What are Remittances?

Remittances are a payment or collection method that consists in the issue of an amount corresponding to an invoice for a sale or a service rendered.

A remittance is a document by which we give the order to the bank to manage the collection or payment or a group of purchases/sales made.

In the collection remittance, a giro is made in which the amounts corresponding to the invoices included in the remittance is extracted from the purchasers' accounts (known as "drawn"), which is paid directly to the seller's account (or assignor). In order for the transaction to be carried out, the customer must have previously given their consent in a SEPA mandate, which authorises the bank to do a direct debit.

It can also be a payment remittance, in which the bank is ordered to pay any outstanding balances to suppliers.

In both cases, the bank is simply an intermediary for the collection or payment management, according to the instructions it has been given by the seller or the buyer. Therefore, the financial institution is not responsible for the correct outcome of the transaction.

Types of remittances

There are two types of remittances according to the payment date:

  • Payable at sight: the amount is paid when the remittance is presented.
  • Payable on the due date: The bank pays the amount corresponding to the remittance on a pre-arranged date.

For international transactions, and based on the documentation that comprises the remittance, they are classified into two types:

  • Simple: when they only have financial documents, such as cheques, bills or promissory notes.
  • Documentary: when they have commercial documents that may or may not be accompanied by a financial instrument, such as a commercial invoice, a transport document, a certificate or an insurance policy.

Benefits of remittances

Remittances have the advantage that they enable several bills to be executed at the same time, saving time and work. They also tend to be a rather effective form of payment or collection, as it is understood that there is a prior agreement between the parties to make the payments or collections this way.


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