How to Create and Send Remittance Advice

Remittance advice notes are issued to confirm invoice payments. Although less common today, they can improve financial tracking and offer peace of mind to your suppliers.

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Keeping track of online payments and invoices can be done much more easily in today’s digital age. Still, additional clarity is always appreciated. When managing your company’s bookkeeping, it’s much easier to match online payments to invoices based on invoice numbers, payment dates, and amounts, though doing so can be tedious.

While accounting software helps automate much of the invoicing and payment management process, providing extra documentation when an invoice is paid can provide better transparency on both ends. That’s where remittance advice comes in handy, making it easier to match up payments with invoices.


Overview: What is remittance advice?

Remittance refers to money that is sent or issued to a supplier, vendor, contractor, or another business. Remittance advice is the proof of payment a company sends to accounts receivable to let a business or individual know that an invoice has been paid. It’s similar to a receipt and can be extremely helpful for both parties to better organize financial records.

When a company or individual issues an invoice, a remittance advice note (also known as a remittance receipt) can be automatically scheduled to send out once payment for the invoice has been processed. This can be done in the form of an email message or sent via payment portal or processing software. A remittance advice note is also sometimes referred to as a remittance invoice, payment remittance, or remittance notice.

Since most invoices are now paid online, a remittance advice document is not typically required, nor is it often expected. In fact, these notes are becoming less frequent as digital payment methods increase.

However, there are some key advantages to issuing remittance advice notes, including:

  • Making it easier to match payments and invoices
  • Confirming proof of payment
  • Offering easier identification if a company questions payment

In addition, if you frequently work with vendors and suppliers in other countries, issuing remittance advice documents can offer an extra layer of accountability when compiling your financial documents for company reviews or tax season.


6 things to include in a remittance advice document

If you decide to issue a remittance advice document after processing payment to a vendor or other entity, you’ll want to pull key information from their invoice. Their invoice will have some personal information and payment details, including how to pay them, payment terms (net 30, due upon receipt, etc.), and details about the service performed.

Here are some of the standard fields you’ll want to include when issuing remittance advice notes:

1. Your company’s name and address

Include this information to ensure the payment recipient can clearly identify who the payment is coming from. If the recipient did work or supplied products to a subsidiary, you’ll want to include that information on the slip for clarity.

2. Recipient’s name and address

Next, include the recipient’s name and address as listed on the invoice they supplied to you. You can also include their email address or phone number if that information is available.

3. Invoice number

When the vendor submitted an invoice, it would have provided an invoice number. Be sure to include that on this slip for ease of reference.

4. Payment amount

It’s important to include the amount the recipient is being paid, including any taxes or expenses withheld or bonuses. If multiple services were completed, you can itemize the payments to offer even more detail.

5. Payment method

Be sure to include how the invoice has been paid (DCH, PayPal, Venmo, wire transfer, physical check, or alternative payment method). This will allow the recipient to understand how their money will be coming to them and offer better transparency to match up payments to invoices down the road.

6. Issued date

Lastly, you might want to include the date the remittance advice document was issued and when the customer can anticipate payment according to their payment terms.


How to create and send a remittance advice document

Now that you know what’s needed to create remittance advice slips, you might wonder about the best way to send them. There are no firm rules regarding how remittance advice notes should be sent — in fact, they aren’t legally required at all. However, there are some common practices you can follow, depending on the method you choose for sending remittance advice documents.

Here are the most common ways to send remittance advice documents.

1. Physical mail

Before payments began to transfer to digital methods, remittance advice documents were much more prevalent. They were sent through the mail to the company or contact’s address and sometimes even came along with physical checks. However, sending remittance advice documents digitally is much more common today.

2. Email

Email is typically the fastest and easiest form of sending and receiving remittance advice documents. When doing this, it’s important to request the entity’s email address (or that of its accounting department) upfront, rather than relying on a general company email address.

3. Other digital methods

Many accounting platforms make it easy to send and receive remittance advice notices digitally. Some accounting software allows you to set up remittance advice documentation automatically, which is then sent through to the corresponding recipient when an invoice is paid (or scheduled to be paid).

When the remittance advice document is created, it could trigger an email, text, or notification in your accounts payable software for the recipient.

Keep in mind, the method your company chooses to send out remittance advice notes will likely vary depending on your size, profitability, and number of vendors, suppliers, and contractors.

For instance, if you’re a small company that primarily pays contractors and suppliers by physical check, you might opt to send the remittance advice document with the payment. Larger companies that offer vendors and suppliers access to their invoice software or accounts payable systems will likely opt to send these notices within the software platform.


What are some alternatives to sending remittance advice?

Since many companies now pay their suppliers and vendors online, remittance advice documents are not as necessary as they once were. In fact, many companies choose not to send remittance advice documents or alternatives at all, instead noting their payment terms upfront so recipients always know when to expect payments.

In lieu of sending a remittance advice note, other companies may opt to send an email noting when the recipient can expect payment or confirming that payment is being processed. Most accounting software can be set up to send these notes automatically.

While similar to remittance advice emails, these payment confirmation emails typically contain less information than traditional admittance advice notes. Accounting software like Xero and Zoho Books can automatically send emails to users once an invoice is submitted. These emails contain the invoice status, up-to-date payment information, and links to check on the status of a particular invoice.


Save time with automated payment processing updates

Remittance advice documents are still issued by many companies today as a means to help provide better tracking for vendor payments, though they are not required by law. However, since digital tracking offers much more transparency, remittance advice notes are becoming much less common.

If you do choose to send remittance advice documents, you can do so via mail, email, or automated messages generated by your accounting software. Alternatively, you can send payment processing notifications or offer vendors access to your invoice management system so they can easily see and track all of their invoice payments.

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