What is Remittance Advice & How Do You Use Them?

While remittance isn’t mandatory for a business, here are some reasons why you should consider it:

• With remittance advice, it’s easier to maintain records and know which payments are associated with which orders or customers.
• If check payments are involved, it helps the analysts understand which customers’ checks are cleared. Learn how Artificial Intelligence can help cash application teams to capture remittance data from check stubs.
• It’s beneficial for businesses to compare the actual payment vs the outstanding payment. Plus, if you have customers that prefer paying in instalments, remittance advice aids in monitoring them.
• For businesses tracking electronic payments, they can maintain records by simply scanning the remittance data.

A remittance slip is ideally declared on a document with company letterhead. It should include the contact details of the POC along with the following information:

• Date
• Name and address of the customer/supplier
• Name and address of the business
• Mode of payment
• Payment amount; payment made against each order if remitted in installments
• Invoice number
• Transaction ID
• Tentative date of payment expectation

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 a remittance advice that indicates the order number, invoice number, payment amount, line-item level details.

The following image shows what a cheque remittance looks like:

Customers send remittances through various modes. They could send it along with the check or via emails, EDIs or as web remittances. When sending it via email, ensure you deliver it to the correct department. We would recommend confirming the email credentials with the cash application team before sending it in to avoid miscommunication. If you’re sending the remittance advice along with the check, it means you’re also clearing the invoice simultaneously. Maintain a copy of the remittance advice for your recordkeeping too.

The cash application teams have to handle multiple remittance formats and sometimes even missing remittance scenarios. Manually processing remittances from emails, EDIs, paper-based documents or even web portals can turn out to be difficult and error-prone. Learn how the cash application team at Wesco simplified their remittance processing by automating the cash application process.