What is a bank remittance and how does SEPA management work

If you have ever had to pay salaries to your whole team or collect payments from dozens of customers, you know how tedious it can be. A bank remittance is simply the solution to that chaos.

Instead of doing each operation one by one, a remittance lets you group all those payments or collections into a single digital file that you send to the bank. It is the difference between going to the post office to send 50 letters separately or taking them all together in a sack for them to distribute. All at once.

Breaking down what a bank remittance is

Imagine the scenario: it is the end of the month and you have to pay 50 employees their salaries. Or perhaps you manage the monthly fees of 200 members of a club. Doing it manually would mean making 50 transfers or issuing 200 collections one by one. Crazy, right? It is repetitive work and a breeding ground for silly mistakes, like mistyping an IBAN or an amount.

This is where the bank remittance changes the game. This system works like a digital “folder” that contains all those instructions. Instead of giving the bank individual instructions for each transaction, you hand over a single file with all the information. The bank processes it in bulk, and each payment or collection is executed automatically.

In essence, a bank remittance is simply a way to automate the mass management of financial operations. It is pure efficiency for your business.

The fundamental purpose of remittances

The aim of a remittance is clear: efficiency. By grouping operations, companies—especially SMEs and accountancy firms—get direct, tangible benefits that improve the day-to-day management of their treasury.

Think of the advantages this brings in daily life:

• Massive time savings: The hours that used to go into keying in data are freed up. That time can be invested in tasks that really add value to the company.
• Fewer human errors: When the process is automated, the risk of getting an IBAN, amount or due date wrong is drastically reduced.
• Better control and forecasting: Centralising collections and payments on specific dates gives you a much clearer view of your cash flow. You know what money is coming in and going out, and when.
• Cost optimisation: Banks often offer better fees for processing a batch of operations than for handling them individually.

Key components of a bank remittance

To understand the flow, it helps to know who is who in this process. The following table summarises the essential elements that define a remittance so you have a clear picture from the start.

Concept	Description
Originator	The party that creates and sends the order. For example, your company when it pays salaries or issues collections to customers.
Originating bank	The originator’s financial institution. It receives the file, validates it and initiates the process.
Remittance file	The digital file (usually in SEPA XML format) that contains all the payment or collection instructions.
Beneficiary / Debtor	The individuals or companies who receive the money (beneficiaries) or whose accounts are debited (debtors).
Receiving bank	The beneficiary’s or debtor’s financial institution. It receives the order from the originating bank and executes it in the final account.

As you can see, it is a well-defined ecosystem where each part has a clear role so that money moves safely and efficiently from A to B.

Types of remittances for collections and payments: sending or receiving money?

Now that we are clear that a remittance is essentially a “package” of financial operations, we need to see what kind of packages we can send to the bank. Because, let us be honest, paying your suppliers is not the same as collecting monthly fees from your customers.

In a company, money only goes two ways: out (payments) or in (collections). Remittances are your best ally for managing both flows in bulk, but each direction needs a different type of remittance. Choosing the right one is the first step to making everything run smoothly.

Transfer remittances: the outbound lane for your payments

Put yourself in this situation: it is the 28th and you have to pay salaries and a pile of supplier invoices. The idea of doing thirty transfers one by one from online banking is, to say the least, discouraging. This is where transfer remittances shine.

With them, you group all those outbound payments in a single SEPA file. You prepare it, upload it to your bank, and that is it. The bank distributes the money to each recipient for you. It is a huge saving in time and potential human error.

The most common uses are everyday:

• Salary payments: A single file to pay the whole team. Simple and effective.
• Supplier payments: You group all the month’s invoices and settle them in one go.
• Refunds or credits: When you need to refund several customers at once.

In short, a transfer remittance is a direct instruction to your bank: “Take this money from my account and distribute it to all these people according to the instructions in this file”.

Direct debit remittances: the magnet for your collections

Now we turn the tables. Imagine you have a business with recurring income: an accountancy firm, a gym, a software company with subscriptions… Chasing payments every month is a real nightmare. That is what direct debit remittances are for—also known as SEPA direct debits.

