With fall reporting deadlines right around the corner for Finance, you may want to take a second look at your company’s process.
Unclaimed property (UP) is a growing area of interest for states, say the corporate finance and compliance experts at Duff & Phelps. Aside from taxes, UP is another key way states can bring in extra revenue, they explain. The accounting and consulting pros at Baker Tilly agree, saying states are now taking more aggressive tactics to capture UP and use it as a major revenue generator.
Knowing that, you’ll want to make sure your department’s prepped for a successful fall reporting cycle. Ask these four questions to improve your UP process for this year and all the years to come:
1. Did we account for all types?
For most companies, outstanding A/P payments make up the bulk of their UP. But you know there are other types (found in various departments), like:
- commissions and bonuses
- stocks and bonds
- rebates
- workers’ compensation
- uncashed flexible spending, and
- A/R credits.
To ensure nothing goes unaccounted for, have your A/P staff check in with every department that handles anything that could lead to a potential UP liability.
Staffers can save time and streamline this step by making a template to distribute to these departments, advises Duff & Phelps. They can use an Excel or other file that has unique fields for relevant data (e.g., property type, owner, state).
2. Where do errors lie?
When it’s time to report UP, tiny mistakes have been known to slip by even the best finance pros. Some of the most common errors, according to Duff & Phelps, are:
- incorrect use of UP codes (and in turn, incorrect dormancy periods)
- incomplete owner information
- data placed in the wrong fields
- duplicate payments for one report
- payments without reports (or reports without payments), and
- reports sent only to the state of incorporation.
Have finance supervisors go over these errors (and other common ones they may have noticed over the years) with staffers. That way, everyone will be on the lookout for them as they file those final reports.
3. Are we ready to submit?
You know that when it comes to UP, states run by their own rules. No two processes are exactly alike, and that includes submission method. Some states want you to upload your report online; others want an encrypted diskette or a paper report.
This is the final step to getting those reports out on time, making it easy to overlook until the last minute. Instead, have your team research and record how to submit UP for each state you have liabilities with early on. Then that final step can go off without a hitch.
4. What’s our ideal process?
Managing UP is no small task, so it’s important to think big picture about what kind of process fits your company. The three main paths to consider are:
- Manual: For small companies that don’t do business in many states, a manual process could work.
- Automated: Software’s a good choice for those that want to keep control of internal processes, but automate some tasks (e.g., tracking state rules and creating due diligence letters).
- Outsourced: Companies that would like to ensure accuracy without sacrificing staff output can shift UP tasks to a third-party firm.