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What is Remittance Advice?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 14 September 2016
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A remittance advice is a document that is sometimes issued as a courtesy to a vendor or supplier. The text of the document usually confirms the delivery of goods or services ordered by the customer, affirm the products are satisfactory, and notes that payment for the order is being prepared and will be remitted by a certain date. In some instances, the advice accompanies the payment and a copy of the invoice for the order. While not considered necessary or required in most business settings, the remittance advice remains a staple of business etiquette in many nations, with technology now making it possible to forward electronic versions to suppliers along with the more traditional method of preparing and posting a hard copy document.

The exact format of a remittance advice can be very simple or extremely complex. The most simplistic examples may contain minimal information like the order number, the date the order was received, the amount due, and the date that the payment will be forwarded to the supplier. More complex examples may include an itemized list of each item included in the order, including unit and extended pricing for each of those items, a grand total, the check number for the payment, and the date that the check will be mailed. In cases where payment is remitted electronically, the remittance advice may document of a recently completed payment or advise the vendor to expect receipt of the electronic payment by a certain date.

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In times past, the purpose of the remittance advice was not only to provide confirmation of the receipt of an order and notification of a pending payment, but also as a means of extending courtesy to a valued business partner. While not mandatory, issuing documents of this type made it easier for business owners to anticipate when payments would be tendered, which in turn aided vendors in the process of scheduling payments to their creditors. For business owners that used outside accounting firms to manage their accounts payable and receivable, it was not unusual for the remittance advice to be mailed directly to the business while the payment was remitted to a separate remittance address.

Today, the remittance advice serves the same basic purpose and may serve as a crosscheck when electronic payments are scheduled for delivery by a certain date. In this application, a customer may schedule an electronic payment to be deposited in two to three business days directly into the vendor’s bank account. Once the payment is scheduled, the customer advises the vendor by way of email that the payment is scheduled and should arrive by a certain date. The details often include the invoice number associated with the payment, the amount of the payment, and possibly a transaction number that can be used to trace the payment should it fail to post on the appointed day.

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