You have gone out of the United States for higher study. Really, it is a nice choice, but your family faces difficulty while sending money to you. Then you should have a sound knowledge of the remittance meaning in accounting so that your family will not face any issues while transferring money out of the United States. You can also pay the suppliers who are present inside the United States using these methods.
In this blog, you will get a detailed idea about the remittance meaning in accounting and how the remittance works.
What is Remittance in Accounting?
Remittance meaning in accounting, is the method of transferring money online to friends, family, or groups who are living outside the USA. The bank charges some extra money to perform the remittance money transfer. If you want to make a remittance payment, then you should have a proper amount of money in the account from which you are going to pay. If you want, you can also deposit cash with the service, and then it will send it to the family member’s account.
Remittance can be done in different ways, like
- Bank Remittance
- Cash
- Check
- Automated Clearing House (ACH)
- Wire Transfer
You choose any mode of remittance to send money to family members who are living across the border.
Types of Remittance in Business
Till now you have learned about remittance and its ways. It is really very crucial to know about different ways it applies to your business. Every type of remittance has different features. Whether you pay for the service or you want to do the tax payment. Different types of remittance in business are:
- Supplier Remittance: In this method, the money is sent to the US vendor for the supply of goods and services. Whether you are importing raw material or new technology for your organization.
- Payroll Remittance: Here, the salary or the compensation is given to the employee who is leaving beyond the United States border. This is really very much necessary for employee satisfaction but also to properly follow the labor law.
- Tax Remittance: Tax remittance is necessary to pay the tax to the outside border to settle the tax company’s responsibility with the foreign taxation authority.
- Intercompany Remittance: If you have your business branches and sub-branches outside the country, then intercompany remittance has become a necessary part. It is given to support the different processes and properly reallocate the resources.
What are the key features Remittance ?
With time, the use of remittance has really grown. It has been a great source of income for the struggling and developing countries. It can also enhance the country’s GNP (gross National product) and the gross margin. If the disaster hits the country, then you can use the remittance amount to recover. Remittance meaning in accounting, is necessary for the country. Some of the key features of the remittance are:
Secure Payment
When you transfer money to another country, a secure payment is very much necessary. So you need a proper and advanced security feature during the transfer of money. If you don’t have a secure and compliant feature while transferring money, then you will face problems like financial loss, damage to reputation, and penalties.
Instant Transfer
Using remittance, you can have an instant transfer of money across orders. Integrating with advanced technologies and fintech allows for an instant money transfer process. It also helps to enhance customer satisfaction and minimize delays in transactions or missing deadlines.
Interoperable
It will help your system to integrate with different useful platforms to provide different features to the customer, which will help in seamless transactions. The integration with different platforms includes platforms like
- Different payment sites
- Advanced Online Wallets
- Netbanking Services
- Different types of money transfer methods and more.
Transaction Tracking
With the setup of advanced technology in the remittance payment process. The customer will get all the details about the payment process that is done outside the United States. Because of the real-time tracking method, the customer can easily monitor their payment process.
Risk Management And Preventing Fraud
Remittance has enabled the latest monitoring features and fraud detection software to reduce the risk and safeguard your and your customers’ necessary details. It will automatically implement the AIML method while transferring the money outside the country. Here the CDD & KYC method is used to verify the customer identification and transaction processes, which reduces fraud and enhances security.
How to Send a Remittance?
Only knowing the remittance meaning in accounting is knowing how to manage the payment effectively. If you are sending or receiving overseas money, also include various important steps. Here, you will know how remittances work in modern technology.
Vendor Payment
You have to first initiate the remittance when you are going to pay any vendor across the border. You can also simplify the vendor payment by choosing the right invoice and currency and allowing the transaction in a few clicks. It will help to make sure that the vendors are paid on time.
Bank and Network
Once you set up all the currency and invoice details, the money will not directly move to your other account. You have to search the remittance account from the global banking system using the SWIFT network and make sure that it safely reaches the right bank account. This is really important while using the old method of payment through remittance, like a wire transfer of money.
Processing The Transaction
When the transaction process begins, the bank will check the transaction information and start the process of the fund settlement. This is the major part of the remittance in the business payment, where large amounts and different regulations are involved. Here, funds are converted to local currency and deposited into the account.
Tracking of The Payment
If you are using Volopay, it will help you track your payment remittance transactions in real time. Even when the vendor receives the full payment, it will automatically be updated in the application. This will help you strengthen the relationship with the overseas partners.
Management of Fee
The remittance method of payment is not free; there are some bank charges, a flat fee, and other bank charges as a percentage for the currency conversion process. With the modern method of digital payment, you can access the transportation process at a better cost.
Conclusion
Remittance meaning in accounting, is the straightforward method with modern fintech to transfer money between two parties, friends, and family who are living away from the USA. It provides a safe and accurate payment method for you. It provides clarity and continuous tracking of the money transfer. If you still have doubts related to the remittance meaning in accounting, then you can contact the remittance expert team for support.