Remittance advice definition
/What is a Remittance Advice?
A remittance advice is a statement that accompanies a payment to a supplier, detailing what was paid. The supplier uses the information on the remittance advice to flag outstanding receivables in its accounting system as having been paid. This information is quite useful for the recipient, especially when a large number of invoices are being paid, perhaps with offsetting credits. Without the remittance advice, it would be impossible to figure out which invoices were paid. A remittance advice is frequently printed as an attachment to a check payment. The payables software generates the remittance advice automatically, as part of the check printing process. The remittance includes the invoice number and payment amount for each invoice paid.
Remittance Advices for Electronic Payments
When a business makes an electronic payment, the transmission system generally does not provide for the inclusion of any remittance details. This can make matters difficult for the recipient, who has no idea which invoices are being paid for by the payer. To get around this problem, a remittance advice can be sent separately to the payee, either as an attachment to an email or through the regular postal service.
Remittances Advices for Online Purchases
A remittance advice is not needed in online retail store transactions, since customers are making credit card or debit card payments at the point of sale. In these cases, the payment is automatically associated with the customer’s purchase in the seller’s accounting system.
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Advantages of a Remittance Advice
The use of a remittance advice can be considered a best practice, since it keeps the payment recipient from having to contact the sender to discuss what was included in the payment. It can also be used by the recipient as a control, where the amount of cash received is compared to the amount stated on the remittance advice, to ensure that they are the same; this is usually done at the point of cash receipt.