Covering Business Credit

Credit Questions and Answers
Business Credit and Collections
Commercial Credit Management

Return to Q and A 2005Home

Doctor Credit

Can we write off open credit memos and unapplieds on account cash payments, particularly from customers we no longer do business with or company that have gone out of business?

Answer: Every state requires businesses and financial institutions to report when property has been abandoned or unclaimed after a specified period of time. The meaning of escheatment has been expanded to include property of every kind. The definition of unclaimed property involves hundreds of categories of property. If a person or entity has a legal or equitable right to the property, then a state's unclaimed property law governs it. Before a creditor company can consider on account cash or credit memos to be abandoned and escheatable, the company must try to locate the owner. If a company is unable to find the rightful owner, it must report the account to the State within the time prescribed by law. The State then claims the abandoned property through a process called escheatment. Please read the article below for additional information.

spacer spacer