What Is a Remittance Advice?
Remittance Advice
The customer's note that says 'we have paid, and here is what the payment covers': the fastest way to match money to invoices.
- What Is a Remittance Advice?
- A remittance advice is a note from a customer to a supplier confirming that a payment has been made and listing which invoices it covers, often with the amount, date and payment reference, and any deductions such as credit notes. It helps the supplier match the payment to the right invoices.
- A remittance advice is sent by the customer to say they have paid and which invoices the payment covers.
- It is not a receipt, which comes from the seller, and not an invoice.
- It makes matching a payment to invoices quick, especially when one payment covers several.
- Differences between the remittance and your records usually point to a credit note, a dispute or a deduction.
When a business customer pays you, the money arrives in your bank account with a short reference, and sometimes not even that. If the customer owes you on several invoices, or has taken off a credit, you need to know which invoices the payment settles. A remittance advice tells you. It is the customer's note, usually an email or a slip from their accounting system, that says: we have paid this amount, on this date, and here is what it covers.
What a remittance advice shows
| Detail | Example |
|---|---|
| Payer's name | Harbour Cafe Ltd |
| Payee's name | Smith Joinery |
| Payment date | 14 April |
| Payment method and reference | Bank transfer, ref HARB-2291 |
| Invoices paid | INV-0041 £390.00, INV-0044 £1,250.00 |
| Deductions | Less CN-0006 £120.00 |
| Total paid | £1,520.00 |
What one payment covered, from a remittance advice
- INV-0041£390.00
- INV-0044£1,250.00
- Less CN-0006-£120.00
- Total paid£1,520.00
An invoice is not the same as a receipt, which is an acknowledgement of payment.
Remittance advice, receipt and invoice compared
| Invoice | Remittance advice | Receipt | |
|---|---|---|---|
| Sent by | Seller | Buyer | Seller |
| When | Before payment | When paying | After payment |
| Says | "Please pay this" | "We have paid, and this is what it covers" | "We received your payment" |
| Main use | Request payment | Match payment to invoices | Proof of payment for the buyer |
Why remittance advices matter to small businesses
Matching payments. Without one, a £1,520 payment against three open invoices is a puzzle. With one, it is a glance.
Spotting deductions. A remittance shows what the customer has taken off: a credit note you issued, a disputed amount, or, in construction, a CIS deduction. If the deduction is unexpected, you know straight away and can ask.
Chasing accurately. Once you know exactly which invoices are paid, you know exactly which are still outstanding, so you never chase an invoice that has already been settled.
Clean records. Your accounts receivable, the list of what customers owe you, stays accurate.
How to get remittance advices
Larger customers usually send them automatically with each payment run, to the email address on their supplier record. Make sure that address reaches you. For smaller customers who do not, ask them to use the invoice number as the bank payment reference; for a single invoice, that does the same job. When several invoices are paid at once, ask for a short email listing them.
The simplest way to make payments easy to match is to put a clear reference on every invoice and ask for it to be quoted. The invoice number generator gives you a format that fits in a bank reference field, and the guide on how to send an invoice covers what to ask customers for.
When the remittance and your records differ
Differences happen, and each has a usual cause:
| Difference | Likely cause | What to do |
|---|---|---|
| Less paid than invoiced | A credit note, an agreed discount, or a disputed line | Match to your credit notes; if none, ask |
| A construction payment short by a percentage | A CIS deduction from the labour | Check the payment and deduction statement |
| An invoice missing from the list | Not yet approved, or lost | Resend it and ask when it will be paid |
| An invoice you do not recognise | A mistake by the customer | Tell them; it may be another supplier's |
| More paid than owed | A duplicate payment | Refund or agree to offset, in writing |
Remittance advices and your statement of account
A statement of account is the seller's summary of everything invoiced and paid with a customer. Sending one monthly, and comparing it with the customer's remittance advices, catches mismatches early. Between them, the two documents keep both sides' records in step.
A worked example
A joiner has three open invoices with a café group: INV-0041 for £390, INV-0044 for £1,250 and INV-0047 for £860. She has also issued credit note CN-0006 for £120 against INV-0044, after the café returned two shelves. On 14 April, £1,520 lands in her account with the reference HARB-2291. On its own, the figure matches nothing she has sent. Then the café's remittance advice arrives by email: INV-0041 £390, INV-0044 £1,250, less CN-0006 £120, total £1,520. In under a minute she marks two invoices paid, records the credit as used, and sees that INV-0047 for £860 is still outstanding, due at the end of the month. Without the remittance, she might have guessed wrongly, or phoned the café to ask, or, worse, chased an invoice that had already been paid.
