When it comes to applying customer payments quickly and accurately, remittance advice is one of the most useful tools your accounts receivable team can have.

Remittance advice eliminates guesswork, reduces errors, and speeds up the reconciliation process by telling you exactly how to allocate incoming payments from customers across their invoices.

In this post, we’ll break down what remittance advice includes, how to get it from customers, and how Fazeshift can automate the entire process.

‍

Key Takeaways:

• Remittance advice is a helpful document sent by customers to specify how their  payments should be applied to certain invoices
• Remittance advice is especially useful when your accounts receivable team is handling multiple payments for a single invoice or partial payments.
• While not mandatory, remittance advice can simplify cash application, reduce reconciliation errors, and make audits less painful for suppliers and vendors.
• Common remittance details include customer and supplier contact information, invoice numbers, payment amounts, credit memos, discounts, and any remaining balances.
• Customers may send remittance advice in a variety of ways: through email, attached to physical checks, via banking or AP portals, or integrated platforms like Coupa and SAP Ariba.
• Fazeshift makes it easy to automatically obtain and process remittance advice so your AR team can start applying payments faster, more accurately, and with less manual effort.

What is remittance advice?

Remittance advice — sometimes called a payment advice or remittance notice — is a document that customers often send with a payment to let a vendor or supplier know how the incoming funds should be applied to an invoice or a set of invoices.    

Since it can allocate payment amounts to specific transactions, remittance advice can be particularly helpful when customers are closing out multiple invoices with a single payment or partially paying an open invoice balance.

While customers generally aren’t required to provide remittance advice to vendors or suppliers, it’s still a good business practice to ensure that payments are applied to the correct invoices.

Remittance advice from customers can also make the reconciliation process and audits easier for suppliers and vendors, since payments are clearly documented and can be easily traced to specific purchases.

‍

What type of information is found on remittance advice?

Generally speaking, everything detailed in a remittance advice document is designed to make it as easy as possible for accounts receivable teams to link incoming customer payments to open invoices in their account.

Along with details about a supplier, to confirm who is being paid, and the customer, for matching purposes, remittance advice should include information about what’s being paid, how much is being paid, what’s being allocated to specific invoices, and how to locate a customer.

Remittance advice should also account for anything that may arise as an issue during the reconciliation process, such as discounts, adjustments, or credit memos that were applied to a transaction.

‍

Here’s a full breakdown of what information should be included in remittance advice:  

‍

Customer (Payer) Details

• Company name and address
• Contact information (i.e. phone number, email address, etc)
• Contact details for their finance team for payment inquiries

Supplier/Vendor (Payee) Details

• Name and address
• Contact information (i.e. phone number, email address, etc.)

Payment Details

• Payment amount
• Payment date
• Payment due date
• Payment method (i.e. check, ACH, wire transfer, etc.)
• Any invoice numbers or reference IDs tied to the payment
• Invoice dates
• Reference or purchase order number
• Description of goods or services covered by the payment
• Any discounts and adjustments that were applied
• Credit memo numbers and amounts when applicable
• Payer’s account number or other identifying information that can make the cash application process easier, especially if a payment is being used to pay multiple invoices or make a partial payment
• Any outstanding amounts or the remaining balance after a payment is made

If you’re wondering what a remittance may look like in real life, here’s an example that’s formatted to make it easy for AI-powered systems to read, extract, and analyze:

‍

By including these remittance details with a payment, you and your customers can keep accurate records of transactions, easily track them down later on down the line, and avoid potential headaches during the cash application and reconciliation processes.  

‍

How to get remittance advice?

There are several different ways that suppliers or vendors can obtain remittance advice from a customer when they make a payment.

In some cases, accounts receivable teams for suppliers or vendors can log in to online payment or banking portals to access and download the remittance advice that was included with a customer’s payment.

Some customers will also make a payment and then send the remittance advice separately to accounts receivable teams either in the body of an email or as an attachment — oftentimes as a PDF, CSV file, or screenshot.

Customers can also choose to mail remittance advice with their physical checks to a secure post office box that’s controlled by a supplier’s financial institution. The bank will typically scan everything in the lockbox simultaneously and share it with a supplier or vendor for processing.

‍

The difference between remittance advice and a payment receipt

While remittance advice and payment receipts act as a payment confirmation for payers and payees, the biggest difference is the person or entity responsible for creating and sending the documents.

Remittance advice is sent by a customer (the payers) to let a supplier or vendor (the payee) know that a payment is being sent and how it should be handled. Meanwhile, suppliers send payment receipts to customers after the fact to confirm that an invoice was paid.

Alternatively, vendors and suppliers can send an invoice and a detachable remittance advice letter to a customer. The customer would then fill out the remittance details and send it with a payment to a vendor or supplier, who would use the remittance advice during the cash application process when payments are matched to open invoices.

‍

How to easily get remittance advice from customers

Fazeshift makes it remarkably easy to obtain remittance advice from customers, so your accounts receivable team no longer has to chase down customers or grab payment details from multiple platforms.

When Fazeshift receives scanned copies of everything that customers sent to your financial institution’s lockbox, our cash application AI agent can not only read and process payment details on a check but also extract information from the remittance details that go with it. This information is then used during the cash application process to automatically match customer payments to their open invoices

In addition to sending out AI payment reminders, Fazeshift’s email AI agent can automatically request remittance advice from a customer, if it wasn’t originally sent with a payment.

Fazeshift can even get remittance advice through the integrations we have with software solutions, such as Coupa and SAP Ariba, that have built-in portals for customer payments.

Meanwhile, Fazeshift’s payment portal agents can also use your login credentials to automatically access accounts payable portals or financial institutions, download your customer’s remittance advice, process it, and then use the information to accurately match a customer’s payments to their open invoices.  

To simplify the customer payment process for your organization, Fazeshift can build a custom payment portal that automatically extracts customer payment details and remittance advice before kicking off the cash application process.  

‍

Automate your remittance advice retrieval and cash application processes

Chasing down remittance advice for dozens or even hundreds of customer payments every day is more than just frustrating — it’s a massive drain on time and resources.

Between digging through emails, logging into multiple portals, and manually matching payments to invoices, accounts receivable teams can spend hours each week just trying to piece everything together.

Fazeshift eliminates that burden by automating every step of the process, from retrieving remittance details to applying payments accurately and efficiently.

Want to see it all in action? Schedule a demo and see how your accounts receivable team can stop scrambling for payment details and start focusing on higher-value work.