Payee definition
/What is a Payee?
A payee is a person or entity that receives or is scheduled to receive a payment. The payee is usually entitled to a payment because it has provided goods or services to the payer. Other reasons for the receipt of payment are when the payee is receiving a donation, a grant, or a tax payment. The person or entity making the payment is the payer.
Payments to a Payee
A payment to a payee may be in any form, including bills, coins, a check, an electronic transfer, a promissory note, or in kind. For example, the payer may promise to provide tax filing services to the payee in exchange for the settlement of a debt.
Examples of Payees
Here are several examples of payees:
Supplier. This party receives payments for raw materials, goods, or services provided.
Employee. This party receives wages or salaries as part of payroll.
Contractor. This party receives payment for specific projects or tasks.
Tax authority. This party receives tax payments from the business.
Insurer. This party receives premium payments for policies.
Each payee is the recipient of funds, whether for a transaction, obligation, or service rendered.
When are the Payer and Payee the Same?
The payer and the payee may be the same party. This situation usually arises when a person wants to transfer funds from one account to another, and does so by writing a check to himself from one account and depositing it in another account.