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UNCLAIMED PROPERTY FOCUS is a blog written by and for UPPO members, featuring diverse perspectives and insights from unclaimed property practitioners across the U.S. and Canada. We welcome your submissions to Unclaimed Property Focus. Please contact Tim Dressen via with any questions about submitting a blog post for consideration and refer to our editorial guidelines when writing your blog post. Disclaimer: Information and/or comments to this blog is not intended as a substitute for legal advice on compliance or reporting requirements.


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Unclaimed Property Best Practices for Accounts Receivable

Posted By Administration, Thursday, October 17, 2019

Unclaimed property compliance often begins with the accounts receivable department. Regardless of a company’s industry, AR is a common source of potential unclaimed property via credit memos, overpayments, duplicate payments, customer account adjustments, unidentified remittances, accounting errors, promotional credits and discounts, product returns and write-offs. 


AR departments can reduce their unclaimed property risk by implementing several best practices.


Establish written policies and procedures to ensure that unclaimed credit balances are addressed on a regular basis.


Ensure that account receivable duties are segregated to discourage fraudulent activity. No single individual should have control over adding a customer plus the ability to generate credit memos. This reduces opportunities for an employee to create a fictitious customer and issue a credit to that person. 

“It is important to monitor employees’ roles, understand what each role has the ability and access to do, and make sure that there is not crossover that might lead to bad actions,” said Colleen D’Eramo, corporate service specialist with Owens Corning, during a recent UPPO webinar.


Update last activity dates to accurately reflect current activity. Maintaining an ongoing relationship with a customer reduces the likelihood of an account becoming dormant. Recording accurate last activity dates is necessary to flag accounts at risk of generating unclaimed property and demonstrates proof of ongoing relationships with customers in the event of an audit. 


Follow up on credit balances as they are created. Contact customers to ask whether they want the credit offset against the next billing cycle or refunded via a check. 

“Customers are busy with their day-to-day operations, and credits can be easily forgotten,” said D’Eramo. “If you’re waiting for them to contact you about the credit, it may not happen. The longer credits linger, the more challenging it can be to take care of them because of changing roles and difficulty tracking down the transaction history.”

Include credit balances on all invoices. This practice reminds customers of credits they may otherwise forget and helps demonstrate you are making customers aware of their credit balances in the event of an audit. 


Establish a procedure to automatically generate correspondence with customers with outstanding credit balances. Routinely generating a report that flags customers with credit balances of two years or longer, for example, can help you reach out before accounts have to be reported as unclaimed.


Include outstanding credit balances in standard due diligence communications. Much like including balances on invoices, this procedure reminds customers of their credits so they can be applied or refunded rather than reported as unclaimed.


Implementing these procedures, AR departments have less liability to worry about as accounts age. The goal is to reduce the amount of time credits remain on the books and, ultimately, eliminating the need to consider them for unclaimed property reporting. 



Tags:  accounts receivable  best practices 

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