What Is a Remittance Advice?
The note a customer sends to say what a payment is for
What a remittance advice contains
It is usually short, and its job is to remove guesswork when the payment arrives.
- The payer's name and the supplier's name
- The date of the payment and the method used
- The total amount paid
- The numbers of the invoices being paid, with the amount against each
- Any credit notes or deductions taken off
- A payment reference the supplier can find on their bank statement
Why it matters
A single bank transfer can cover several invoices, or only part of one. Without a remittance advice the seller has to guess which invoices to mark as paid, and may chase a customer for money that has already been sent.
A worked example
A customer pays 1,150.00 by bank transfer. The remittance advice lists INV-0044 for 1,000.00, INV-0047 for 250.00 and credit note CN-0002 for 100.00.
The seller marks both invoices as paid and applies the credit note: 1,000.00 + 250.00 - 100.00 = 1,150.00.
Remittance advice or receipt?
A remittance advice comes from the person paying and says what they have paid. A receipt comes from the person being paid and confirms they have received it.
Frequently Asked Questions
What is a remittance advice?
A notice from a customer to a supplier saying a payment has been made and which invoices it covers.
Who sends a remittance advice?
The customer, or whoever is making the payment. The seller receives it.
Is a remittance advice the same as a receipt?
No. A remittance advice is sent by the payer to say what they have paid. A receipt is sent by the seller to confirm they have been paid.
Do I need to send one?
Often not for a single invoice paid in full, but it is useful when one payment covers several invoices or part of one.
Create an invoice with the right terms
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