By Paul MacCready, Customer Success
September 4, 2020
September 4, 2020
In the midst of the economic downturn caused by Covid-19, many companies are desperate for creative solutions to either drive new revenue or reduce existing costs. With that in mind, we put together the following list:
NEW INCOME SOURCES
Unclaimed property (“UP”) is a two-way street. While your company has been diligently reporting UP, it is possible that funds have been getting reported on your company’s behalf. This potential is magnified if your company has a history of acquisitions. In addition to the traditional paths (state UP lists), funds can also be found with counties, bankruptcy courts and even other countries (Canada, most notably).
Options: Search your company or engage a third-party firm that will do the work on a contingency basis. Be prepared to invest considerable time and effort and don’t presume all states will be the same in terms of process nor timeliness.
Cautions: Claims as an owner can be a red flag for a state to look at your firm’s reporting history as a holder. We recommend you be certain about your compliance prior to making any claims, but holders with a solid history of compliance should certainly consider this route.
If the majority of your reporting is for any type of account (banking, credit union or shareholder-related), Sovos Keane can leverage its ability to find people to your benefit. Sometimes the only thing you need to retain an account and avoid escheat is contact, but sometimes you need more.
Options: The key challenge we hear in this area is the traditional “silo” problem in American business. Meaning, a service has to impact your budget to get funds approved even if the impact to the business overall is positive. If this is the case for you, we recommend identifying the area that will benefit and open a dialogue about the expense falling under their budget.
For a host of reasons, a company’s UP inventory can be a dumping ground of misunderstandings. It can contain items that are not true liabilities. Examples are: duplicate payments, invoice mistakes, or any price changes that generate an unreconciled overpayment. Income opportunities could be hiding in your UP inventory.
Options: It is certainly possible to do the work internally, but keep in mind the item has already been passed into inventory by the area that was in the best position to recognize the mistake. Hence, this effort will likely take more resources than expected as both internal research AND external outreach will be needed. Keane Owner Location has a unit that will do this work purely on a success-based approach (i.e., contingency where no success = no fee).
Cautions: Be certain that whatever resource you use, internal or external, you obtain “audit-worthy” documentation. Should your reversals ever be investigated, you want source documentation speaking specifically to the items in question; avoid settling for general statements that “nothing is owed.”
Reduce Transfer Agent Fees
For companies with shareholders, it is possible that your monthly burden of transfer agent fees includes some waste. Have Keane Owner Location conduct a mortality analysis and outreach to purge your list. Owner Location can also conduct an odd lot program to achieve similar results.
Penalties & Interest
This potential only applies to holders that have systemic issues causing items to be reported late on a recurring basis. There are five states at the time of this publication confirmed to auto-assess interest to late items (on timely reports) and at least two more that have announced intent to do so.
Options: Companies with recurring problems generally have the same source: business units that either do not have policies and procedures or that have them but aren’t following them. If so, one way to get their attention is to announce that assessments will be charged back to their source but, simultaneously, offer assistance to get records caught up and procedures in place. We can assist with the short-term issue of the late items and/or with the long-term challenge of getting that sub unit’s procedures updated.
Cautions: Ongoing reporting of late items is not just costly in terms of auto-assessed interest, it can lead to a multi-state audit.
Stop Wasting Resources by Chasing False Positives
For companies that are required to conduct Death Master File (DMF) comparisons or those that conduct such comparisons for internal purposes, we challenge you to a test. Let us conduct our full mortality analysis and compare it to yours. We believe you will find two differences:
- More deaths – because Keane Owner Location is likely using a broader set of data
- Fewer false positives – because Keane Owner Location doesn’t just produce possible matches, we validate all matches to save your resources, and precious internal labor hours
Let us supplement your existing efforts so you can free up resources. For those interested in going to the extreme, our “White Glove” approach means a Keane Owner Location team stepping in where you provide mostly oversight. A custom solution can be built that takes over as much or as little of your UP process as you like, including interfacing v with sub-units about data collection.
Some states view UP as a consumer protection act and are not interested in getting in the middle of your transactions with other businesses. Hence, the “business-to-business” (B2B) exemptions you may have heard about over time. Like with everything else that is UP, the guidelines vary by state even in what constitutes a “business.”
Options: Navigate the waters yourself or get help. We can analyze your inventory and provide guidance. Fees apply only if you are successful in reducing your reporting obligation.
Cautions: The wording is definitively and categorically different across the states that make exemptions available. If you attempt to tackle this analysis internally, please assign resources to review the requirements AND to stay UP TO DATE with them. Please also make sure that the work that takes place is comprehensive enough to withstand an audit. For example, some states require that an “ongoing business relationship” be present – who will research it and, more importantly, how and where will they document their proof?
Aggressive Pre-Escheat Cleanup
For many holders a state of limbo exists from when an item reaches 180 days to the moment of dormancy and due diligence. During that time, contact opportunities dwindle. Escheat happens and it happens mostly because of timing. We recommend acting more aggressively and earlier.
Option: Install an aggressive campaign starting when items are no longer subject to internal review, generally when they aged to 365 days (one year) but as early as 180 days. If internal resources are not available, Keane Owner Location creates a custom pre-escheat location (PEL) program that leverages our research and outreach capabilities. Pricing is on a success basis – no success, no fee.