March 28, 2025

Remittance advice: What it is, purpose, and its relevance to AP

a person typing on a laptop with circles around the keyboard

When a business makes a payment—especially one that covers multiple items or includes discounts—it needs a way to clearly communicate what the payment is for. Remittance advice is how that clarity is delivered.

Let’s break down what remittance advice is, its purpose, and how businesses use it to maintain transparency with vendors and support accurate internal records.

What is remittance advice?

definition
Remittance advice

Remittance advice is a document or digital message that a payer sends to a payee to outline the details of a payment.

Remittance advice clarifies which invoices or charges are being settled and notes any adjustments, such as discounts or partial payments. Its primary purpose is to help the recipient match the payment to their records.

Without clear context—especially for payments that span multiple invoices or deviate from expected amounts—the risk of confusion, delays, or misapplied funds increases.

Common components of remittance advice

Remittance advice does not follow a universal format, but several core elements are typically included to ensure clarity and accuracy during reconciliation. These components help the recipient apply the payment correctly and keep their records accurate.

Here’s what’s typically included:

  • Payment amount: Total sum being paid
  • Invoice numbers or reference IDs: Identifies which invoices the payment applies to
  • Payment method: Indicates whether the payment was made by ACH, wire, check, or another method
  • Payment date: Specifies when the payment was sent or scheduled
  • Discounts or adjustments: Notes any early payment discounts, credits, or deductions applied
  • Remitter and recipient information: Names or contact details to confirm the source and destination of the payment

Depending on the system used, remittance advice may also include a memo field for additional instructions or clarifications.

How does remittance advice work?

Remittance advice is typically generated at the time a payment is scheduled or processed. It can be created manually—such as through an email or a downloadable form—or automatically via an accounting or accounts payable platform based on the payment details.

Once prepared, it is delivered to the recipient through one of several channels:

  • Email (as a PDF attachment or inline message)
  • A bank note appended to an ACH or wire transfer (with limited character space)
  • An AP platform notification with a link to the payment record
  • Physical mail (in cases where checks are used)

Example of how it’s used

Consider a scenario where your business is paying a vendor $5,000 to cover three outstanding invoices. One of those invoices qualifies for a 2% early payment discount.

In this case:

  • You schedule the payment through your AP system
  • The system generates remittance advice stating: Invoice 1001 ($2,000), Invoice 1002 ($2,000), and Invoice 1003 ($1,000 with a $20 discount)
  • The total payment comes to $4,980
  • The remittance advice is emailed to the vendor once the payment is processed
  • The vendor’s AR team uses the information to apply the payment correctly

Without that context, the vendor may receive the $4,980 and struggle to determine how it aligns with their open invoices.

Why remittance advice matters

While remittance advice may seem like a small administrative detail, it plays a key role in maintaining clarity throughout the payment process—especially when multiple invoices, adjustments, or vendors are involved. Clear documentation helps the receiving business reconcile payments without additional outreach or delay.

When included consistently, remittance advice helps:

  • Clarify which invoices a payment covers
  • Prevent delays caused by missing or incomplete information
  • Reduce the risk of misapplied or unallocated funds
  • Support accurate and timely financial recordkeeping

FAQ: Is remittance advice legally required?

Although not legally required, remittance advice adds structure to payment communications and helps strengthen vendor relationships through transparency and consistency.

Types of remittance advice

While all remittance advice serves the same purpose—communicating payment details—the format can vary based on business needs, payment complexity, and system capabilities. Some businesses rely on simple summaries, while others use more detailed or system-generated formats.

Here are the most common types of remittance advice and when each one is typically used:

Type

Description

Use case

Basic remittance advice

A simple message listing invoice numbers and total payment amount

Used for straightforward payments with minimal complexity

Detailed remittance advice

Includes line-item breakdowns, adjustments, and payment terms

Useful when paying multiple invoices or applying discounts

Electronic remittance advice (ERA)

A structured digital version, often generated by AP software or sent via EDI

Ideal for businesses using automated systems or integrated platforms

The appropriate format depends on both internal workflows and vendor expectations. In most cases, automation platforms will default to electronic formats. Regardless of the method, what matters most is ensuring that the information is complete, accurate, and easy to apply.

How remittance advice fits into accounts payable

Remittance advice is typically generated at the final stage of the accounts payable process—after an invoice is approved and a payment is scheduled. Whether created manually or automatically, its role is to clarify which invoices the payment is intended to settle.

For AP teams, remittance advice acts as a confirmation mechanism. It helps ensure that the vendor receives the payment with sufficient context, including any applied discounts or adjustments. This reduces the likelihood of vendor inquiries, supports accurate reconciliation, and maintains alignment between the payer’s and payee’s records.

In modern accounts payable workflows, remittance advice is often embedded in automation tools, providing a standardized and reliable way to close out payments while minimizing manual effort.

