Transfer of Funds

Before funds can be applied against an open accounts-receivable account, the beneficiary must reconcile the following data streams:

• Payment advice from the receiving bank

• Remittance information received through a separate channel

These data streams were separated during the transfer operation.

If this reconciliation does not take place, and if the amount of funds received differs from the amount indicated in the remittance advice, the beneficiary might have problems balancing the accounts-receivable ledger.

The value transfer begins when the originator issues a payment order to the originator’s bank. If a credit transfer is specified, the originator’s bank charges the originator’s bank account and pays the amount to the beneficiary’s bank for credit to the beneficiary’s account.

If the payment order specifies a debit transfer, the originator is the beneficiary. In this case, the beneficiary’s bank originates the value transfer, and the payor’s account is debited (charged) for a set amount, which is credited to the originator’s (beneficiary’s) bank account.

The payor must issue approval to its bank to honor the debit transfer, either before the beneficiary presents the debit transfer or at the same time. This debit authorization or approval can take one or more of the following forms:

• Individual item approval

• Blanket approval of all incoming debits with an upper dollar limit

• Blanket approval for a particular TP to originate any debit