We issue thousands of checks each month, some for small amounts.

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What can we do to determine if these amounts are really owed or not? What do other large shared services do with this task? Although letters can be written to the vendors, we are talking about a significant number of uncashed checks over a period of time.

 

Answer: If you cut a check with the supporting documents and approvals, it would be considered by most states as the property of the vendor unless it was a fraudulent transaction. Since each state has different statutes, make sure to check those that apply to your company.

You are on the right path in reviewing the un-cashed checks. Some checks may prove to be duplicate payments or otherwise issued in error. In such cases, document the errors and void the checks; they would not be reportable as unclaimed property. But unless you can document a duplicate payment or other error, the un-cashed checks are reportable as unclaimed property. The due diligence letter will call the payment to the attention of the vendor and enlist their help in determining whether the payment is owed or not. Note that some states do not require a due diligence (or "search") letter for small-dollar amounts (see table inState Escheatment Requirements). Without clear evidence of error or duplication, consider them reportable. A due diligence letter template is available on TAPN. There are firms to whom you can outsource the letter notice function, or look into software that could be a plug-in application or stand-alone one to automate it. You can find vendors offering these services in the Directories menu under the category AP Tools+. Select Vendors.

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