What exactly is a bank remittance?
Though you might not be sure of the answer, if you’re sending and receiving business payments, like paying a supplier or receiving payment for a B2B customer, you’re using bank remittances.
In this article, we’ll explore what a bank remittance is, how it works, and the fees and costs associated with it.
Bank remittance definition
A bank remittance is the transfer of money from one party to another through a bank or financial institution.
In the business context, the term bank remittance simply refers to sending or receiving payments tied to invoices, purchases, or services.
It's a formal and secure method of transferring funds, and it ensures that both parties involved (the payer and the payee) have a clear record of the transaction for accurate record-keeping.
There are two main types of bank remittances:
- Domestic remittances are transfers made between banks within the same country, often using payments like ACH or direct bank transfers.
- International remittances involve cross-border transfers and typically rely on networks like SWIFT to move funds between financial institutions in different countries.
Bank remittances are extremely common.
They’re regularly used by businesses to pay suppliers, contractors, and service providers for recurring expenses (like rent, payroll, and utilities), as well as for sending payments to international vendors.
That’s because remittances offer traceability, security, and compatibility with digital finance platforms, making them a preferred choice for efficient business payments.
How does a bank remittance work?
Sending a bank remittance involves several steps.
Each step is designed to make sure that the payment is secure, accurate, and properly documented—the main reasons that businesses choose to use bank remittances in the first place.
The exact process varies slightly depending on the platform you use and whether the transfer is domestic or international, but most will follow this general workflow:
- Payment initiation. The sender instructs their bank to initiate the remittance. This usually includes entering the recipient’s bank details, the payment amount, and any reference information (such as an invoice number).
- Verification and processing. The sender’s bank verifies the payment details, checks that there are sufficient funds in the account, and prepares the transaction for transmission. For international payments, currency conversion may also occur at this stage.
- Transmission through payment networks. The bank routes the payment through appropriate channels. Domestic remittances often use networks like ACH or real-time payment systems, while international remittances typically go through the SWIFT network. Cross-border transactions typically involve intermediary banks to facilitate the transfer across different banking systems.
- Receipt and settlement. The payee’s bank processes the incoming payment and then credits the funds to the customer's account.
- Confirmation. Both parties may receive a confirmation of the completed transfer, depending on the bank or payment platform used.
Processing timeframes for bank remittances vary, though the main factor that impacts clearance times is whether it's a domestic or international payment.
Domestic payments typically clear within 1-2 business days, though they can be completed on the same day in certain cases. For international payments, 2-5 business days is normal, and it depends on the number of intermediary banks and the currencies involved.
Sending a bank remittance
Remittances can be sent through several channels:
- Online banking platforms: Most banks and payment software providers offer self-service options for initiating transfers online.
- In-person at a bank branch: Some businesses still choose to handle remittances at a physical location, especially for large or complex international payments.
- In an accounts payable software platform: Many AP software platforms can help automate the remittance process by pulling in invoice data, validating payment details, and initiating the transfer directly from your bank account.
Whichever option you choose to use, it's critical that you provide accurate and complete payment details to ensure that the funds are delivered correctly and without delay.
Typically, those details include:
- Recipient’s full name or business name
- Bank name and branch
- Account number or IBAN
- SWIFT/BIC code (for international transfers)
- Currency and amount
- Reference details (such as invoice number or payment purpose)
Bank remittance fees and costs
Bank remittances often come with transaction fees, which can vary depending on the payment method, destination, and the banks involved.
The most common remittance fees include:
- Outgoing transfer fee: This is charged by the sender’s bank to process the remittance.
- Intermediary bank fees: These are applied when third-party banks help route international payments.
- Receiving bank fee: Occasionally charged by the beneficiary’s bank for accepting the transfer, depending on the bank, currency, and type of transfer.
- Currency conversion fee: When the remittance involves different currencies, banks may apply a markup on the exchange rate.
There are several factors that influence what the total cost of your transaction will be. These include:
- Whether it's a domestic or international transfer (international remittances typically cost more)
- The speed of delivery (express or same-day services usually cost more)
- The amount you send (some banks charge a flat fee while others use a percentage-based model)
- Which payment method you use (transfers initiated through software platforms or integrated AP tools may have lower negotiated fees)
These fees can really rack up if you’re sending a high volume of bank remittances. Here are a few strategies you can employ to minimize what your business spends on remittance fees:
- Use a payment platform that consolidates and automates transfers at scale
- Choose local currency payments when possible to avoid conversion markups
- Double-check the recipient’s bank details to avoid reprocessing fees due to errors
- Compare bank and third-party rates before initiating high-value or recurring payments
Benefits of using bank remittance services
Bank remittances offer a reliable, professional-grade solution for transferring funds, especially when compared to more informal or manual payment methods. For businesses, they provide several key advantages that improve financial operations and reduce risk.
Some of the advantages that bank remittance services offer over other payment methods (like card payments) include:
Traceability
Every remittance is documented, so it's easy to track payments and reconcile accounts. This is important for B2B payments, where clear audit trails and regulatory alignment are important.
Security features
Protocols like encryption and multi-level verification, built-in validation and error prevention, and the use of secure networks all increase the security profile of bank remittances.
Global reach
Bank remittances support both domestic and international payments through well-established financial networks.
Customer support and resources
Banks and platforms like BILL offer dedicated support to resolve payment issues, verify transactions, or manage complex remittances. Many services also provide real-time tracking, reporting tools, and integrations with accounting software to streamline workflows.
Automating the bank remittance process with BILL
Bank remittance is more than just a method of sending payments, it’s a vital part of maintaining accurate, timely, and secure financial operations.
With BILL’s integrated financial operations platform, businesses can streamline the entire remittance process through automation.
Whether you're sending ACH transfers, wire payments, or using virtual cards, BILL ensures each payment includes complete remittance details so recipients always know exactly what the payment is for.
Businesses using BILL to manage bank remittance benefit from:
- Real-time payment tracking and confirmation
- Full integration with your account system
- Improved control and visibility in a dedicated spend management solution