With this type of remittance, you do not send money; you ask your bank to collect from your customers’ accounts and credit yours. It is the engine that automates the collection of payments and fees. And it is no small matter: remittances sent from Spain abroad reached 10.7 billion euros, equivalent to 0.7% of Spanish GDP. For any SME, controlling SEPA formats is vital, especially when the European Central Bank recorded 16.8 billion transfers in the eurozone, 6.5% more than the previous year. You can see the scale of these figures in this analysis of remittance volume in Spain on Trading Economics.

But unlike transfers, to collect from someone’s account you need something essential: their permission.

The SEPA mandate: the master key to collecting

That permission has an official name: the SEPA mandate. It is nothing more than the authorisation signed by your customer that gives you the right to charge their account. Without this document, your bank will reject the collection order. It is a contract that protects both your customer and you.

What should you know about the SEPA mandate?

• It is unique and non-transferable: Each mandate has a unique reference that identifies it.
• It contains key data: It includes the customer’s name, address and IBAN, as well as your company’s details.
• It is 100% mandatory: You cannot include a customer in a collection remittance if you do not have a signed, valid mandate.

So here is the main practical difference between the two types of remittance. To pay someone, you only need their IBAN. But to collect from them, you need their explicit, documented consent. As simple and as important as that.

How is a bank remittance processed? The journey of your money, step by step

So you have your file of payments or collections ready. What happens next? What exactly happens when you hit send? Far from being an opaque process, the path of a remittance is more like a well-oiled assembly line. Each part has its role and, if all goes well, the money reaches its destination safely and on time.

Understanding this flow will help you see why formats matter so much and what happens between sending the file and your employees or suppliers seeing the money in their account.

The starting point: creating the file

Everything starts in your system, in your office. Before the bank can move a single cent, you need to group all the payment or collection orders in a single file. This file is literally the instruction that sets everything in motion.

Normally this information is prepared in an accounting program, an ERP or, in simpler cases, a spreadsheet. In this initial step you gather the key data: destination IBANs (or origin IBANs for collections), amounts, descriptions, the date you want the operation executed and, for direct debits, the references of the SEPA mandates signed by your customers.

The remittance journey in six stages

Once you have the file, it sets off on a journey that passes through several hands and validation systems. Let us break it down so you can see there is no mystery.

1. Upload to your online banking: With the file ready (ideally in SEPA XML format), you log into your company’s electronic banking and upload it in the remittances section. This is the starting gun.
2. First validation (your bank): Your bank is the first guardian of the process. As soon as it receives the file, its automated systems review it. They check that the structure is correct, that the data makes sense and that the format complies with SEPA regulations. If something fails here, they send it back to you.
3. Processing in the clearing system: If the file passes the first filter, your bank sends it to the National Electronic Clearing System (SNCE). Think of the SNCE as a large logistics centre where all payment and collection orders from Spanish banks cross and are sorted.
4. Distribution to destination banks: The SNCE does its work: it organises thousands of operations and routes them to each recipient’s bank. Each institution receives a “package” with all the transactions aimed at its customers.
5. Handling at the destination bank: Now it is the turn of your customer’s or supplier’s bank. When it receives the order, it prepares to execute it. If it is a transfer remittance, it prepares the credit; if it is collections, it processes the debit on the debtor’s account.
6. Final credit or debit to the account: Done! The money moves for good. Funds are credited to beneficiaries’ accounts (if you are paying salaries or suppliers) or debited from debtors’ accounts (if you are collecting fees). The cycle is complete.

This diagram will help you visualise the two possible routes, whether for collecting or paying.

As you can see, even though the goal is the opposite (crediting money vs. debiting it), the skeleton of the process through the banking system is practically the same.

The main players in this process

For this whole machinery to work, several key actors are involved. Knowing who is who will give you a complete view of how it operates.

