Remittance advice
Encyclopedia
A remittance advice is a letter sent by a customer to a supplier, to inform the supplier that their invoice
has been paid. If the customer is paying by cheque
, the remittance advice often accompanies the cheque. The advice may consist of a literal letter (e.g., "Gentlemen: Your shipment of the 10th inst was received in good order; accompanying is our remittance of $52.47 per invoice No 83046") or of a voucher attached to the side or top of the cheque.
Remittance advices are not mandatory, however they are seen as a courtesy because they help the supplier's accounts-receivable department to match invoices with payments. The remittance advice should therefore specify the invoice number(s) for which payment is tendered.
Most companies' invoices are designed so that customers return a portion of the invoice, called a remittance advice, with their payment. The employee who opens the incoming mail should initially compare the amount of cash received with the amount shown on the remittance advice. If the customer does not return a remittance advice, an employee prepares one. Like the cash register
, the remittance advice serves as a record of cash initially received.
Modern systems will often scan a paper remittance advice into a computer system where data entry will be performed. Modern remittance advices can include dozens, or hundreds of invoice numbers, and other information.
RAs can be very complicated, especially in specialized fields like medical insurance payments. For example, there is a 188 page document entitled Understanding the Remittance Advice for the Medicare
health insurance program.
Invoice
An invoice or bill is a commercial document issued by a seller to the buyer, indicating the products, quantities, and agreed prices for products or services the seller has provided the buyer. An invoice indicates the buyer must pay the seller, according to the payment terms...
has been paid. If the customer is paying by cheque
Cheque
A cheque is a document/instrument See the negotiable cow—itself a fictional story—for discussions of cheques written on unusual surfaces. that orders a payment of money from a bank account...
, the remittance advice often accompanies the cheque. The advice may consist of a literal letter (e.g., "Gentlemen: Your shipment of the 10th inst was received in good order; accompanying is our remittance of $52.47 per invoice No 83046") or of a voucher attached to the side or top of the cheque.
Remittance advices are not mandatory, however they are seen as a courtesy because they help the supplier's accounts-receivable department to match invoices with payments. The remittance advice should therefore specify the invoice number(s) for which payment is tendered.
Most companies' invoices are designed so that customers return a portion of the invoice, called a remittance advice, with their payment. The employee who opens the incoming mail should initially compare the amount of cash received with the amount shown on the remittance advice. If the customer does not return a remittance advice, an employee prepares one. Like the cash register
Cash register
A cash register or till is a mechanical or electronic device for calculating and recording sales transactions, and an attached cash drawer for storing cash...
, the remittance advice serves as a record of cash initially received.
Modern systems will often scan a paper remittance advice into a computer system where data entry will be performed. Modern remittance advices can include dozens, or hundreds of invoice numbers, and other information.
RAs can be very complicated, especially in specialized fields like medical insurance payments. For example, there is a 188 page document entitled Understanding the Remittance Advice for the Medicare
Medicare (United States)
Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over; to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other...
health insurance program.