What is remittance advice?
Written by Arnon Shimoni
✓ Expert
Last updated on:
Remittance advice is the note a payer sends to tell the seller which invoices a payment covers. It travels with or just before the payment, by email, through a portal, or as a structured message from the payer's accounts payable system, and it lets the seller match the money that arrives to the invoices it settles.
Example: a customer pays €7,350 by bank transfer. Without remittance advice, the seller sees one amount and has to guess. With it, the seller sees that the payment covers invoice 1041 in full (€4,000), invoice 1038 in full (€750) and invoice 1035 in part (€2,600 of €3,200, with €600 held pending a credit note). Three invoices are closed or updated in one step.
At a glance | |
|---|---|
Sent by | The payer (customer) |
Sent to | The seller's accounts receivable |
Contains | Payment amount, date, reference, invoice numbers and the amount applied to each |
Used for | Matching payments to invoices (cash application) |
What remittance advice contains
Payer name and, for groups, which entity paid.
Payment date, amount and currency.
Payment method and reference (bank transfer reference, cheque number, card settlement ID).
The list of invoice numbers the payment covers.
The amount applied to each invoice, and for partial payments the amount left open.
Deductions taken and why: credit notes applied, early-payment discount, disputed lines, short payment.
Contact for queries.
Remittance advice vs invoice vs receipt
Document | Who sends it | When | What it says |
|---|---|---|---|
Seller to buyer | When the goods or services are supplied | What is owed, by when, and the tax on it | |
Remittance advice | Buyer to seller | When the buyer pays | Which invoices this payment settles, and how much on each |
Receipt | Seller to buyer | After the payment is received | Confirmation that the amount was received and applied |
Why remittance advice matters for reconciliation
A bank statement line shows an amount and a short reference. It does not show which of a customer's open invoices it settles, and for a customer with twenty open invoices and a habit of short-paying, that is the whole problem. Remittance advice closes the gap. One payment of €7,350 against three invoices, one of them partial, is applied in a minute with the advice and can take an afternoon of emails without it. At scale, the share of payments that arrive with usable remittance data is the main driver of how fast accounts receivable can be closed each month and how accurate the ageing report is.
Automating remittance matching
Matching works in layers, each catching what the previous one missed.
Reference matching. The invoice number or a structured payment reference in the bank transfer identifies the invoice directly. This is why the payment reference belongs on every invoice and why e-invoicing formats carry it as a field.
Bank statement rules. Amount, payer account and date matched against open invoices for that customer; exact-amount matches applied automatically, near matches queued.
Remittance parsing. Emailed or portal remittance advice read for invoice numbers and amounts, including partials and deductions, and applied across several invoices in one step.
Exceptions. What is left, typically short payments and unexplained deductions, goes to a person with the customer's open items and the remittance on one screen.
The ERP or the billing system that holds the open invoices has to be the place the matching happens, because that is where the invoice balances are updated and the dunning sequence is stopped.
Where Solvimon fits
Solvimon issues invoices with a structured payment reference, records payments from connected PSPs and bank feeds against the open invoices, applies partial payments and credit notes, and syncs the result to the ERP so the receivables ledger and the ageing report agree.
Frequently asked questions
What is remittance advice?
A note from the payer to the seller that says which invoices a payment covers and how much was applied to each.
Who sends remittance advice?
The payer. It is generated by the customer's accounts payable system or written by the person making the payment, and sent to the seller's accounts receivable.
Is remittance advice required?
No. It is not a legal document and no law requires it, but many sellers ask for it in their payment terms and most accounts payable systems produce it automatically with each payment run.
What is a remittance reference?
The identifier the payer quotes with the payment, usually the invoice number or a structured reference printed on the invoice, so the seller can match the payment without reading the advice.
What is the difference between remittance advice and a receipt?
Remittance advice goes from the buyer to the seller when the buyer pays. A receipt goes from the seller to the buyer after the money arrives.
Related
Accounts receivable. The open-invoice ledger that remittance advice is applied to.
Invoice. The document the remittance refers to.
Payment terms. Where to ask customers to send remittance advice.
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