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Wire Transfer Payments
Michael C. Dennis, MBA, CBF

Business Credit Concepts
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A wire transfer is an electronic transfer of funds, such as one that is made over the Federal Reserve Wire Network, or the Clearing House Interbank Payments System, among others. A wire transfer involves the movement of funds from one account to another. These transfers involve guaranteed funds for the recipient, meaning that the sender cannot revoke the payment after the transfer is made.

Credit managers sometimes require payments from customers [and in particular from foreign buyers] to be made in advance and by wire transfer. There are some of the terms credit professionals should know when managing wire transfer payments:

  • The beneficiary bank is the bank that receives the wire transfer.

  • Beneficiary information includes the name, account number, bank routing and transit number, and address of the party for whom the incoming wire transfer is intended.

  • A debit account is the account to be charged for the outgoing wire transfer payment.

  • The foreign current amount is the foreign currency equivalent after the U.S. dollars are exchanged.

  • An intermediary bank is a receiving bank, other than the beneficiary bank, that the wire transfer passes through before it reaches the beneficiary bank and the seller/beneficiary.

  • A notification advice is a bank generated confirmation notice of a received incoming wire transfer. The notification advice identifies the amount sent, date sent, and confirmation number. The advice may not list who the sender is or the customer/recipient is.

  • The originator is the customer or entity sending the wire transfer payment.

  • A recall wire request is a request sent to the beneficiary bank to return a wire transfer payment.

  • The routing and transit number is the bank's identification number with the Federal Reserve Bank.

  • The selling rate is the exchange rate used to convert U.S. dollars into foreign currency. [Note: Banks usually charge a fee for this].

  • Special instructions are additional instructions to help the beneficiary to apply the incoming wire transfer payment.

  • SWIFT Code is an eight digit identification code assigned by SWIFT for international payment transfers.

  • A trace wire is a request that is sent to the receiving bank to confirm that the incoming wire was credited to the beneficiary's account.

  • The U.S. Equivalent exchange rate is the amount that results fro the conversion of a foreign currency into U.S. dollars.

  • The Value Date is the date on which an incoming wire becomes available to the receiving bank and its customer.

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