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Developing a Strategy for Effective Asset Recovery

Posted By Administration, Wednesday, February 6, 2019

Unclaimed property compliance is a necessary, but expensive responsibility for many companies. However, unclaimed property professionals can help offset some of the costs associated with their role by taking on the holder. Seeking and recovering property owed to the company can turn an area that is normally a cost center into a profit center. 

 

Finding and claiming unclaimed property requires a well-planned and systematic effort. Some states publish unclaimed items only when they’re over a certain age or dollar amount, but these thresholds aren’t consistent from state to state. In addition, searchable data excludes a substantial amount of property held by cities, counties and other entities.

 

The complexities associated with a company’s structure and history compound these challenges. Property may not be listed only under the company’s current name. There may be property attached to numerous subsidiaries and other entities with different names, plus additional companies, subsidiaries and entities tied to mergers and acquisitions. Don’t forget about alternate spellings (or misspellings) and acronyms. 

 

Once property is located, recovering it can also prove challenging. Demonstrating that the property rightfully belongs to your company and that you have the authority to claim it carries another set of roadblocks. 

 

So, how should an unclaimed property professional approach this complicated task? Following are a few tips for making the process less cumbersome. 

 

Understand your company 

Having a comprehensive knowledge of your company’s business activities, holdings and history can help clarify the types of unclaimed property it is likely to have. Similarly, knowing the company’s legal names, DBAs, and merger and acquisition history is essential to conducting complete and effective unclaimed property searches. 

 

"To maximize recoveries, you must know your company,” said Kim Sawyer, consultant for PricewaterhouseCoopers. “Understand your M&A history, learn your corporate structure, identify all fictitious and previous names, appreciate your primary business lines and ascertain significant physical locations. Based on that information, create search and source lists. A search list consists of legal entities and fictitious name under which unclaimed property may be found. A source list narrows down where you are going to do these searches, based on clients, vendors and agencies that may owe you a refund.”

 

Build a reference library

Unclaimed property claims frequently require documents that verify the company’s relationship to its subsidiaries and predecessor companies. Maintaining a library of these documents makes the process easier and more efficient. The library should include: merger and acquisition filings, name change and fictitious name filings, an Internal Revenue Service letter containing the tax ID number, and a list of current and past real estate holdings.

 

Typically, the person signing for the unclaimed property must demonstrate the authority to do so. Depending on the holder or agency, proof may be as simple as company bylaws, but in many cases a secretary certificate or other specific documentation will be required. The signatory usually needs to provide a driver’s license for identity verification as well. 

 

“If you’re searching for a predecessor company that no longer exists, you’ll need documentation that the company was 100 percent owned by your company before it dissolved and, in some cases, you may have to legally revive the company before a source may pay out a claim,” Sawyer said. “When dealing with acquisitions, you’ll need to show documentation that your company is entitled to recover property that exists under the predecessor company’s name. Maintain these documents in an organized fashion because you’ll have to access them repeatedly.”

 

Get organized

A well-designed unclaimed property recovery system includes a thorough tracking document or database containing detailed, up-to-date information about searches, data requests and submitted claims. It should include property IDs, amounts, owner names and addresses, contact names and phone numbers, and scheduled follow-up dates.

 

Exercise care with third parties

If your company decides to seek assistance from a third-party specialist, perform due diligence to ensure you’re dealing with a reputable firm. Make sure you have a detailed explanation of the fee structure before signing any agreements. 

 

“It’s important to conduct background checks when considering a relationship with a third-party vendor,” said Donna Greenhalgh, unclaimed property supervisor with AT&T. “Seeking recommendations and feedback from other departments within your company may also be beneficial, since they may be using vendors that perform services for other purposes, such as tax services or audit support. Checking to see if they are UPPO members is also another worthwhile step.” 

 

Join UPPO for an in-depth look at recovering unclaimed property during the Recovering Assets for Your Company webinar at 1 p.m. EST on Feb. 13. Presenters Kim Sawyer and Donna Greenhalgh will provide insight and practical tips to help unclaimed property professionals find and recovery assets for their companies. Register today

Tags:  asset recovery 

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