A remittance advice is a document that a customer sends to a supplier to notify them of a payment made. It includes details such as the payment amount, date, and invoice number, and helps the supplier match the payment to the correct invoice and keep accurate accounting records.
Suppliers use remittance advice to match their invoices with incoming payments easily. If a customer doesn’t send a remittance, the supplier must ask for one to avoid confusion.
A remittance is a document that explains why a customer made a specific payment. While its usage originated when checks were widely in practice, it’s still in use because several global businesses transact via check and send their check remittance advice along with the payment for suppliers to maintain a record.
Even though digital payment is now commonly practiced, if you’re dealing with multiple remittance emails daily, these remittances will help organize and match open invoices with payments.
Generally, the Customer remittance advice contains the invoice number, items bought, and their corresponding payment information. If your business receives payments and remittances in large amounts, it can be difficult for the cash application team to handle remittances manually. Read this article to learn the best practices of remittance processing.
1. Paper-Based Remittance: These remittances are usually paper-based documents that are either hand-written or printed. They contain information such as an invoice number and the payment amount.
2. Email Remittance: Customers usually send the remittance information through email. The remittance is either present in the body of the email or as an attachment.
3. EDI-Based Remittance: Large enterprises usually send remittances through EDI machines. These remittances are a combination of alphanumeric characters.
4. Web-Based Remittance: In the case of retail giants like Amazon and Walmart, their A/P teams upload the remittance on a website portal. The supplier cash application teams would log into those portals and download the web remittance advice.
There are various commonly used remittance formats across the industry; you can explore the 13 most commonly-used remittance formats here.
While remittance isn’t mandatory for a business, here are some reasons why you should consider it:
A remittance slip is declared on a document with company letterhead. It should include the contact details of the POC along with the following information:
If the remittance is sent by email, your accounts team can monitor the payment or communicate with the POC in case of discrepancies.
Let us consider a buyer-supplier ecosystem where the buyer is PentaCorp, and the supplier is ABCCorp. As PentaCorp releases the payment corresponding to the goods supplied by ABCCorp, they also send remittance advice that indicates the order number, invoice number, payment amount, and line-item level details.
The following images include a check remittance advice example:
Customers send remittances through various modes. They could send it along with the check or via emails, EDIs, or as web remittances. Here are a few best practices while sending out remittance information:
1. When sending it via email, ensure you deliver it to the correct department.
2. We would recommend confirming the email credentials with the cash application team before sending it in to avoid miscommunication.
3. If you’re sending the remittance advice along with the check, it means you’re also clearing the invoice simultaneously.
Each day, the cash application teams have to handle multiple remittance formats and sometimes even missing remittance scenarios. Manually processing remittances from checks, emails, EDIs, paper-based documents or even web portals can turn out to be difficult and error-prone. The majority of resources in the cash application team are burdened with low-value manual tasks such as re-keying remittances, reconciling and fetching data, and matching invoices. In this era of digital payment, learn how companies have achieved 95% straight-through cash posting rates with reduced operating costs.
As per the Research data assistance center (ResDAC), the Remittance Advice number is a sequential number to identify the current advice produced for a supplier. Each time a new remittance advice generates, the remittance advice number is incremented by one.
Remittance advice simplifies record maintenance of payment per line item.
Remittance advice is not proof of payment. It only confirms the payment transaction.
There’s no ideal way to write one, just make sure you add the payment amount, invoice number, payment date, and mode of payment.
Yes, you must document the remittance advice as it’s a confirmation from the customer about the payment transaction.
Remittance information is the details provided by a customer when making a payment, including the amount paid, the invoice number, and any additional information required by the payer. It is used by the payee to reconcile the payment and allocate it to the appropriate account or invoice.
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HighRadius Cash Application Software enables the end-to-end automation of the cash application process that covers major benefits such as AI-enabled data capture for remittances, auto-linking of payments with open invoices, cost-cutting on lockbox fees and easy compatibility with any system due to its ERP-agnostic Saas infrastructure. Apart from the major benefits that it has, there are some key features which can not be missed out, some of them are Email Remittance capture, Discounts and Deductions Handling, Check Remittance Capture, Web Remittance Capture, Invoice Matching, and RDC & Mobile Payments.