What is Remittance Advice?
Remittance advice is a letter issued by the customer to the supplier in order to inform the supplier that their invoice has been paid. It is not mandatory to send remittance advice along with the payment but it is considered as a courtesy as it helps the accounts receivable department to match invoices with payments. It is treated as a proof of payment received which is considered equivalent to a receipt from a cash register.
Who issues Remittance Advice?
Remittance advice is issued by the customer to the supplier.
What to include in Remittance Advice?
Remittance advice should have the following information -
- You name & address
- Supplier’s name & address
- Date of remittance
- Remittance amount
- Invoice number for which the remittance is paid
- When the supplier expecting the payment to be complete & available.
Types of Remittance Advice
There are 3 types of remittance advice –
Basic Remittance Advice
Basic remittance advice is a note issued by the customer containing invoice number & the total payment.
Removable Invoice Advice
In case of removable invoice advice, a slip is sent by the seller to the customer along with the invoice which is filled by the customer & sent back to the supplier as a remittance advice.
Scannable Remittance Advice
You can now easily create remittance advice with the help of various softwares, where remittance advice can easily scanned into computer systems and helps in electronic record keeping too.
When is Remittance Advice Slip used?
Remittance advice slip is used to inform suppliers that their payment has been done. It is mostly used when the payment by the customer is done by Cheque. The remittance advice slip is attached along with the payment which also helps accounts receivable department in matching the payment amount with the invoice.
How to issue a Remittance Advice?
There are different ways of issuing a remittance advice. It is generally issued in the following ways –
Paper Remittance Advice
Paper remittance advice is widely used if you are making a payment to the supplier through Cheque. It is sent to the supplier along with the Cheque.
Electronic Remittance Advice
As you know, we are all now a part of digital world. Everything is done online. Therefore, after doing the payment online, an electronic remittance advice can also be sent via e-mail.
Benefits of Electronic Remittance Advice
The benefits of electronic remittance advice are as follows –
- Easy & quick generation of receipt electronically
- Quickly send receipt of remittances to customers over e-mail
- Saves the administration cost
- Easily auto post electronic remittances and helps in reconciling the outstanding balances too.
- It helps in reducing your paper & printing cost which makes the entire process environment friendly.
- Low maintenance cost
- Low storage cost
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