The types of remittances are the ways in which remittances can be classified according to how they enter a country and its payment process.
The channels through which remittances can be transferred are very varied, you can be sent through:
- Money transfer services
- Credit associations
- Hawala Companies
- Check by mail
- Friends or family
Informal and formal remittances
One way to classify remittances is to divide them into informal and formal.
- Informal remittances
So, they are called informal remittances to those that are sent through relatives or relatives. They can also be sent by the middle of companies called Hawala, which is an alternate system to transfer remittances informally.Since, this system is being used in many countries of the world and is based primarily on trust, operates outside the financial market supervision and administration system.
Income currency, through informal remittances, are not recorded in the National accounts statistics.
- Formal remittances
Therefore, formal remittances are those that are transferred through official channels of the Finance system and as a consequence they are recorded in the statistics of foreign exchange entering the national market.So, the financial institutions that can formally transfer remittances can be banks, cooperatives of Credit and transfer providers. When the transfer is made by through these entities users can obtain important information
- The charges and taxes charged to them
- Exchange rate
- Foreign charges charged by the entities involved in the transfer
- The exact amount that the recipient will receive, not including taxes to be paid abroad
- The date on which the money
- How to correct errors
- How to file a complaint
Simple and documentary remittances
The remittances they can also be divided into simple and documentary remittances
- Simple remittance
Now, it is known as simple consignment when alone It involves a financial document such as a check, a promissory note, a receipt among others; which are sent directly from the seller to the buyer.They may be:
- Payable at sight: This implies that the importer must make the payment at the time the financial document is presented.
- Term Payable: In this case the payment is made on the date that is predetermined in the document received.
2. Documentary remittance
While, a documentary consignment includes a Business document such as an invoice, a certificate or an insurance policy. These Business documents can be accompanied by another financial document such as receipts, promissory notes, bills of exchange, among which we can mention.
The recipient can take possession of the merchandise, as long as he accepts the terms of payment based on the documents delivered.
Actors of Documentary Remittances
Main actors in these transfers are
- Bank that remits: It is the financial institution that is responsible for carrying out the entire management of the operation’s collection process.
- Presenter Bank: He is responsible for presenting the corresponding documents to the importer, to formalize the payment. On some occasions, the sending bank may also be the presenter.
- Exporter: He is the actor who uses the consignment to generate the collection.
- Importer: It is the individual or legal person that receives the remittance documents and accepts the payment conditions.
Process to carry out the operation
The process followed to complete the procedure is as follows:
- The exporter delivers the documents to the sending bank
The process is started when the exporter sends the goods to their destination and delivers the commercial and financial documents to the sending bank, to manage the payment.
- Sending the documentary remittance to the presenting bank
The bank sender sends the documents to the importer’s bank, which is known as presenter bank to deliver the collection documents to the importer.
- The presenting bank delivers the documents to the importer
The importer receives the documents, which he can withdraw from the bank when he has made the corresponding payment and subsequently with those documents, he can take possession of the merchandise sent.
- Payment of the remittance
In this last step, the importer proceeds to make the payment; if it’s the insight you can perform at the same time of delivery and if it is on time you can do it in the agreed date.It could be the case that the importer does not accept the documentation, it must be returned by the presenting bank to the sender.
To end, We can say that remittances represent a very important item in income currency, especially in underdeveloped countries, which contributes to improving the living conditions of the inhabitants of these receiving countries.
We must mention that not all remittances are accounted for within the national accounts, since many are entered through informal channels, which prevents them from being properly registered.