Remittance advices and your bank reconciliation
Reconciling your bank account means matching every payment in and out to a record in your books. Customer payments are usually the hardest part, because the bank reference is short and customers pay in batches. A remittance advice turns each batch payment into a list you can tick off. Businesses that receive many payments often keep remittances in one folder or inbox, and reconcile weekly: bank statement on one side, remittances and invoices on the other. Anything left over, a payment with no remittance or an invoice with no payment, becomes a short list of questions to ask.
When a customer never sends one
Many small customers, and almost all households, never send remittance advices. That is fine as long as payments are easy to identify. Three habits make up for it. First, one invoice number per payment reference: ask customers to quote it. Second, keep invoices small and regular rather than bundling months of work, so a payment amount usually points to a single invoice. Third, send a statement of account monthly to customers with more than one open invoice, listing what is outstanding; they will often reply confirming what they have paid, which does the same job as a remittance.
Remittance advices under Making Tax Digital
Making Tax Digital requires digital records of your income, and remittance advices help keep them accurate by making sure each payment is recorded against the right invoice. If you use the cash basis, the date on the remittance, or better, the date the money actually arrived, is when the income counts. Keeping the remittance with the invoice means that when you review a quarter's income, every figure can be traced to a payment and a document.
Remittance advices in construction
Contractors paying subcontractors under CIS often send a remittance advice alongside the monthly payment and deduction statement. The remittance shows the invoices paid; the statement shows the CIS deducted and passed to HMRC. Keep both: the statement is your evidence of the tax already paid, and the remittance shows which invoices the net payment settled.
Remittance advices and fraud
Criminals sometimes send fake remittance advices, claiming a payment has been made, to buy time or to trick a business into releasing goods. Treat a remittance advice as information, not proof: check that the money has actually arrived in your bank account before you mark an invoice paid or ship goods. Likewise, never change the bank details you pay a supplier on the strength of an email alone.
Sending remittance advices yourself
When you pay your own suppliers, sending a remittance advice is a courtesy that saves them time and saves you queries. List the invoices you are paying, any credit notes you have deducted, the date and the reference. Many accounting packages produce one automatically when you record a supplier payment.
Keeping remittance advices
Keep them with the invoices they relate to. They help explain your records, answer customer queries and support your bank reconciliation. They do not replace invoices or receipts as tax evidence, but they make those records easier to follow.
Remittance advices and late payment
A remittance also tells you what has not been paid. If a customer's payment run pays some of your invoices but not others, the remittance shows the gap at once, and you can ask why while the approver still remembers. If an invoice is left off because it is disputed, that is the moment to resolve it; see invoice disputes. If it has simply been missed and is now overdue, chase it on your usual schedule. For business customers, statutory interest and fixed compensation can apply to overdue amounts, and the late payment interest calculator works out the figures from the due date.
What to include if you send one
When you pay your own suppliers, a good remittance lists: your business name, the supplier's name, the payment date, the method and bank reference, each invoice paid by number with its amount, any credit notes deducted, and the total. Keep it short and send it the day you pay. Suppliers who can match your payments quickly are suppliers who do not chase you by mistake.
Related terms
A remittance advice relates to invoices identified by their invoice number, often net of a credit note. The seller's statement of account summarises the position across all invoices. For the difference between asking for and confirming payment, see invoice vs receipt.
A remittance advice is a small courtesy with a large effect: it turns an anonymous bank payment into a clear record of which invoices are settled and which are not.
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Frequently asked questions
Is a remittance advice a receipt?
No. A receipt is issued by the seller to confirm payment was received. A remittance advice is sent by the buyer to say a payment has been made and what it covers.
Is a remittance advice legally required?
No. It is a courtesy and a practical tool. Many larger businesses send one automatically with each payment run.
What if a remittance advice does not match my records?
Check it against your invoices and statement. A difference usually means a credit note, a disputed invoice or a deduction such as CIS. Query anything you cannot explain with the customer promptly.
Sources
Official guidance on GOV.UK.