Key takeaways
- A bank transfer notice is an official bank document that proves a transfer has been initiated and that funds have been debited from the sender’s account in favor of an identified beneficiary, even if the funds have not yet been credited.
- It is a valuable supporting document for accounting: it can be used to settle an invoice, keep payment tracking up to date and facilitate bank reconciliation without waiting for the account statement.
- A transfer notice helps manage customer credit risk and preserve the commercial relationship by avoiding unnecessary payment reminders for invoices that are already settled or in the process of being paid.
- A properly issued notice typically includes the sender’s and beneficiary’s IBAN/BIC, the amount and currency, the execution date, the transfer reference/reason and a “validated” status.
- Combined with account reconciliation software, the transfer notice can be detected automatically (PDF or feed), matched to the corresponding invoice and immediately flag discrepancies, which increases process reliability and saves considerable time.
- Transfer notices are a strategic tool for credit management and treasury: they secure deliveries, refine cash-in forecasts, improve DSO and working capital by providing visibility on incoming flows.
A bank transfer notice is a document that serves to prove the initiation of a transfer of a given amount to an identified recipient. It therefore guarantees that the funds have left the sender’s account even if they do not yet appear as a credit on the beneficiary’s account. Beyond the reassurance a transfer notice provides, it is also a very useful accounting supporting document. It is a formal proof of payment, which explains why it is valued by both credit managers and accountants. In addition, it helps control credit risk by ensuring that payment has been initiated. This also prevents unnecessary payment reminders that could damage the customer relationship.
The transfer notice is therefore a tool in the payment monitoring process that proves the amount due has been sent and facilitates bank reconciliation.
What is a transfer notice?
Definition of a transfer notice
A transfer notice is a bank document that certifies that the funds transfer has been initiated in favor of the beneficiary. Providing such an official document helps build trust between the business and its client. This is particularly relevant because, unlike a transfer order, the transfer notice confirms that the funds have indeed been debited from the sender’s account and therefore will be credited to the beneficiary’s account. It is not a mere request; it is proof that the request was executed.
In practice, as a supplier or service provider you can ask your clients to send a transfer notice to validate an order or the completion of a service. This is quite common, especially for deposit payments. The transfer notice allows you not to wait for the funds to arrive before delivering the order or performing the service. Indeed, the company knows it will receive the funds shortly and therefore does not take on the risk.
The role of the transfer notice
Moreover, the transfer notice plays an important role in accounting. It serves as evidence to settle an invoice. Thus, the accountant can record the transaction as completed without waiting for the funds to appear on the account statement. Payment tracking is then fully up to date. This has two benefits. On one hand, management gets an accurate view of cash position, and on the other hand it helps manage the customer relationship effectively by avoiding reminders for an overdue invoice whose payment is already in progress.
Finally, the transfer notice ensures traceability of operations and the full compliance of accounts. In case of an audit or dispute, presenting the notice is sufficient as irrefutable proof of payment.
What are the essential details on a transfer notice?
A properly issued transfer notice must include the following details:
- the bank details (IBAN and BIC) of the sender and the beneficiary to allow identification;
- the transfer amount and the currency used, which helps verify the amount matches the invoice and thus facilitates bank reconciliation;
- the execution date of the transfer, which helps estimate receipt times depending on the transfer type (SEPA or international);
- the references and reason for the transfer, which generally correspond to the reference of the invoice being paid;
- the payment status, since for the notice to serve as proof the transfer must be marked as “validated”.
How to reconcile transfer notices automatically?
To simplify, accelerate and secure bank reconciliation, you can implement automations. Indeed, a reconciliation software can detect transfer notices whether they are in PDF format or come as bank feeds, and automatically match them to the corresponding invoice. From that point, entries are reconciled instantly without staff intervention. They no longer need to manually compare payments and invoices and update tracking. The time savings are undeniable.
In addition, automating transfer notice handling helps make the reconciliation process more reliable. This prevents data-entry errors and greatly reduces the risk of duplicates.