What remittance advice is not

Remittance advice is often confused with other documents, especially in payment-heavy workflows. Here’s how to distinguish it:

  • It is not a check: When a check is sent with remittance advice, the check is the actual payment. The remittance advice simply provides context for what the check covers.
  • It is not a refund: Remittance advice confirms that a payment has been made to a third party. It does not signal that funds are being returned or that a refund is being issued.
  • It is not proof of payment: While it summarizes payment details, remittance advice is not always sufficient as official proof—especially in formal audits or disputes. A bank-issued receipt or transaction confirmation serves that purpose.
  • It is not an invoice or invoice notification: Invoices are issued by the vendor to request payment. Remittance advice, on the other hand, is sent by the payer after payment is made to reference which invoices were settled.

By distinguishing remittance advice from these related documents, businesses can use it more effectively within the payment process—and avoid relying on it for purposes it wasn’t designed to serve.

Alternatives to remittance advice

Although remittance advice is a reliable way to communicate payment details, some businesses use other methods depending on their systems and workflows. These alternatives may serve a similar purpose, but they often vary in detail, consistency, and reliability.

Alternative

What it is

When it's used

Limitations

Vendor portals or shared AP-AR platforms

Centralized platforms where vendors can view payment status directly

When both parties use the same system

Only effective if vendors have platform access

Bank transfer memos

Short notes included with ACH or wire payments

For simple or one-off payments

Limited space; lacks invoice-level context

Payment confirmation emails

Emails sent to confirm that payment has been issued

When remittance advice isn’t built into the workflow

Often informal and missing invoice details

Proof of payment (bank receipt)

A confirmation from the bank that funds were sent

When official documentation is required

Does not clarify what the payment was for

These alternatives may be sufficient in straightforward situations. However, when payments are complex or involve multiple invoices, remittance advice continues to offer the most structured and transparent way to communicate payment details.

Bring clarity to every payment with Ramp

Remittance advice plays an important role in helping vendors understand what they're being paid for. But the real goal is payment clarity—and that starts well before you send a remittance notice. Ramp helps you get there by simplifying the entire accounts payable process, from invoice intake to payment tracking.

With Ramp, you can:

  • Automate invoice processing: Use AI-powered OCR to extract invoice details, apply suggested GL codes, and reduce manual errors for precise, audit-ready records
  • Track vendor invoice status in real time: Automate approval reminders and keep vendors in the loop with notifications to reduce unnecessary back-and-forth
  • Manage all payments in one place: Centralize domestic and global payments—whether by check, card, ACH, or wire—for full visibility across your payables

By the time a payment goes out, your records are already clear, structured, and synced. Whether you still send remittance advice or not, Ramp gives you and your vendors the transparency you need.

Let’s simplify your AP process. Get started with Ramp’s invoice management software—or try an interactive demo to see it in action.


Try Ramp for free

This content is for general informational purposes only and should not be considered legal, tax, or accounting advice. For guidance specific to your situation, consult a qualified professional.

Share with
Ashley NguyenContent Strategist, Ramp
Ashley is a Content Strategist and Marketer at Ramp. Prior to Ramp, she led B2C growth strategies at Search Nurture, Roku, and TikTok. Ashley holds a B.S. in Managerial Economics from the University of California, Davis.
Ramp is dedicated to helping businesses of all sizes make informed decisions. We adhere to strict editorial guidelines to ensure that our content meets and maintains our high standards.

We’ve simplified our workflows while improving accuracy, and we are faster in closing with the help of automation. We could not have achieved this without the solutions Ramp brought to the table.

Kaustubh Khandelwal

VP of Finance, Poshmark

Poshmark

Our previous bill pay process probably took a good 10 hours per AP batch. Now it just takes a couple of minutes between getting an invoice entered, approved, and processed.

Jason Hershey

VP of Finance and Accounting, Hospital Association of Oregon

Hospital Association of Oregon

When looking for a procure-to-pay solution we wanted to make everyone’s life easier. We wanted a one-click type of solution, and that’s what we’ve achieved with Ramp.

Mandy Mobley

Finance Invoice & Expense Coordinator, Crossings Community Church

Crossings Community Church

We no longer have to comb through expense records for the whole month — having everything in one spot has been really convenient. Ramp's made things more streamlined and easy for us to stay on top of. It's been a night and day difference.

Fahem Islam

Accounting Associate, Snapdocs

Snapdocs

It's great to be able to park our operating cash in the Ramp Business Account where it earns an actual return and then also pay the bills from that account to maximize float.

Mike Rizzo

Accounting Manager, MakeStickers

Makestickers

The practice managers love Ramp, it allows them to keep some agency for paying practice expenses. They like that they can instantaneously attach receipts at the time of transaction, and that they can text back-and-forth with the automated system. We've gotten a lot of good feedback from users.

Greg Finn

Director of FP&A, Align ENTA

Align ENTA

The reason I've been such a super fan of Ramp is the product velocity. Not only is it incredibly beneficial to the user, it’s also something that gives me confidence in your ability to continue to pull away from other products.

Tyler Bliha

CEO, Abode

Abode