What is remittance advice?
Monday, 23 January 2023, 3 minute read
Remittance advice is the key to accurate and efficient financial record-keeping. Without sending it, businesses risk lost payments and miscommunication with suppliers.
So, whether you're a small business owner or managing finances at a larger business, understanding the basics of remittance advice and how it can improve your accounting processes is crucial to keeping relationships with suppliers positive, and retaining proof of all the payments you’ve made.
However, in 2023, there’s no need for you to be creating all of your remittance advice slips from scratch. Automating your remittance advice documents is quick and easy, and will save you hours in admin processes when you’re paying suppliers in bulk.
In today’s article, we’ll cover the meaning of the term ‘remittance advice’, the benefits of sending remittance advice, and how you can create effective remittance advice documents or automate them with Crezco.
What does remittance advice mean?
Remittance advice, also known as a remittance slip or remittance statement (and sometimes incorrectly called ‘remittance advices’!) is a document that accompanies a payment being made to a supplier or vendor. How does it work? The payer sends their remittance advice to the payee when making a payment, informing them that a payment has been made.
It’s similar to a ‘proof of payment’, serving as a record of the transaction and providing details such as the amount paid, the date of the payment, and any reference or invoice numbers that may be associated with the payment.
However, remittance advice is different to proof of payment in that it notifies the payee that the payment has been sent - rather than that it has arrived. If there is any issue with the payee receiving their money, the remittance advice document will come in handy to prove that the payment was initially made.
What are the benefits of sending payees a remittance advice slip?
The purpose of sending remittance advice is to provide clear and accurate information about the payment being made, and to ensure that the supplier or vendor can easily reconcile their accounts. This helps to avoid any confusion or disputes about the payment, and ensures that the supplier or vendor can quickly and easily update their records to reflect the payment.
Ultimately, sending remittance advice help make complicated transactions between businesses and suppliers more transparent and assist in keeping financial records organised. They can be beneficial in the short term for ensuring invoices are paid on time, as well as in the long term when it comes to reviewing financial records for quarterly and annual reporting.
Note: Sending a remittance advice slip with your payment is not mandatory. That said, it is best practice and it’s a courteous gesture that suppliers will appreciate, as it serves as a record of payment, helps them match invoices to payments, and minimises any risk of human error.
Read more: Sending remittance advice and paying Chines suppliers
What’s the best template for a remittance advice document?
When creating a remittance advice slip, the most important details to include are:
Your name and address
The supplier's name and address
The method of payment used
The payment amount
The invoice number(s)
Contact information for a representative of your organisation who can address any questions or concerns
Sending remittance advice for Bacs and Faster Payments: The above information should be included whether you’re sending remittance advice with a Bacs payment or a Faster Payment. Bacs (which stands for Bankers Automated Clearing Services) is an electronic system for making bank-to-bank transfers in the UK, such as Direct Debit and Direct Credit payments. These types of payments generally take three days to clear, while Faster Payments clear in a matter of seconds. But no matter how fast or slow your payment clear, it’s best practice to send your remittance advice at the same time as you make your payment.
What format should your remittance advice be sent in?:
Remittance advice can either be sent as a paper document, an email, or an electronic file. While it’s now common practice to send remittance advice by email, some suppliers or vendors may prefer to receive their remittance advice in a specific format, so it’s always worth checking with them first.
Importantly, in 2023, you don’t have to create your remittance advice documents manually. While you can choose to write your remittance advice yourself, you can also save time by generating these slips automatically through your accounting software or a payments solution like Crezco.
How to automate sending your remittance advice
With Crezco, you can do more than just receive and collect payments - you can also pay vendors and suppliers individually or in bulk, and send remittance advice automatically to let them know their invoices have been paid.
How does Crezco do it? The account-to-account payments platform integrates with a variety of accounting software, including Xero, and pulls in the bill and contact information (including email addresses and bank account details). When you make payments to all your suppliers in one go, they are then automatically sent remittance advice to their email addresses. This stops you from having to enter payment details manually each time and helps reduce the risk of human error. It also ensures that the recipient of your payment gets all the accurate, up-to-date information they need - such as the payment reference, invoice number and, if you’re making an international payment or paying an invoice from the EU, a tracking link to tell them when their payment is estimated to arrive.
Crezco can help
Crezco’s account-to-account payments solution allows businesses to easily track and manage payments in one place and provides real-time updates on payment status, alerting businesses if there are any discrepancies or issues with the payment.
In conclusion, sending remittance advice is a simple yet effective way to streamline and secure the efficiency of your own financial operations, and help your suppliers to do the same. It serves as a record of payment, helps match invoices to payments, and leads to better communication and relationships with suppliers.
Plus, with the right tools and processes in place, sending remittance advice can be a breeze! Find out more about how to get started making fast and easy payments and sending remittance advice with Crezco, and start making your financial operations more efficient than ever.