What is Remittance?
Remittance is the process of sending money from one party to another — typically a payment to settle an invoice. Learn how remittance works in invoicing, how to track it, and what a remittance advice slip is.
What Is Remittance?
Remittance is the act of sending money from one party to another — typically a payment to settle a debt, invoice, or financial obligation. In freelance and small business contexts, "remittance" most often refers to: 1. A payment you receive from a client (incoming remittance) 2. A payment you send to a vendor (outgoing remittance) The word comes from the Latin remittere — to send back. When a client "remits payment," they're sending money back to you in settlement of your invoice. In everyday usage, you'll hear: - "We'll process the remittance today" = We'll send payment today - "Please include a remittance advice" = Please include a note saying which invoice you're paying - "Incoming remittance received" = Your payment has arrived
Remittance and Invoicing
When a client pays your invoice, the payment is a remittance. What makes it good remittance is proper documentation — the client needs to tell you which invoice(s) the payment covers. The Problem Without Remittance Advice Client sends you $3,000. You have three outstanding invoices: - Invoice #101: $1,200 (30 days overdue) - Invoice #102: $1,500 (current) - Invoice #103: $800 (not yet due) This ambiguity causes reconciliation nightmares. The Solution: Remittance Advice A remittance advice (also called remittance slip or payment advice) is a document — usually a short form or email — that tells you: - Which invoice(s) the payment covers - The amount being applied to each - The payment date and method - Any reference numbers Remittance Advice Slip Example: > Payment from: Acme Corp > Date: March 15, 2026 > Amount: $3,000 > Method: ACH > > | Invoice # | Amount | > |---|---| > | Invoice #101 | $1,200 | > | Invoice #102 | $1,500 | > | Invoice #103 | $300 | > | Total | $3,000 | > > Note: Partial payment on Invoice #103; balance remains outstanding.
How Remittances Are Sent
| Method | Description | Speed | |---|---|---| | ACH | Electronic bank transfer | 1-3 business days | | Wire transfer | Direct bank-to-bank transfer | Same day or 1 day | | Check | Paper check mailed | 3-5 days | | Credit card | Online payment via portal | Instant or 1-2 days | | PayPal/Stripe | Third-party payment platform | Instant |
Tracking Remittances in Your Books
When you receive a remittance (payment), you need to match it to the right invoice in your accounting system: Accounting entry when payment arrives: - Debit Cash (increase assets) - Credit Accounts Receivable (decrease assets — the receivable is settled) If partial payment: - Credit Accounts Receivable for the amount received - Keep the invoice open for the remaining balance This process is called account reconciliation — and without a remittance advice, it becomes a guessing game.
Remittance vs. Payment: Are They the Same?
In casual usage, yes — remittance and payment are often interchangeable. But there's a subtle distinction: - Payment is the general act of settling a financial obligation - Remittance emphasizes the transmission of funds and often includes the documentation (remittance advice) In banking and accounting contexts, "remittance" typically refers to outgoing payments (you remit a payment), while incoming payments are more commonly called "receipts" or "collections."
The Bottom Line
Remittance — properly documented — is the bridge between an invoice and cash in your bank account. Always request a remittance advice when you send an invoice, and always include one when your client pays. This simple habit eliminates payment ambiguity and keeps your accounts receivable records accurate. (Track payments automatically →) (Reconcile your accounts →) (Understand online payments →) Key Takeaways: 1. Remittance = sending money to settle an invoice 2. A remittance advice tells you which invoice(s) a payment covers 3. Without remittance advice, you can't properly reconcile payments 4. ACH and wire transfers are the most common electronic remittance methods 5. Always match remittances to invoices immediately upon receipt Match every payment to the right invoice automatically — Try Eonebill Free Eonebill's automated payment matching connects incoming payments to their invoices — no more guessing which invoice a client just paid. View Pricing → | Glossary Home → | Home →