Essential Financial Instruments: Checks, Transfers, and Receipts

Check Payment Requirements

A check is payable on demand, due when the instrument is presented for collection at the bank and branch appearing on the document.

Check Presentation Deadlines

To preserve all rights, the holder of a check must submit it for payment within the time predetermined by law:

• A check issued and payable in Spain: 15 days.
• A check issued in Europe and payable in Spain: 20 days.
• A check issued outside of Europe and payable in Spain: 60 days.

Check Endorsement

A check, as a payment instrument, can be endorsed to a party other than the original payee, granting that party a right of recovery.

The endorsement is the legal act used to convey the right to cash the check. The person transferring the check is called the endorser, and the recipient is the endorsee.

The endorsement must be total (for the full amount).

Recourse for Non-Payment of a Check

If the drawer's bank account lacks sufficient funds, and the drawee fails to pay the amount, either in whole or in part, the holder may exercise their right to payment (recourse).

Check Payment Guarantee (Aval)

The holder of the check can request a guarantee (known as an aval) to ensure payment, either for all or part of the amount.

This guarantee involves two parties:

• Guarantor: The person who guarantees the payment.
• Guaranteed Party (Avalisé): The person whose obligation is supported, typically the drawer.

The guarantee must necessarily be signed by the guarantor.

Bank Transfers and Payment Orders

A bank transfer occurs when a customer orders their bank to move funds from their account to a beneficiary (supplier). This operation usually involves costs, such as a commission charged to the payer.

Types of Bank Transfers

Based on Institution Location:

• Internal Transfers: Both the payer's account and the beneficiary's account are held within the same depository institution.
• External Transfers: These involve two or more credit institutions, requiring transmission through interbank clearing procedures.

Based on Routing (External Transfers):

• Direct Transfers: The beneficiary is a client of the deposit institution to which the initiating entity sends the transfer order directly.
• Indirect Transfers (or Routed Transfers): The beneficiary is not a customer of the entity managing the transfer. This entity uses an intermediary to route the order to a third institution where the transferee holds an account.

Payment Receipts (The Bill)

A receipt is a document proving the payment of an amount due. It is typically issued by the recipient of the money to acknowledge the payment.

Standard Receipt Sections

A standard receipt usually consists of the following sections:

• Receipt Number
• Name and address of the recipient
• Date of issue or release
• Amount stated in words and figures
• Reason for issuing the receipt
• Signature of the party issuing the receipt

Direct Debit (Domiciled Payments)

This mechanism is used for payments that are domiciled (set up for automatic collection) in a bank account. It requires written permission (mandate) from the account owner, authorizing future payments to be made automatically.