What is remittance advice and why is it useful?
Remittance advice is important because it helps both the vendor and the buyer track their finances. A standard part of the financial record-keeping process, remittance advice is sent to a supplier or vendor when an invoice is paid, providing a way to match payments with their financial records. For buyers, it’s a written record of a transaction that goes into their financial documentation.
In this guide, we’ll look at the benefits of remittance advice, the different types of advice and how to use MYOB to send remittance advice to your suppliers.
What is remittance advice?
Remittance advice is a written notification of an invoice payment. The documents are sent to your supplier or vendor when you pay or partially pay an invoice, so they know to expect a payment to their account and can use your remittance advice to match the payment with their invoice.
What does remittance advice do?
Remittance advice lets a supplier or vendor know that you have paid their invoice. It also provides details of the payment to make it easier for the business to record as part of their billing process, including payment date, method, invoice number and your internal reference number.
What’s the difference between remittance and remittance advice?
Remittance is the act of paying an invoice, while remittance advice is the written notification – usually sent at the same time. By definition, remittance is any type of payment to a business or individual, and remittance advice is the document that records that payment.
What are the benefits of remittance advice?
The key benefits of remittance advice are simpler record management and reconciling, for both the buyer and seller.
Benefits to the seller:
For the seller or vendor, there are two main advantages of remittance advice:
It gives you early notice of an upcoming payment, which can help you plan your finances for the month or months to come.
Record of payment
It acts as a record of payment, making it easier to reconcile the transactions in your account with past invoices. Without a remittance advice notice, it can sometimes be difficult to work out exactly where a payment came from.
Benefits to the buyer:
For the buyer, there are several benefits associated with sending remittance advice:
You can let your vendor know that you are about to make a payment, which means they can stop sending payment requests or reminders.
If your accounts team needs to know what a specific outgoing payment was for, they can track down the remittance advice document and check.
Confirmation of payment
Remittance advice documents become a form of security – if a supplier comes back and claims that you haven’t paid an invoice, you can refer back to the remittance advice document to confirm.
Stronger internal controls
Because it matches invoices to payments, remittance advice can help prevent overpayment or duplicate payment.
What should be included on remittance advice documents?
Remittance advice documents include several key details. Most businesses use a standardised template or format to ensure they include crucial information.
It’s best practice to supply a reference number or purchase order number along with the vendor’s invoice number, so you can track down the remittance advice on your end as needed.
Details can include:
The buyer’s company name and address
Contact information for the accounting team or accounts person
The vendor’s company name and contact information
Payment method – credit card, online payment, cheque or other method
Payment amount and remaining money owed, if any
Expected payment date
The vendor’s invoice number
A reference number or purchase order number from the buyer
The goods or services being paid for
Remittance advice templates don’t have to be complicated — a simple Word document or PDF is fine for most small businesses.
Frequently asked questions about remittance advice
Who prepares and sends remittance advice?
The buyer prepares and sends remittance advice, usually when or just after an invoice is paid.
Is sending remittance advice mandatory?
It’s not mandatory to send remittance advice when you pay an invoice. Instead, it’s seen as a professional courtesy to the vendor.
What is the difference between remittance advice and an invoice?
An invoice requests payment, while remittance advice confirms that payment has been made.
What is the difference between remittance advice and proof of payment?
Remittance advice shows that an invoice will be paid shortly, while proof of payment shows that it has been paid. The buyer sends remittance advice expressing the intention to pay an invoice, but it doesn’t show whether the payment has actually gone through.
For example, a payment could fail even after remittance advice has been sent. Proof of payment is a receipt or record of a payment that has gone through already.
What are the different remittance advice formats?
Remittance advice can be sent as a paper document, via email or through your accounting software.
How to generate remittance advice in MYOB
If you use MYOB to manage your accounts, sending remittance advice is simple.
Here’s what you need to know:
How to send remittance advice through MYOB
1. Create a payment to a supplier.
2. Check that the ‘Send remittance advice’ and ‘Send now’ buttons are selected.
3. Click ‘save’ to record the payment, and the remittance advice page should open automatically.
4. Check that the email address is correct and click ‘Add another email’ to send to more than one recipient.
5. Personalise the outgoing message or use your custom remittance advice form (AccountRight customers only).
6. Click ‘Send remittance advice’ to email the document to your vendor.
How to print or email a remittance advice with MYOB.
In some cases, you may choose to print or email several remittance advices later on, rather than sending as you go.
1. Go to the Purchases command centre.
2. Click ‘Print/email remittance advice.’
3. Select the ‘To be printed’ or ‘To be emailed’ tab.
4. Click ‘Pay Bills’ to show remittance advice only.
5. To print: select the remittance advice you want to print, type the number of copies, and click ‘print.’
6. To email: select the remittance advice you want to email, change the subject line, message and email address if needed, and click ‘send to email.’
Simplify remittance advice with MYOB
Remittance advice is a helpful way to keep your financial records on track, preventing lost invoices, overpayments and other errors.
MYOB’s accounting tools make remittance advice quick and easy for you and your suppliers. Generate and send remittance advice from your phone or other device, print or email remittance advice documents, and refer back to past invoices and remittances in seconds. Start your free trial today.
Disclaimer: Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.