Remittance advice is a simple document which is similar to an invoice. It is often abbreviated as RA and is a vital component of financial transactions. It is a proof of payment document sent by a customer to a business for completion of payment. It has important information for both senders and receivers, including the date and amount of payment. Read on to find out the major details of what is remittance advice and its types.
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Remittance Advice
Remittance advice, RA is a financial document that includes details of remittances. It’s a proof of payment letter which is sent by the customer to the supplier. Based on this, the supplier verifies that the payment has been made. Thus, it acts like an invoice. This document adds an added layer of security to the voicing process for both customers and suppliers.
- ‘Remit’ means to ‘send back’.
- ‘Remittance’ refers to the amount of money that is sent or transferred to the concerned person/ supplier.
- These are typically used with overseas payments. Two major types are- foreign inward remittance and foreign outward remittance.
- ‘Remittance advice’ is used by a customer which is sent to the business as proof of payment.
- Through this document, the customer intends to inform the business that an invoice has been paid.
- With ‘online payments’ becoming popular, remittance advice slips are becoming less popular.
Also Read: To know about the limits of maximum and minimum amount of remittances, check out the Liberalised Remittance Scheme of the RBI.
Types of Remittance Advice
There are four different types of remittance advice. These are paper-based remittances, email remittances, EDI-based remittances, and web-based remittances. These are based on the types of whether they are printed, written, emailed, or digitalised through the web. Let’s check them in detail-
Paper-based Remittances
- These are paper-based documents that are handwritten or printed.
- They contain details like invoice number and amount.
- It’s a less common format of remittance advice due to the rise of digital payments.
Email Remittances
- Remittance advice that is sent via email is called email remittance advice.
- Remittance advice is shared in the email body or as an attachment.
- It’s a more common format as people are moving away from paper-based remittance advice.
EDI-based Remittances
- Remittances sent through EDI (Electronic Data Interchange) machines are called EDI-based remittance advice.
- It is ideal for businesses that process large amounts of payments and wish to automate the account receivable process.
- It has a combination of alphanumeric characters.
Web-based Remittances
- When a customer shares the payment information with the supplier through a web-based portal, it is known as web-based remittance advice.
- It is useful for businesses that process
Also Read: Check out the details of how foreign remittances work. Understand how foreign remittance transactions are made and what are the processes of inward and outward remittance
What’s Included in Remittance Advice?
Remittance advice is an important financial document. It has the necessary information, including the amount and date of the payment. Since it is issued to the company head, it also includes contact details for the member of your organisation who can deal with any queries of the supplier. Here’s what remittance advice includes-
- Your name and address
- Name and address of the supplier
- Method of payment
- Amount of Payment
- Date of Payment
- Invoice Number
- Any additional notes from the payer
This was all about remittance advice. Understanding its importance and types can benefit businesses and individuals in managing their finances effectively.
FAQs
Remittance advice is a document sent by a customer to a business as proof of payment for an invoice. It’s important because it verifies that payment has been made and adds a layer of security to the invoicing process.
There are four main types: paper-based, email, EDI-based, and web-based remittance advice. Each type varies in how the payment information is transmitted from the customer to the supplier.
Remittance advice typically includes the payer’s name and address, supplier’s name and address, method of payment, amount, date of payment, invoice number, and any additional notes from the payer.
With the rise of digital payments, paper-based remittances are becoming less common due to the convenience and efficiency of electronic methods.
EDI-based remittance advice is ideal for businesses processing large payment volumes and seeking to automate their accounts receivable processes.
Web-based remittance advice allows for the seamless transmission of payment information through a web portal, making it convenient for businesses processing high volumes of payments from a single customer.
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