Remittance Advice

What is remittance advice?

When you pay a bill or settle an invoice, you might come across the term remittance advice. Remittance advice is a document the payer sends to the payee to provide details about a payment. It’s a document that confirms a payment was made and helps the payee match that payment to the correct invoice or bill. Without a remittance, it can sometimes be a little confusing to match up customer payments.

For example, you have just received a client’s payment for a big project. You sit down to settle the invoices but get confused about which ones to settle because the client did not include any details about which invoices the payment is meant to cover. This is where remittance advice can be helpful. Remittance advice helps you track and reconcile payments to the specific invoices they are meant for. Without it, you might be left wondering which invoice the payment was meant to settle, especially if it includes multiple invoices.

Key Points

Remittance advice is a document that helps payees match payments to specific invoices so you can reconcile records and avoid confusion.
Remittance advice is especially helpful when one payment covers multiple invoices. It shows exactly which invoices were paid, how much was applied to each, when the payment was made, and the payment method.

Remittance advice example

Here’s another example of what a remittance advice might look like:

Now, you’re a freelance graphic designer who just finished three client projects. The client sends you a payment of $1,500 and includes a remittance advice that lists the breakdown:

Project 1: $500
Project 2: $600
Project 3: $400

With this, you can easily match the payment to the corresponding invoices so you know which amounts are being paid for which projects. It also means you and the client have a clear transaction record.

In addition to itemizing payments for specific invoices, remittance advice can also include:

Payment method (e.g., check, wire transfer, credit card)
Date of payment
Total amount paid
Any discounts or adjustments applied to the payment

It’s useful info to have, especially for businesses or freelancers handling multiple invoices at once. With remittance advice, you can reconcile payments, avoid confusion, and make sure you get paid what you’re owed. Creating a remittance advice can be a bit daunting at first, but there are plenty of online templates to help get you started.