What is remittance advice? Guide for NZ businesses

Whether you’re a builder or a barber, busy Kiwi SMBs have a steady stream of incoming invoices at any given time. Without a full-time bookkeeper on your books, keeping track of every payment can become a huge administrative burden.

Remittance advice is a simple, easy-to-generate document that eliminates mismatched payments and streamlines record-keeping. From definitions to objectives and benefits, here’s what remittance advice means for small New Zealand-based businesses.

What is remittance advice?

A remittance advice is a document that provides written confirmation of the initiation of an invoice payment. The document doesn’t serve as proof of payment, as the funds may not have arrived yet. The buyer sends remittance advice to the supplier at the time of payment, or sometimes shortly afterwards.

Remittance advice can cover a full payment or a partial payment for a milestone as part of an extended contractual agreement.

Remittance comes from the verb “to remit”, which means to “send back.” In business, remittance refers to the act of paying an invoice for supplied goods or services. Therefore, “remittance advice” is like a receipt documenting that payment.

Importance of a remittance advice?

Remittance advice is both a professional courtesy and a useful administrative tool.

Upon receiving remittance advice, the supplier can rest assured the funds will reach their account soon – if not already. With this knowledge, they no longer have to chase payments and can better manage cash flow.

Remittance advice also provides a written record of which payments belong to which invoices. By including details such as the date, payment method, amount, goods/services, and invoice number, the buyer and supplier will find it easier to match and reconcile payments.

Benefits of a remittance advice

Accurate, well-structured remittance advice provides an array of tangible benefits for businesses in New Zealand.

• Advance notice: The supplier doesn’t need to chase payments, saving needless back-and-forth for both parties.
• Payment tracking: The supplier and seller will find it easier to monitor incoming and outgoing payments.
• Simplified reconciliation: The supplier and buyer can match payments to specific invoices, making reconciliation easier.
• Fewer disputes: The supplier is much less likely to dispute a late or incorrect payment when remittance advice is provided.
• Better accuracy: By matching payments to invoices, remittance advice can help reduce the likelihood of payment mistakes, such as duplicates or overpayments.
• Stronger relationships: Suppliers appreciate receiving remittance advice, and the document can help foster effective, long-lasting business relationships.

The downside? Remittance advice requires time and effort to generate and send. However, with modern accounting software, it’s possible to automate some processes.

Types of remittance advice

There are three different types of remittance advice a Kiwi business should consider.

Standard remittance advice

The standard type of remittance advice is a template generated and filled in by the buyer. The document is typically saved in PDF format and emailed to the supplier.

Removable remittance advice

When sending an invoice, some businesses include a removable tear-out slip or a copy-pasteable section that the buyer can fill in and submit upon payment. Its inclusion suggests the vendor would like to receive a remittance advice – sending one may help build a stronger business relationship.

Scannable remittance advice

Barcodes, QR codes, and alphanumeric codes can make remittance advice machine-readable, which reduces admin for busy businesses.

What to include in remittance advice?

To reap the benefits of sending remittance advice, you must present all the essential details in a simple, easy-to-read document.

Most businesses have a reusable template for different payments and suppliers. Ensure your document includes the following:

• Your business name and address
• Supplier’s business name and address
• Relevant goods or services, including quantities
• Payment method (card, bank transfer, etc.)
• Total payment amount
• Total amount owing
• Payment date
• The invoice number (must match the one provided by the supplier)
• Reference number or purchase order number, if provided (must also match the supplier’s invoice)

Remittance advice template

Looking for a remittance advice example template to use with your business? Feel free to copy and paste the text below.

Parties

Payment details

Invoice reference

Goods / Services included

Notes

How to create and send a remittance advice

New Zealand businesses can create their own template or use the free sample provided above.

Back in the day, businesses would send financial documents through the post. Nowadays, of course, most Kiwis prefer email as it's faster and reduces paper waste. To ensure the right person sees it, forward the document to a specific email address – typically accounts receivable – rather than the main company inbox.

Here’s a quick, step-by-step rundown of the remittance advice process.

1. Pay the invoice
2. Create a copy of your editable remittance advice template
3. Fill in the empty fields
4. Review your work to identify and fix potential errors
5. Save the document under a suitable file name
6. Select a format (many Kiwis prefer PDF)
7. Send the remittance advice to the correct address within the supplier’s company

Busy businesses dealing with a deluge of invoices may prefer to use accounting software, which automates much of the process. Many programs use EDI (Electronic Data Interchange) or XML (eXtensible Markup Language), which are standardised electronic formats for exchanging administrative documentation between accounting apps.

Is remittance advice compulsory?

Remittance advice is generally considered more of a professional courtesy than an obligatory document, such as an invoice or receipt. While helpful for record-keeping, remittance advice isn’t strictly required for most transactions, and some businesses choose not to send them.

Challenges when sending payments and remittance advice to overseas suppliers

High fees and cost uncertainty make sending a remittance advice more complex when paying overseas suppliers.

• Payment gaps: Time zone differences and foreign public holidays can lead to unexpected payment delays.
• Currency fluctuations: The exchange rate varies from one moment to the next, affecting the total payable amount in your home currency.
• International transaction fees: Cross-currency payments generally incur high fees, and both parties must agree on which will absorb the costs.
• FOREX fees: Many financial services include hidden markups in their foreign exchange fees, making sending money abroad more expensive than expected.
• Unclear fees: The buyer often won’t know how much the seller will receive until the transaction is finalised.

Wise Business: Simplifying international payments for New Zealand Businesses

Sending an accurate remittance advice becomes a lot more complicated when you are paying overseas suppliers, since unpredictable exchange rates and surprise bank fees often mean the amount you document doesn't match what actually arrives.

Wise Business helps solve this uncertainty for Kiwi businesses by providing the real mid-market exchange rate and clear, upfront fees, ensuring the numbers on your paperwork match the final transfer exactly.

Wise Business helps streamline overseas business payments without foreign transaction fees, saving up to 6x compared to other providers.

• Free to register — Send money to 140+ currencies with no hidden exchange rate markups
• Make up to 1,000 transfers at once with the Wise batch payments feature
• Fast, low-cost payouts to customers, freelancers, employees, investors, and suppliers globally
• Automate invoice payments, recurring transfers, and international payroll
• Fast and fully secure payments through Wise, even for large amounts

Tired of hidden fees and complex processes when making overseas payments?

Start sending with a Wise Business account! 🚀

This general advice does not take into account your objectives, financial circumstances or needs and you should consider if it is appropriate for you.

---

FAQs on remittance advice

1. What does remittance advice mean?
Remittance advice is a financial document a buyer sends to a supplier to confirm they have paid an invoice.

2. Does remittance advice mean payment has been made?
Not quite. Remittance advice indicates that the buyer has initiated the payment process. However, the transaction may still be pending and could take several hours or days to finalise, depending on the payment type. Also, the payment could fail to process or be withdrawn.

3. Is remittance advice considered proof of payment?
No. Remittance advice only serves as proof of the buyer’s intent to pay. Definitive proof of payment occurs when the money reaches the supplier’s bank account, and the transaction moves from pending to finalised.

4. What's the difference between remittance advice and a payslip?
Remittance advice is a document that the buyer sends to the supplier to confirm the initiation of payment for an invoice. A payslip is a document an employer issues to an employee that outlines their salary, taxes, entitlements, and deductions for a specific pay period.