Telling the truth about SME life today

What Is A Remittance Address

What Is A Remittance Address

A remittance address is a mailing address that is designated to receive payments from invoices and where account bills should be delivered. It may or may not be the same as the business’s physical address.

You will see a remittance address listed on bills and invoices and billing statements to show where money should be sent. It is often accompanied by invoice numbers, customer references and account information where payments should be made to. This combined information is called ‘remittance advice’ and is used to aid the easy processing of payments between individuals and organisations.

When Is A Remittance Address Used?

A remittance address essentially highlights who and where funds should be handled by. Using a remittance address is therefore useful when directing money between teams, people, accounting systems and companies. It helps to settle the financial records of money in/out.

As a result; the following scenarios use remittance addresses:

Invoice Payment:

A remittance address should be used when customers pay invoices to ensure the funds they send are directed to the right department.


When employees submit expenses, they should use the company’s remittance address so that finance teams know where to expect the reimbursement paperwork and payment


Non-profit organisations include remittance details on donation forms and pages so they can reconcile gifts with specific campaigns, funds or donations when money is received.

Loan Payoffs

Remittance addresses are useful in reconciling debts vs payments when loans are being paid off.

Settling Government Fees

Paying your tax, parking tickets or permit applications? You will see remittance instructions on the bills that you are sent.

Who Needs To Use A Remittance Address?

Remittance addresses are used by multiple stakeholders including customers, suppliers, employees, donors, government entities and banks so it’s important to ensure they are accurately and visibility displayed when you need them to be used.

  • Employees – When employees submit expense reports, payroll teams use remittance addresses to direct internal payments
  • Suppliers – suppliers need remittance advice from buyers with payments as it helps to match funds on purchase orders and accounts payable entries.
  • Donors – charities and non-profit organisations use remittance addresses so they acknowledge and track donations.
  • Banks – Banks process a lot of payments

Including Key Details with Remittance Addresses

To make sure payments get processed properly, invoices and billing statements should clearly display the remittance address where payments should be sent. They should also include some key details to help the receiving team quickly match funds to the right customer accounts.

Account Details

Most importantly, list the customer’s account number or the unique invoice number being paid. This enables accurate matching of the money to outstanding balances. Avoid just putting the customer name only.

Payment Amount

Write the exact amount the customer is paying now, especially if they are only paying part of what is owed. Confirming the correct amount is expected to avoid confusion.

Open Invoices 

To further identify where to apply funds, include invoice numbers, dates, amounts, etc. for the specific unpaid bills the current payment is intended to address.

Payer Identity 

Ensure the customer name, account number, or other ID number from your accounts receivable files is visible so you know whose account to credit.

Date of Payment

Add the date when payment was sent. This assists with tracing payments if they are delayed.

Method Sent

Note how payment was issued – check, wire, ACH, credit card, etc. This sets expectations for timing and clears problem payments faster.

Additional Notes

Any messages, comments or explanations are helpful for reference. Your accounting team appreciates details!

Providing complete remittance instructions guarantees accurate posting by your staff. It also makes the payer’s life easier by clearly specifying where and how to pay. Clarity benefits all parties.

How Important Is A Remittance Address For Accounting?

Displaying a remittance address is important for accounting because it helps to facilitate payment matching, faster processing times, reconciliations, visibility of cash flow, and audit trails. Without remittance advice directing payments businesses can expect delays in payments and lots of time spent chasing unidentified funds received.

Here are some key reasons that smooth accounting needs remittance advice: 

Payment Matching – A remittance address ensures payments are directed to the right department so account details like invoices numbers can be matched up for posting to customer accounts. Misrouted payments delay applications.

Faster Processing – When remittance instructions are followed, payments are handled by the appropriate staff and systems for logging and application. This speeds up order-to-cash cycles.

Reconciliation – Accounting teams rely on remittance data like dates, amounts paid, and memos to connect payments to open accounts receivable entries for rapid reconciliation.

Cash Flow Visibility – Up-to-date cash tracking depends on accounting teams quickly receiving and applying expected customer payments as they arrive. Remittance details facilitate this handling.

Audit Trails – Complete remittance information included with payments preserves transaction details that provide clean audit trails and assists with resolving any payment inquiries

How Can Remittance Data Be Leveraged?

There is a wealth of payment data available within remittance advice that lends itself to advanced analytics using AI and machine learning to uncover trends and optimise cash flow in business.

Remittance data can be used to: 

  • Predict payment delays
  • Model impacts to cash flow from changes
  • Compare historical seasonal patterns
  • Classify most profitable customer segments
  • Personalise collection strategies
  • Forecast AR/AP budget needs
  • Detect fraud faster
  • Identify process bottlenecks

Identify Customer Payment Patterns

Analysing remittance advice over longer periods of time allows companies to identify payment patterns. Being able to see which customers pay early or late, where the seasonal trends are, and the impact of disputes/deductions etc can all help a business to better understand its customers and accounts. In turn, this can lead to business strategies being formed to speed up payments, stay on top of cash flow and improve customer relationships.

