What Is Remittance Advice? Everything You Need to Know

Businesses that deal with multiple suppliers or a high volume of transactions can find it a challenge to keep track of all the invoices and payments. Remittance advice is a useful solution as it alerts accounting teams to incoming or outgoing payments and helps optimize their processes. It is also a good way of keeping lines of communication open between suppliers and clients.

This article explains the meaning of the term and best practices for sending remittance advice to help your business relationships run smoothly.

What is Remittance Advice?

The concept of remittance in money transfer comes from the term “remit”, or “send back”. A supplier sends an invoice to a customer to request payment for products and services delivered and a remittance sends back payment from the customer.

The definition of remittance advice, then, is a notice sent from the buyer to the seller to confirm that they have paid the invoice. This can be in the form of an electronic notification or a paper document.

Remittance advice slips, sometimes known as payment vouchers, assist customers and suppliers in matching their payments to their invoices and quickly identifying any discrepancies. They are also useful in providing confirmation of urgent, high value, or international payments.

In the past, payment remittance advice would be sent in the form of a letter along with a check, which would help the individual processing the check to allocate the payment to the correct invoice.

As instant digital payments are becoming increasingly popular, remittance advice can seem redundant, with accounting programs able to match payments automatically. However, it provides an extra layer of clarity and security for suppliers and customers. Remittance advice slips are particularly helpful when customers combine payments, as this can cause an accounting mismatch.

The Three Types of Remittance Advice

There are several different types of remittance advice, including:

• Basic remittance advice: a simple document the buyer sends to the seller stating the invoice number and payment amount.
• Removable invoice advice: an invoice the seller sends to the buyer that includes a removable remittance slip for the buyer to complete and return along with their payment.
• Scannable remittance advice: a document that can be scanned for electronic record keeping.

Remittance advice can also be categorized as email-based, web-based, paper-based, or Electronic Data Interchange (EDI)-based. EDI-based remittance is typically sent through EDI machines and suitable for businesses that have automated their accounts receivable processes.¹

What Should a Remittance Advice Slip Include?

What type of information is found in a remittance advice document? To help the recipient identify the payment, a remittance advice contains details about the transaction including:²

• Customer’s name and contact details
• Supplier’s name and contact details
• Invoice number
• Purchase order number
• Payment date
• Expected receipt date
• Payment amount and currency
• Payment method
• Description of products or services
• Discount, where applicable
• Deductions or amount withheld, where applicable

This enables the supplier to easily match the incoming payment to the correct customer invoice and helps to streamline accounting processes.

The amount of detail included can depend on the payment method used. For example, payments by check often include more information than a bank transfer, which might simply state the invoice number and payment amount.

How to Send a Remittance Advice Slip

There are several options for sending a remittance advice slip to a supplier:

• Accounting software: Platforms such as QuickBooks, Sage and Xero can automate the process of sending remittance advice slips, emailing suppliers when a payment is sent.
• Email: Sending an email is quicker and easier than mail and creates an electronic remittance advice record for later reference. It is important to ensure it is sent to the correct email address, such as a contact in the supplier’s accounts receivable team, rather than a general company email account.
• Mail: You can send a note by mail to the supplier when you send the payment, especially if you’re sending remittance advice with a check. You can use a remittance advice template online to create and print it out the letter.

Once the supplier receives the remittance advice, they can file it with their invoices and other important documents for their records.

When Should you Send Remittance Advice?

It is not obligatory to send remittance advice, but it is a courtesy for customers to send it when they pay an invoice.

As noted above, some suppliers issue a removable invoice advice or scannable remittance advice when they invoice customers, making it easier for them to send back remittance advice in the correct format when they make the payment.

Discover Wise Business: The Stress-Free Way to Handle International Payments

If you regularly send payments to companies overseas, you should know about remittance advice. And if you frequently make international payments, you can save money with Wise Business.

Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. The Wise Business account is designed with international business in mind, and makes it easy to send, hold, and manage business funds in 40+ currencies. You can get major currency account details for a one-off fee to receive overseas payments like a local. You can also send money to 160+ countries.

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The benefits of a Wise account include:

• No monthly fees
• QuickBooks connection to track payments and automate remittance advice
• Easy batch payments
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• Major currency account details to receive payments like a local

All sources checked December 2024.