• The Originator: That is you, your company. Your responsibility is the most important: to produce a file with correct, accurate data. A simple error here can bring everything to a halt.
• The Originating Bank: Your bank, the one that works for you. It acts as your intermediary, validating your instructions and sending them into the interbank system.
• The Receiving Bank: Your customer’s, supplier’s or employee’s bank. Its job is to receive the order and apply it correctly to the destination account.

Remember that each of these actors depends on the previous one. The quality of the information you provide as originator is the foundation everything rests on. A well-made file is the best guarantee that the process will run without surprises.

Remittance files: from the old AEB format to the SEPA standard

For your bank to process a remittance, your system and theirs have to speak the same language. And that “language” is nothing other than the format of the file you send with all the payment or collection instructions. If the format is wrong, it is like giving an instruction in a language the bank does not understand: it will simply reject it and the money will not move.

Today, the standard that rules across the Single Euro Payments Area is the SEPA (Single Euro Payments Area) format. However, many companies still use somewhat outdated internal systems that produce files in old formats, such as those of the Spanish Banking Association (AEB). Understanding why this is a problem and how to fix it is key.

The current standard: SEPA XML

Today, the only official and mandatory file format for any remittance is XML based on the ISO 20022 standard. Although it sounds very technical, in practice it is a universal language that all banks in the SEPA area understand. Its structure is designed to hold all the information clearly and in a standard way: from the recipient’s IBAN and description to the mandate reference in a direct debit.

Think of SEPA XML as the European standard plug. No matter which EU country you travel to, you know you can plug in your charger anywhere without an adapter. As simple as that.

Thanks to this unified standard, making an operation to another European country is as easy and safe as making one within Spain, removing the complications that existed before.

The legacy formats that no longer work: AEB norms

Before SEPA came to unify everything, in Spain we used the formats defined by the AEB. Many will remember the famous “Cuadernos” (Notebooks), such as Cuaderno 19 for issuing transfers or Cuaderno 34 for managing direct-debit collections. They were plain-text files with a very rigid structure, where each piece of data had to go in an exact position.

The problem is simple: banks no longer accept these formats. Although many management programs (ERPs) or companies’ Excel templates still produce remittances in these old structures, if you try to upload one of those files to your online banking, they will reject it immediately. It is like trying to pay in the supermarket with pesetas; they simply are no longer valid.

For many SMEs, accountancy firms and developers, dealing with these legacy formats has become a real headache. The solution inevitably involves a “translation” process, and that is where specialised tools come in. For example, ConversorSEPA is designed precisely for this: it converts files from Excel, CSV, JSON or the old AEB formats into valid SEPA XML that your bank will accept. And it does it in seconds. These platforms not only adapt the format; they also validate IBANs, ensure data encryption and guarantee that everything complies with the regulations.

Below is a screenshot showing how easy this process is with a conversion tool. You no longer need to be a computer expert.

As you can see in the image, the interface is very intuitive. You just drag your file (an Excel file, for example) and the tool does the conversion, removing all the technical complexity from the process.

Comparison of remittance file formats

To get a clearer picture, we have prepared a table that summarises the main differences between the modern SEPA XML standard and the legacy AEB formats that, although obsolete for banks, are still present in many management systems.

Feature	SEPA XML format	AEB formats (e.g. C34)
Structure	Flexible, tag-based (XML)	Rigid, plain text and positional
Bank acceptance	Mandatory and accepted across the SEPA area	Obsolete, rejected by all banks
Information	Allows detailed, extensive data	Limited fields and fixed length
Operations	Valid for national and international operations	National operations only
Complexity	More complex to generate manually	Simpler, but inflexible

The conclusion is clear: although you may still work with simpler formats internally, you must convert to SEPA XML before sending any remittance to the bank.

Why do you need a format “translator”?

The real problem for many companies is the gap between the old formats their systems produce and the SEPA XML the bank requires. Your ERP still “speaks” in Cuaderno 34 language, but the bank only understands SEPA XML.

A converter acts literally as an expert translator. It takes your Excel, CSV or AEB format file and completely rebuilds it into the XML your bank needs. And it is not just a change of extension; it is a total restructuring of the data so it meets strict European regulations.

