Receivable Protection Program (RPP) FAQs
What is the Receivable Protection Program?
The Receivable Protection Program (RPP) guards your company from those IAM members in financial difficulty through the following features:
- Invoice Compensation: Your company will now be able to submit claims to IAM for compensation on any unpaid invoice stemming from a household goods shipment owed to it by another IAM Core or Governing Member. This is the last resort mechanism by which your company can recover money lost due to another member declaring bankruptcy or ceasing to exist. IAM has paid out roughly $71,586.98 to compensate members for unpaid invoices since the start of the RPP.
- Staff Intervention on Outstanding Invoices: Your company will now be able to request IAM intervention on any invoice greater than $3,000.00 USD owed by another IAM member. The invoice must be at least 120 days old. This is the intermediate step by which IAM Staff intervenes with the allegedly delinquent member and tries to facilitate repayment of the outstanding debt. Since inception in May of 2011, IAM has facilitated resolution on invoices amounting to $355,540.54 USD.
- Alleged Debtor List: Your company will now receive the IAM Alleged Debtor List each month, which details the IAM members who are allegedly delinquent on payments owed to other IAM members. This tool provides members with advance business information regarding which members may not be paying their invoices.
I heard that the RPP only covers invoices that stem from commercial household goods shipments (i.e. non-U.S. Military / Government Shipments). Is this true?
This used to be true. However, now that IAM has extended the program to all Governing and Core Members, the Association can now afford to cover invoices that stem from household goods shipments for the U.S. Department of Defense, Department of State, and General Services Administration.
The RPP now covers invoices from U.S. Military and Government shipments? Is that right?
Yes, by expanding the RPP, IAM can now spread risk among approximately 2,000 companies rather 100 to 200 companies. In the past, failing to cover these invoices was a chief complaint of the RPP, so IAM wanted to incorporate this feature to make the program even more valuable to members.
Are there any other benefits that come from my company’s new membership benefit – the RPP?
Yes. IAM operates the Invoice Dispute Resolution Process, which is the procedure by which IAM intervenes on outstanding invoice amounts owed between members. Since implementing this process in 2011, IAM has successfully resolved roughly $355,000 USD on behalf of companies who participate in the RPP. On average, the RPP has only had 150 participating companies since the implementation of the Invoice Dispute Resolution Process, so this is a big number.
How does this Invoice Dispute Resolution Process work?
Under this process, IAM intervenes with the delinquent member (Alleged Debtor) if the debt exceeds $3,000 USD and is more than 120 days old. If, after three interventions, the debt remains outstanding, IAM will add the delinquent company to the IAM Alleged Debtor List. The IAM Alleged Debtor List is circulated to companies who participate in the RPP each month and, beginning October 2014, will be distributed to all IAM Governing and Core Members.
So my company will be able to obtain compensation for unpaid invoices, request IAM intervention on outstanding invoices, and receive advance information about which IAM Members are allegedly not paying their invoices?
Yes, your company will receive all three benefits. IAM calculates that these benefits collectively provide each RPP Member with more than $1,100 USD of value per year.
$1,100 USD – How is that number calculated???
Since the inception of the RPP about seven years ago, IAM has paid out roughly $72,000.00 USD in claims and successfully intervened on approximately $355,000 USD worth of outstanding payments between members. For the 2014 fiscal year, we are anticipating paying out at least $18,214 for successful RPP claims. Added all up, the RPP has delivered about $455,000 worth of benefits over that timeframe. This figure does not factor in the value of the Alleged Debtor List,so it is even more valuable than that.
To calculate the $1,100 number, IAM divided $455,000 by the number of participating companies and the 7 years that the RPP has been operational arriving at a total benefit per company per year of about $1,250. By subtracting the average cost of participation per year ($138.00 USD) from $1,250, we obtained the net member benefit of the RPP to be $1,100.
Under the Invoice Compensation component of the RPP, if my claim is approved, will IAM pay me the entire amount of the invoice that was not paid?
No, IAM must maintain certain limitations in the program to protect its solvency. One limitation is predicated on the desire to protect the solvency of the RPP. Therefore, IAM will review the total payout limit at the end of each year.
My Company recently joined the RPP and had to pay an initiation fee of $650.00 USD. Will my company have to pay an additional fee for this member benefit as well?
Depending on the year in which your company joined the RPP, it has already paid a certain amount of money into the program; therefore, IAM will reach out to your company directly to advise how much your company has paid into the RPP Reserve Fund already and how it will affect your future dues payments.
This Alleged Debtor List – How does a company get designated as an Alleged Debtor?
As part of the Invoice Dispute Resolution Process, IAM Staff conducts a step-by-step procedure by which a company will be identified as an Alleged Debtorif no effort is made to resolve the outstanding debt.Ample time is provided to the alleged debtor to pay off the outstanding invoice before being placed on that list. Additionally, IAM staff will work with the debtor company to follow up on debts that they may be waiting for from other IAM members.
Other trade associations like LACMA and FIDI operate similar programs to the RPP. If my claim is valid in all three programs, can I still recover money from the RPP?
IAM’s policy on this subject is to work with FIDI and LACMA to determine what the expected payout from each program will be. If the cumulative payout from more than one of the organizations does not make up for the total amount of the loss.