Furthermore, if the account reconciliation software detects a discrepancy, it is immediately reported to the accounting or collections teams so it can be corrected quickly.
An intelligent reconciliation software can also propose matches between transfer notices and invoices based on purchase history and client habits. Reconciliation becomes extremely accurate and helps simplify month-end closings.
Moreover, using reconciliation software allows you to forecast cash. It is easier to predict incoming cash flows based on transfer notices since you know funds are in the process of being transferred. You can even pre-post the invoice as settled so that when the transfer appears on the company account it is already processed.
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The transfer notice: a strategic tool for credit management and treasury
Relying on transfer notices helps avoid customer disputes. Indeed, nothing is more frustrating for a customer than being chased for a payment they have already initiated. With the transfer notice, they can easily prove they sent the funds on a specific date. There is then no uncertainty about the imminent arrival of funds or the amount transferred.
The transfer notice also helps secure deliveries and orders. You can require a transfer notice before shipping goods or starting a service. You are assured that the customer has initiated payment, and you do not risk not being paid after the goods are delivered.
From a credit management perspective, the transfer notice is also a valuable tool to refine cash-in forecasts. The treasurer knows exactly when the funds will be on the company’s account. It becomes much easier to determine the cash level at a given date and to manage treasury effectively. In addition, the transfer notice helps optimize Days Sales Outstanding (DSO), the average payment period of customers. By adopting reconciliation software that automatically links incoming transfers with issued invoices, you can shorten the collection cycle and consequently improve working capital requirements (WC).
The collections process is also positively impacted by using transfer notices. A reconciliation tool integrated with collections alerts teams to incoming funds. It is even possible to require a transfer notice to release orders that were suspended pending the customer’s regularization.
Transfer notice: best practices
To make the use of transfer notices optimal in financial and accounting management, it is necessary to apply the following best practices:
- implement rigorous archiving to keep each transfer notice in the corresponding client file to ensure traceability and serve as evidence in case of audit;
- define a clear internal process to avoid omissions and harmonize practices across accounting and credit management teams;
- use account reconciliation software to automate the processing of these notices and reconcile accounting entries effortlessly;
- train teams and communicate regularly with staff on the importance of payment notices and how to use the tools;
- forecast cash based on transfer notices.
Conclusion
A transfer notice is a bank document certifying the execution of a transfer in favor of the beneficiary. It contains a number of required details that give it evidential value. This supporting document also has accounting value since it allows you to quickly settle invoices corresponding to the initiated transfer. It facilitates bank reconciliation by linking debtor and creditor accounts.
Using account reconciliation software makes it possible to instantly match transfer notices with the corresponding invoices. This automation represents a significant time saving for teams and improves the reliability of accounts. In addition, it enables forecasting of cash flows and pre-accounting of transactions to avoid further entries upon receipt of funds. However, to get the most out of transfer notices for a company’s financial and accounting management, it is recommended to adopt certain best practices, notably the systematic integration of transfer notices into the workflow of accountants and financial managers
If you want to know how our reconciliation software can help you manage your transfer notices, contact our team.
FAQ
How can I provide proof of transfer?
You can prove a transfer from your bank account by sending a confirmation email to the beneficiary if that service is offered by your bank. Otherwise, you can generate a transfer notice from your mobile app or your bank’s website, which serves as a transfer certificate. If you make a transfer at a branch, your advisor can also give you a receipt.
What should I put as the reason for a bank transfer?
You can specify a reason when making a bank transfer. This clarifies what the operation refers to. It is common to enter the invoice reference as the transfer reason. This greatly simplifies matching operations for both the client and the beneficiary company.
Is there a maximum amount for a bank transfer?
There is no universal maximum amount for a bank transfer. The limit depends on the bank, the account type and your profile. For example, a large corporation has much higher transfer limits than a micro-entrepreneur.
How much can you transfer without proof?
Anti-money laundering and counter-terrorist financing rules (AML/CTF) set a maximum amount of 8,000 euros for transfers without supporting documentation.
