For many businesses, unclaimed properties are out of sight and out of mind, until they become a legal or financial issue. Unclaimed properties can include checks that were never cashed, refunds that weren’t claimed, or dormant customer accounts.
While it may seem like a minor detail, failing to manage these assets properly can lead to penalties, audits, and reputational risk.
Understanding and proactively handling unclaimed property isn’t just about compliance. It’s a smart move for financial health, customer trust, and long-term operational efficiency.
What counts as unclaimed property?
Unclaimed property refers to tangible or intangible assets held by a business that haven’t been claimed by the rightful owner after a specific period of time, known as the dormancy period. This can include:
- Uncashed payroll or vendor checks
- Customer credits or refunds
- Gift cards or rebates
- Dormant bank or escrow accounts
- Stocks and dividends
- Security deposits
Each state has its own laws governing how and when these assets must be reported and turned over to the state.
Why businesses can’t afford to ignore them?
Ignoring unclaimed property can trigger expensive consequences. States are actively enforcing escheatment laws, and audits are on the rise. If you don’t comply, your company could face:
- Penalties and interest
- Audits going back multiple years
- Legal action
- Damage to brand reputation
Even unintentional noncompliance can be costly. Taking steps now to organize your processes can protect your business from future risk.
A growing issue for companies of all sizes
It’s not just large corporations that need to worry. Small and medium-sized businesses are equally affected by unclaimed property laws. In fact, they often lack the internal resources to keep up with varying regulations across states.
Many companies are surprised by the volume of unclaimed assets they’re holding—especially those with high transaction volume or customers across multiple jurisdictions.
How to stay compliant without extra burden?
Managing unclaimed property doesn’t have to be overwhelming. By implementing simple tracking systems and regular reviews, businesses can stay ahead of potential problems.
Start by identifying what types of property may go unclaimed in your operations. Then, build a schedule for checking aging reports, issuing reminders to claimants, and following up on inactive accounts.
Automation tools or third-party services can also help streamline the process by flagging items nearing dormancy and preparing reports for submission.
Benefits beyond compliance
While avoiding fines is a clear benefit, managing unclaimed property also helps clean up internal records and improve financial transparency. It encourages better accounting practices and strengthens trust with clients and vendors.
If you’re returning forgotten funds or resolving open balances proactively, you’re reinforcing your commitment to doing business responsibly. That reputation matters.
Multi-state operations increase complexity
If your company does business in more than one state, you’re likely subject to multiple sets of unclaimed property laws. Each state has its own dormancy periods, filing deadlines, and documentation requirements.
Failing to report correctly in even one state can trigger an audit that affects your entire business. That’s why having a centralized polic, and staying up to date with changing regulations, is essential.
How often should you perform reviews?
Annual reviews are a good starting point, but companies with high customer activity may benefit from quarterly assessments. Regular reviews allow you to catch potential issues early and keep records current.
They also help ensure that you’re meeting customer service goals by returning funds to rightful owners in a timely manner.
Training your team to recognize risk areas
Finance, legal, and customer service teams all play a role in unclaimed property compliance. Training staff to identify warning signs, like stale checks, returned mail, or inactive accounts, helps you act early.
The more people in your organization who understand the importance of tracking unclaimed assets, the stronger your compliance program will be.
Why acting now makes business sense?
The cost of waiting is high. As more states modernize their systems and increase enforcement, the chances of being audited continue to grow. By creating a plan today, you gain control, avoid surprises, and protect your company’s reputation.
It also puts you in a better position to recover funds or communicate with customers in good faith, which can strengthen relationships over time.
