What is Remittance Advice?
A remittance advice is a document sent by a payer to inform the recipient which invoices are being paid by a specific payment.
A remittance advice is a notification sent by a customer to their supplier explaining which invoices a payment covers. It helps the supplier correctly allocate the payment to the right invoices.
Why remittance advice matters: When a customer pays multiple invoices with one payment, without remittance advice you might not know how to allocate the funds. This is especially important when: - Multiple invoices are outstanding - Partial payments are made - Discounts or deductions apply - Credits have been applied
What remittance advice includes: - Payer's details - Payment date and amount - List of invoice numbers being paid - Any adjustments (discounts, credits, disputes) - Payment method and reference
Types of remittance advice: 1. Basic: Simple list of invoices paid 2. Detachable: Tear-off section from a cheque 3. Electronic: EDI or email with payment details 4. Bank reference: Payment reference matching invoices
For freelancers: When receiving payments, always check if remittance advice is included. For bank transfers, ask clients to use invoice numbers as the payment reference.
Examples
A company sends remittance advice showing payment covers INV-001, INV-002, and INV-003
Remittance advice explains a £50 deduction for a disputed item
Electronic remittance advice accompanies a BACS payment
Related Terms
Invoice
An invoice is a commercial document issued by a seller to a buyer, listing the products or services provided and requesting payment.
Accounts Receivable
Accounts receivable (AR) is the money owed to a business by its customers for goods or services delivered but not yet paid for.
Net 30
Net 30 is a payment term meaning the full invoice amount is due within 30 days of the invoice date.
Put This Into Practice
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