You have probably seen the words remittance advice on many of your business bills or sometimes utility bills.
A remittance refers to a total sum of money that is sent back or transferred to another person or business. It covers any payments from bills to invoices. Remittance can also cover your personal money transfers.
Remittance is proof of a payment document sent by customers to a business. It is often used by a customer who wants to let a business know when the invoice is paid. So, remittance slips are the same as cash register receipts. They are very helpful when you want to match your invoices with payments.
Online payments are now becoming the most used way for people to pay. Remittance advice slips are sometimes not necessary. However, after an invoice has been paid, sending a confirmation email or text etc is always a great idea and apprecaited.
So in short a remittance advice is a way of communicating that an invoice or payment has been made and that you send it back as away of acknowledging your payment.
Am I required to send remittance advices?
No, you do not have to send remittance advice slips, however, they are really appreciated if you do. They are helpful to the customer for keeping records and knowing what each payment is for and to which account.
Remittance slips do not require too much effort to make, many businesses will give remittance notes along with the invoices, making it a lot easier for customers to send across the needed information to get the correct assistance with their questions.
What are different types of remittance advice?
Always remember that remittance advice comes in a few different forms
Basic Remittance Advice – Simply meaning you type a note for the invoice number and the total payment.
Removable Invoice Advice – In some invoices, the seller would send a slip with the invoice. The buyer will just fill out the slip and send it back as a remittance advice.
Scannable/picture Remittance Advice – Various software is now available for creating remittance advice, which can then be scanned directly into a computer system to keep an electronic record and in some cases be reconciled back against the accounts software.
What do remittance slips need to include?
It is really good idea to include the below 5 points
- Your name and address
- The supplier’s name and address
- The date of the remittance
- The remittance reference
- The payment method (cash, card, Direct Debit etc)
- The payment amount (£)
- The invoice number
The remittance advice slip should be issued on company headed paper and contain your contact details for a customer of your organisation who is equipped to deal with any enquiries they may have. This not only makes it easier for the information to be conveyed but also a good way to remind the customer of your company details.
What alternatives are there to a remittance advice
With online payments becoming one of the most used way of paying for virtually everything this day in age, it is now starting to reduce the need of remittance advice.
If you make a payment online you can still help match the payments with the correct invoice by sending an email informing them of a payment you have made or create references referring to your invoice number as mentioned above it’s a really appreciated to send a remittance advice.
It is vital that you always keep copies you send to supplies and also the ones you receive. There may be queries that come up with an invoice for the future which will mean you need to look back at your previous remittance advice. Your accountant may also want to see them when they prepare your year-end accounts to match payments with invoices.