Last post I listed various steps pertaining to the payment processing process. http://faoblog.com/processes-ap-payment-processing-steps/
Now you released a payment, and the cheque / check is not encashed or the electronic transfer fails, what needs to be done?
In India, for sure, the amount just remains with the business and remains in the payables / unclear cheques / checks account.
Some countries have legal provisions for this. This amount is treated as abandoned and needs to be remitted to the government/state. This is called “escheatment”
We know for sure it is prevalent in the United States of America and the United Kingdom.
Technically this started of as the process of turning over unclaimed or abandoned property to a state authority, such as if a person dies without a will. Then it was applied to bank deposits, identifying customer’s deposit (checking, savings, etc.) and time deposit (CD) accounts that are considered abandoned and remitting the funds to the appropriate state if the customer cannot be contacted to re-activate the account. As an extension, companies with unclaimed vendor balances were also brought in the purview of this.
Normally, most states prescribe a time of three to five years before these accounts can be deemed abandoned.
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