and resources. The situation is even more challenging if a company doesn’t have in-house staff experienced in unclaimed property management.
One of the greatest challenges is managing surges of escheatment work that can interfere with other tasks. Every state has different laws, and they change frequently. It takes time to keep up with the changes and follow them. Some states are very aggressive in enforcement (often with help from third-party contingent-fee auditors).
It’s not unusual for companies to believe they should do as little as possible to reduce the footprint of unclaimed property, but this is a situation in which the less you do, the greater potentially negative impact you risk. If past-due amounts are eventually discovered and assessed during an audit, penalties and interest can add up significantly.
Work now to reduce unclaimed property impact later
No matter what actions are taken, it’s not possible to make unclaimed property completely invisible. However, it is highly possible to overcome the challenges of escheatment and reduce its negative impacts. The key is to put carefully-thought-out policies and processes into place as soon as possible. Don’t let unclaimed property happen to you. Take control of it and mold it into a sleek, efficient process you dispatch with confidence and skill.
To identify the best ways to reduce the impact of unclaimed property in your organization, train your escheatment team to focus on unclaimed property through the lenses of cost and audit. Thinking of each task in these terms will help you avoid wasted time and identify high-payoff activities. Ask yourself: How much will a course of action cost, and how much will NOT taking action cost? How likely is your course of action to lead to an audit and, if you are audited, how much will your action or inaction cost in terms of dollars, time and reputation? Could your ultimate costs be reduced by engaging the services of professional unclaimed property specialists?
To help you and your team pull the pieces of unclaimed property within your organization into a tight process, follow these principles:
Principle #1: Organize data efficiently according to unclaimed property industry best practices and keep records as complete and accurate as possible to support agile movement through files and processes related to escheatment — as well as providing positive support in the event of an audit.
Principle #2: Identify underlying causes of escheatment-related problems and carefully remediate them to keep from having to repeatedly deal with the same issues during due diligence and reporting.
Principle #3: For each action you consider in management of unclaimed property, complete a risk/cost/benefit analysis, so you can do the right thing for your company and avoid under-complying or over-complying.
Principle #4: Designate efficient lines of communication and keep them open. Don’t let issues sit idle.
Principle #5: Create written unclaimed property policies and procedures that document best practices. Revisit and continually update them as company conditions and statute changes warrant.
In other words, make it a priority to reduce the impact of unclaimed property by forging good habits. As with any new process, the longer you work with it, the more streamlined it will become. The closer escheatment comes to being invisible, the fewer negative impacts you will see upon your company.
With practice, unclaimed property processes will become second nature. Even if you or other key escheatment personnel leave the company, your written procedures will remain, so new employees don’t have to reinvent the wheel.
Throughout this process, you and your team members are likely to become your organization’s resident go-to players in the unclaimed property game. Don’t be surprised, once you have things running smoothly, if no one notices your work. That’s the point.Conversely, when things are working well, no one notices. It seems counterintuitive, and it’s too bad that good work in this area doesn’t bring kudos, but that’s exactly what the goal of unclaimed property professionals should be—to manage this business function so well, no one notices.