Optimise Cash Flow Forecasting

Being able to conduct deeper analysis of remittance behaviours can lead to changes to credit terms, billing cycles, and payment communication that smooth out cash inflows. Having steadier, predictable cash flow improves financial planning abilities so this is a win-win scenario!

Refine Risk Exposure

Uncovering correlations between certain invoice types or customers with late or partial payments through remittance data allows tightening of credit and invoice approvals to minimise risk.

Standardise Data Formats

As remittance advice flows electronically across systems, standardising details provided accelerates digitisation efforts internally and across customer/supplier networks to achieve economies of scale.

Develop Sales Incentives

High performing customer segments with positive remittance profiles could be rewarded with personalised incentives like pricing, service upgrades or early payment discounts which in turn improve sales.

The information available in remittance advice history can help businesses to make better decisions about cash flow and customer relationships if companies take the time to develop practical strategies based on the insights discovered. Regularly reviewing and acting upon the information available through remittance advice is an easy way to promote continuous business improvements.

What If Payments Are Received Without Remittance Details?

When a company receives payments without supporting remittance details, it kicks off a chain of steps that need to be completed.

  • The payment should be logged in the accounting system and funds held until they can be matched to an invoice or purchase order.
  • Accounts receivable teams need to contact the customer who has made the payment and ask them to clarify the missing remittance advice. This could be a PO number or invoice number for example that allows the team to match the payment in their system.
  • If the customer can’t provide the details required such as dates or invoice numbers, then the accounts receivables team will need to do some further investigatory work to find the most likely source or reasons for payments.
  • Interest charges may be needed if there was a significant delay or misallocation due to the lack of remittances advice which led to late fees being charged. These kinds of charges should be clearly shared in advance within T&Cs or on the invoices themselves.
  • If customers repeatedly forget to include remittance details, then you should expect to review and update relevant processes. This could include changing how you share remittance information, displaying it differently, or sending it out in a separate communication.

Keeping Remittance Details Secure

When customers submit payments online, sensitive remittance advice is being shared online electronically. Payments contain sensitive data like names, account numbers, balances due and sometimes even credit card details. It’s important that remittance information is secured properly by businesses managing these transactions.

Best practice to do this includes;

Keeping remittance data safe as it’s used and shared. Encryption should be used on files to make the data unusable if intercepted. Finance details should be masked and only revealed on a need-to-know basis once authenticated.

Multi-factor access to review remittances are a good way to improve ‘easy to share’ passwords and don’t let paper copies pile up in post rooms or in trays where anyone can access them.

By implementing some simple security steps, sensitive remittance details can be kept safe and secure which will in turn avoid sensitive data breaches which can be very harmful to company reputations.

Digitisation and Automation Of Remittance Advice

Manual remittance advice delivery methods like postal mail and fax are prone to errors and are inefficient due to the amount of time that they take. With a lot of business accounting now being managed digitally, with invoices and credit notes can be sent and paid with just a few clicks of a mouse, how does this impact remittance advice too?

Here are some ways that remittance advice is being automated: 

  • Payment Networks: Solutions like ACH, card networks, and real-time payments allow transaction details like invoices numbers and memos to flow digitally with payments instead of separately. This helps to automates the matching of payments made against invoices sent.
  • ERP Integration: Remittance data can sync directly between customer and supplier ERP systems to connect payments with associated orders and invoices. Removing manual efforts. ERP systems are used to integrate multiple operations like HR, supply, inventory, CRM and sales.
  • eInvoicing: Issuing invoices electronically allows invoice details to carryover directly to payments. eInvoicing also enables faster communication if any clarification is needed on pending payments between the buyer/supplier.
  • Bank Tools: Bank lockboxes, payment hubs, and cash management systems can ingest remittance data from incoming payments and submit it digitally to customers to reconcile automatically.
  • Supply Chain Finance: When payments are initiated through bank or fintech supply chain finance programs, remittance details are automated throughout the early payment process.
  • Blockchain Settlement: Emergent blockchain transaction settlement models embed enhanced remittance data directly into payment transaction records under smart contracts.


To recap, a remittance address is used to direct incoming payments to the right place. This is so that incoming funds can be accurately logged, applied and reconciled by the teams and individuals managing the payments.

Remittance addresses are often accompanied by account numbers, invoice numbers and customer references. The benefits of remittance details for accounts teams are that it enables easier and more efficient processes of invoices, expenses, donations and loan payments.

Regardless of whether your business sends its invoices out by post, email or directly through an accounting package, be sure to include the essential remittance address and supporting information for the most timely processing of payments.



Related Stories

More From

Most Read


If you enjoyed this article,
why not join our newsletter?

We promise only quality content, tailored to suit what our readers like to see!