The idea of remittance is usually used to refer to sending money from one place to another.
Remittance is a concept that derives from the Latin remissa and is linked to sending something from one place to a different place . Although it could refer to various objects, the word is most frequently used to name the transfer of money that emigrants make to their families, who continue living in their homeland.
For example: “Uncle Arnaldo told me that he has already made the remittance” , “A good part of the income of this country comes from the remittances made by those workers who have emigrated” , “Don't worry: as soon as I earn, I will send you a remittance so you can pay the debt.”
It should be noted that terms such as remittance have a very broad meaning but their usual use is limited to one meaning. This does not mean that the rest of the meanings are wrong or are never used, but rather that a certain definition is the one most used by people in their daily lives.
Workers' remittances
Remittances increased after the Industrial Revolution and, above all, after globalization , when millions of people began to move and work in countries other than those of their origin.
Since many of these workers travel alone, the money they earn is sent to their families who continue to live in their nation. In this way, remittances multiplied.
When a worker is in one country and sends money to his family in another, he makes a remittance.
Classification according to type
We have to establish that, at the banking level, we usually talk about two types of remittances:
- Simple . These are those that allow the sending of promissory notes or bills of exchange, among others, with the clear objective of being able to settle a sale that has been made with any type of merchandise as its object. Specifically, they help the exporter, through the corresponding financial document, get his bank to proceed to manage the collection of the aforementioned purchase and sale.
- Documentaries . These shipments are those in which what is sent are the commercial documents that have to do with the purchase and sale merchandise. These can be accompanied by receipts or promissory notes, for example, and will only be delivered to the buyer if he has agreed to pay the agreed amount or if he pays it directly.
There are many banking entities around the world that offer these two types of remittances, within the international areas, to facilitate their clients' commercial transactions that they have carried out.
Remittances in accounting and other areas
At the accounting level, the term in question is also used. In that case, it is used to refer to the set of grouped payments that are made and that give rise to an accounting entry per group. Hence, they become a fundamental part of the work of an accountant who must keep exhaustive records in this regard.
It should be noted, returning to what we said at the beginning of this article, that a remittance can be another type of shipment that does not involve money. Thus we can speak of a “consignment of documents” or a “consignment of merchandise” .
We must not forget either that in the past, the term was also used with another meaning. Specifically, it was used to refer to the existing place to store cars .