Not sure whether you should send remittance advice with your payments, whether domestic or international? It’s important to keep good lines of communication open between suppliers and purchasers, and remittance advices are one way of doing that. If you remit payments to overseas companies, you should know the ins and outs of remittance advice. And know that if you frequently make international money transfers, it may be cheaper to do it with TransferWise. But more on that later.
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Now, back to what you came here to read.
A remittance advice is a letter that a customer sends to a supplier to let them know that their invoice has been paid. It’s often sent along with the payment, though not always. Remittance advices aren’t necessary, but they’re a nice courtesy since they can help suppliers with their record-keeping by helping identify which payments go with which accounts.1 A Remittance advice is sometimes offered as part of the invoice, which the customer can remove and fill out to return with the payment.
A remittance advice should include 2:
- Your name and address
- The supplier’s name and address
- The date the remittance is sent
- The amount of the remittance
- The invoice number the remittance is paying for
- When the supplier can expect the payment to be complete and available
A remittance advice slip is just for your records, it’s particularly helpful if you have customers who pay via cheque. Whoever receives the remittance advice should immediately compare it to the amount of the payment received to make sure they match.1 It can then be filed with invoices and other important documents for the client who sent it or scanned into a computer system if payments are tracked electronically at your company.
If you need to send a remittance advice to your supplier, you have a few options:
You can scan a remittance advice or create it electronically and send it to the supplier via email. Before you do so, though, make sure you have the appropriate email address. If you just send it to a general company email, it may get lost in the shuffle rather than make it to accounts receivable.
If you send remittance advice by snail mail, you can send it at the same time you send your payment, if you’re paying via cheque. Make sure to send it to the supplier’s remittance address so that it ends up in the right place for payment processing.
A payment remittance is just another term for sending money for a payment. For example, if you own a business in the US and buy wholesale products from China, you’d pay for your orders by sending a payment remittance to the Chinese supplier. Payment remittances can be made domestically or internationally. They can also be sent in many different ways: by cheque via mail, by wire transfer, or by peer-to-peer money transfer via an alternative transfer service like TransferWise.
In its most basic form, a remittance advice is a note or letter that states the invoice number and the amount of the payment.3
Some invoices come with removable slips that can be filled out to act as the remittance advice.3
Some modern software can create remittance advices that can be scanned into computer systems for electronic record-keeping.3
If your questions about remittances weren’t fully answered here, check out these resources to learn more:
- Overview of the World Remittance Industry
- Foreign Remittance (and US tax implications)
- Inward Remittance
- Outward Remittance
- Remittance Address
- FIRC (Foreign Inward Remittance Certificates)
- FEMA & RBI guidelines on remittances
- LRS (Liberalised Remittance Scheme)
- How to make an outward remittance from India
If you have international payments to make for your business, it’s important to know about common business practices like remittance advices. This guide should help get you started.
- https://en.wikipedia.org/wiki/Remittance_advice (May 21 2018)
- http://www.wordexceltemplates.com/remittance-advice/ (May 21 2018)
- https://www.reviso.com/accountingsoftware/accounting-words/remittance-advice (May 21 2018)
|This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.|
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