The advantages of using such a tool are clear:

• You avoid bank rejections: You ensure the file will be accepted first time, with no surprises.
• You save valuable time: Conversion is automatic and instant. No more adjusting files by hand.
• You minimise human error: Built-in validators catch incorrect IBANs and other mistakes before you send anything.
• You always comply with regulations: The XML that is generated is always up to date with the latest SEPA regulations.

In short, understanding the differences between these formats and having the right tools to manage them is essential for your collections and payments to run smoothly. If you want to go deeper into how this type of file is structured and what data it must contain, you can take a look at our detailed guide on the SEPA document and its structure.

Common remittance errors and how to fix them

Managing a bank remittance should be a smooth process, but a small oversight can turn it into a real headache. A rejected file does not only mean delays in your collections or payments. It can also bring unexpected bank fees and extra hours for your team to track down the error and fix it.

The good news is that the vast majority of these problems are predictable and can therefore be avoided. Knowing them is the first step to shielding your treasury from surprises and making sure everything runs smoothly.

Frequent mistakes in transaction data

Many rejections stem from the most basic data in the remittance. They are the kind of errors that seem insignificant but have a direct impact and paralyse your collections and payments.

These are the usual suspects:

• Incorrect IBAN or BIC: A single wrong digit in an account number is enough for the operation to be rejected immediately. Imagine the chaos if this happens in a remittance with hundreds of records.
• Invalid NIF/CIF: Your customer’s or supplier’s tax identifier must be correct and in the format the bank expects. A mistake here can make the receiving bank simply return the order.
• Missing or incorrect SEPA mandate: When it comes to collection remittances, this is the most critical error. Trying to collect from a customer without a valid direct debit mandate is a certain rejection. The same applies if the mandate reference you include in the file does not match the one you have on record.

A remittance file is only as strong as its weakest link. A single incorrect IBAN in a remittance of 50 salaries can mean a delay in that employee’s payment and a return fee for the company.

Problems with the XML file structure

As well as the accuracy of the data, the file itself must follow very strict technical rules. The SEPA XML format has a hierarchical structure that must be respected to the letter. A mistake at this level usually leads the bank to reject the entire file, not just a single operation.

The most common structural errors are:

1. Improperly closed XML tags: The file has a syntax similar to a programming language. If a tag is opened but not closed correctly, the whole document is invalid.
2. Wrong date or amount format: Dates must always be in YYYY-MM-DD format and amounts must use a full stop as the decimal separator. No commas or currency symbols.
3. Disallowed characters: Using special characters such as “ñ”, accented letters or odd symbols in fields like the description or account holder name can corrupt the file and cause an immediate rejection.

Prevention is always the best solution. Instead of waiting for the bank to send the file back so you can correct the errors, the smart move is to apply a quality filter before sending. For this, a SEPA file validator that checks both the data and the file structure is incredibly useful.

The proactive solution: pre-validation

Imagine being able to detect and fix all these errors before they even reach the bank. That is precisely what conversion and validation tools do. Platforms like ConversorSEPA act as a quality control that analyses your Excel or CSV file and turns it into a perfectly valid, error-free SEPA XML.

In a market as active as Spain’s, where 3.424 billion national operations were processed in the last period alone (7.5% more), precision is not an option—it is a necessity. These tools automatically validate IBANs, check that the file structure is correct and even help you generate mandates in PDF, saving you costly return fees.

By integrating a solution like this, your finance team gains time, reduces stress and ensures that collections and payments are executed on the planned date. In short, you keep your company’s treasury healthy.

How to simplify remittance management in your business

Managing bank remittances does not have to be an administrative maze. Let us be honest—it is often seen as a necessary evil, but the goal is to turn it around and make it an agile, efficient process that works for your treasury, not against it.

The key to doing this is simpler than it seems: rely on the right technology. Simply grouping your collections and payments into remittances is already a big step. It saves you a lot of time and gives you much more precise control over when money comes in and goes out of your business.

Automation as a strategic ally

The real leap in quality comes when you automate the most technical, error-prone part: creating and validating the file. This is where a specialised tool makes all the difference.

