All terms

Remittance

Remittance — Remittance is the scheduled transfer of collected funds from the firm's trust account to the creditor client, net of the firm's earned fee and any agreed costs, accompanied by an account-level accounting.

There is no federal definition of remittance in collections; the closest primary anchors are state trust-accounting rules requiring prompt delivery of funds a client is entitled to receive, and the contingent-fee closing statement requirement — North Carolina Rule 1.5(c), for instance, requires a written statement "showing the remittance to the client and the method of its determination." Operationally, remittance terms are set by the placement agreement: cycle (weekly, semi-monthly, monthly), cut-off, whether fees are netted at remittance or invoiced separately, and how NSF reversals and post-remittance refunds are clawed back. Because the funds are client funds held in trust, a late or unreconciled remittance is simultaneously a contract issue, a trust-accounting issue, and a vendor-oversight finding.

See also

• Net-backNet-back is the amount a creditor actually retains from a placement after the firm's contingency fee, court costs, and other recoverable expenses are deducted from gross collections.
• Three-way reconciliationA three-way reconciliation proves that the trust account's general ledger balance, the sum of all individual client ledger balances, and the adjusted bank statement balance are identical as of the same date.
• Contingency feeA contingency fee is a fee payable to the collections firm as an agreed percentage of amounts actually collected, earned only on recovery rather than billed for time.
• IOLTAAn IOLTA is an interest- or dividend-bearing lawyer trust account in which interest earned on pooled client funds is remitted to a state bar foundation to fund legal services rather than paid to the lawyer or the client.

Where this appears

• Migrating a collections firm to a new case management system
• The Otto platform
• IOLTA trust accounting and three-way reconciliation
• Exchange — the placement file gateway
• Client Trust Accounting for Collections Firms: What Does Three-Way Reconciliation Actually Require?

This is an informational reference, not legal advice, and using it creates no attorney-client relationship. Limitations periods turn on facts this page cannot know — which state's law governs, the contract type, when the claim accrued, and whether anything tolled or revived it. Confirm against the primary source and your own counsel before acting.