Using a technological solution brings very direct benefits:

• Guaranteed SEPA compliance: The software ensures your XML file always follows the current regulations. So you can forget about bank rejections for technical reasons.
• Minimised human error: Automatic validation of IBAN, NIF and the file structure itself catches mistakes before they reach the bank.
• Cost savings: Fewer errors translate directly into fewer return fees and, above all, fewer hours of your team putting out fires.

Free up resources for what really matters

For an SME or accountancy firm, every hour counts. The time spent on manual, repetitive tasks is time not spent on winning customers, improving services or planning growth.

The goal is not just to manage remittances; it is to do it in a way that frees up your team. Automation does not replace people; it gives them back time so they can focus on tasks that add much more value.

Tools like ConversorSEPA have been designed with this philosophy. They offer a practical, direct solution for companies that need a reliable, fast way to generate their SEPA files. If you still handle your collections from spreadsheets or old formats, you will want to know how a SEPA converter can simplify your day-to-day.

In short, managing a bank remittance in today’s world means leaving manual processes behind and embracing tools that bring security and efficiency. When you do that, you turn an administrative obligation into a competitive advantage, ensuring your business’s financial engine runs without interruption and with maximum precision.

Answering the most common questions about bank remittances

Although the basic concepts may be clear, small doubts always come up in day-to-day life when preparing a remittance. That is completely normal. Here we answer, in a direct and simple way, the questions we come across most often so you can manage your collections and payments with complete peace of mind.

Having these points clear will save you misunderstandings, errors and, above all, unnecessary delays in your treasury.

What is the difference between a remittance and a normal transfer?

The big difference is volume and efficiency. Think of an ordinary transfer as a single payment order: you move money from account A to account B. It is like sending a single letter by post.

A bank remittance, on the other hand, is a package that groups many of those operations (whether transfers or direct-debit collections) in a single submission. Following the analogy, it would be like taking a sack full of letters to the bank for them to process all at once. The remittance is essentially a tool for managing payments or collections in bulk.

Do I always need a SEPA mandate to send a remittance?

No, and this is one of the most common confusions. The SEPA mandate is simply the written permission a customer gives you to charge collections to their account. It is their explicit authorisation.

So it works like this:

• It is essential for collection remittances (i.e. direct debits or domiciliations). If you do not have a mandate signed by your customer, your bank will simply reject the collection order.
• It is not needed at all for payment remittances (transfers). To pay salaries or supplier invoices, all you need is their account number (IBAN).

The golden rule is simple: you only need signed permission to take money from someone’s account, not to put it in.

How long does the money from a remittance take to arrive?

Timing depends on the type of remittance (SEPA scheme) and the clearing cycles between banks, but the good news is that they are fairly standardised. It is not instant, but it is very predictable.

As a general rule, you can expect:

• CORE remittances (the most common): The money is usually available in the destination account in 1 business day (what is known as D+1) after the date the bank processes the order.
• B2B remittances (business-to-business only): The timing is very similar, usually the next business day. The main difference is that the deadlines for returning a collection are much shorter.

The important thing is that you deliver the remittance file to your bank with the lead time they ask for so that it is executed on the date you want.

Can I prepare a remittance from a simple Excel file?

Of course! In fact, it is the most common way of working in most SMEs and accountancy firms. The most convenient approach is to have all the information for the collections or payments (IBAN, amounts, names, descriptions…) organised in an Excel spreadsheet or CSV file.

That said, there is one catch: your bank will not accept that Excel file as it is. You need an intermediate step to convert it to the technical format they understand—the famous SEPA XML. This is where tools like ConversorSEPA come in: they act as a translator, taking your spreadsheet and turning it into a perfect, validated XML file that your bank will process without any objection.

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Tired of fighting formats and errors when creating your remittances? ConversorSEPA converts your Excel or CSV files to the SEPA format your bank requires. In seconds. Upload your file, map the columns and download an XML ready to send. Try the tool for free and simplify your remittances for good.

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