Are you required to notify a vendor of payment? Communication is an important part of building long-term engagements. Remittance advice keeps your vendors in the loop, creating visibility and building trust. Learn what remittance advice is, how it is used, and when to send it.
Communication and visibility are two of the most important aspects of long-term payer-to-payee disbursement workflows, and remittance advice is one of the key tools that supports both. A remittance stub (also called a payment stub or check stub) is the detachable portion of a payment document that provides details about a payment, such as the amount, invoice number, and applicable deductions. It serves as a physical form of remittance advice, giving payees the information they need to reconcile incoming disbursements without waiting for funds to clear.
TLDR:
- Remittance advice is not legally required in most contexts; it is a best-practice courtesy from payer to payee.
- Include 7 fields on every remittance slip: payer name, payee name, payment method, amount, invoice number, payment date, and estimated processing window.
- Missing any of those fields forces your AR team to chase details manually, slowing cash application and extending receivables aging.
- Electronic remittance advice fits high-volume EFT disbursements; paper stubs fit check-based payments to payees without EDI capability.
- Retain remittance records for three to seven years to support audits, tax filings, and dispute resolution.
What Is a Remittance?
Payments made from a buyer to a supplier or contractor are known as remittance. This term is generally reserved for electronic or online payments, and most commonly payments made internationally. Whether the payment is made by a US-based company to an overseas contractor or the money is sent by a migrant farmer to their family in their country of origin, it is considered remittance.
The common denominator is that these payments are generally electronic funds transfers (EFT), processed through the Automated Clearing House (ACH) and wire transfers. Remittance payments are initiated by a payer, processed by a third party, and received by a payee in their local currency. Remittance payments are subject to fees at various steps in the process and include variable timelines depending on which method is used. Because of this lag in time from when an invoice is sent and when a payee actually sees the funds in their account, any communication that occurs during this time provides visibility to both parties.
What Is Remittance Advice?
A common practice of communication while a payment is processing is known as remittance advice: documentation that provides detailed information about the payment. This information is sent by payout operations teams to a payee to notify that a payment has been initiated. The accounts receivable department relies on this information to track incoming payments as well as to correctly apply payments. A check stub is a familiar form of remittance advice: it is not the payment itself, but does provide the payee with data about the payment including applicable tax, if the payment was subject to deduction, and payer contact information.
Why Is Remittance Advice Used
In the medical field, there are HIPAA-mandated standard formats for electronic remittance advice, which specify the coding used to describe coverage and benefits. Medical billers will include remittance advice remark codes (RARC), claim adjustment reason codes (CARC), and any patient responsibility (PR) that relates to a specific claim. However, in other business settings, there is nothing so formal. Remittance advice is not a required document. The information is considered a courtesy from payer to payee.
Payment processing can take anywhere from a few days up to weeks depending on the payment method. Instead of leaving payees guessing when payment has been processed, remittance advice provides assurance that it is on its way. While it is not confirmation of settlement itself, it helps both parties track the payment in transit and creates a paper trail for audits and bookkeeping.
Physical remittance stubs offer particular advantages for check-based workflows:
- Immediate proof of payment that both parties can reference without waiting for systems to sync
- Clear documentation of which invoices were settled and any deductions or adjustments applied
- Faster cash application, giving AR teams the detail to close open invoices and reduce receivables aging
What to Include on a Remittance Advice Slip
Types of Remittance Advice
Formatting of remittance advice will be different based on payment method and business practices. Here are some common examples.
- Basic remittance advice. Simply put, remittance advice is any document that communicates to a payee that the invoice they submitted has been approved and that the payment has been initiated. Some businesses may choose to send a paper remittance, or literal letter, to a payee stating the invoice is in good order, the amount that will be paid, and to which invoice it should be applied.
- Removable remittance advice. Some companies’ invoices include a removable document included as a portion of the invoice. This is known as removable remittance advice. The vendor is indicating preferences for communication when they receive a payment. AP teams can remove this document from the invoice, fill in the information, and send the document with their payment.
- Scannable remittance advice. Some businesses will provide remittance advice that is formatted for digital capture providing ease to payees in their data entry.
How to Send Remittance Advice
How remittance advice is sent will depend on the payment method used and it is best practice to align the two. Paper remittance advice is sometimes included with a check payment when sending through the mail. This choice is slow and may still leave payees in the dark as to where their payment is since the notification itself is accompanying the payment.
Email remittance advice is a direct and fast choice for communicating to payees about EFT payments, with information included in the body or attached to an email.
Remittance Visibility at Scale: How Routable Helps
The visibility gap that remittance advice closes grows fast once a platform is disbursing to thousands of payees per cycle instead of dozens. Drivers, creators, sellers, and service providers each expect visibility into exactly what they were paid, for which period, and when funds will clear. When that visibility is absent, support queues fill with payment inquiries instead of product feedback, and the cost of chasing confirmation details manually grows with every payee added.
Routable is a payout orchestration platform built for high-volume outbound disbursements. Instead of manual stub generation per transaction, Routable provides real-time payment status tracking from initiation to receipt across every disbursement in a batch, giving both the platform and each individual payee a live view of where their payment stands without any manual follow-up required. Webhook events push status changes, submitted, processing, cleared, or failed, directly into your system the moment they happen, covering the same “payment date” and “processing window” information a remittance stub would otherwise have to communicate manually. Payees can also check status themselves through a white-labeled self-service portal, closing the visibility gap without a single support ticket.
Final Thoughts On Remittance
It may feel like this kind of communication is falling out of favor in a world of dashboards and real-time data. Communication, however, is never a waste of time or resources. Remittance advice is a great option for creating visibility in the AR and AP cycle. Vendors that don’t have to guess at when a payment is on the way will appreciate the touch point, helping to build long-term engagements.
FAQ
What is the difference between remittance advice and a remittance stub?
Remittance advice is the broader term for any notification sent to a payee confirming that a payment has been initiated. A remittance stub is a specific physical form of that notification: the detachable portion of a check or payment document listing invoice details, deductions, and payer contact information. Every remittance stub is a form of remittance advice, but not all remittance advice takes the form of a physical stub.
What information should I include on a remittance advice slip to avoid reconciliation delays?
At minimum, include the payer and payee legal names and contact details, payment method, total amount paid (with any deductions noted), invoice number, payment date, and an estimated processing window. Missing any of these fields forces your AR counterpart to chase down details manually, which slows cash application and extends accounts receivable aging, a compounding problem when you’re running high payment volumes.
Is remittance advice legally required, or is it optional?
Remittance advice is not legally required in most business contexts. It is a best-practice courtesy from payer to payee. The main exception is in healthcare, where HIPAA regulations govern electronic remittance advice (ERA) and require specific coding standards for claims and coverage data.
Paper Remittance Stub vs. Electronic Remittance Advice: Which Should I Use?
Electronic remittance advice is faster, easier to archive, and supports automated reconciliation workflows, making it the better fit for platforms running high payment volumes via ACH or wire. Paper stubs remain practical for check-based payments or for payees without EDI capability, but they introduce manual handling and leave recipients in the dark until the payment itself arrives.
How long should I keep remittance documentation for audit purposes?
Most businesses retain remittance records for three to seven years to support tax filings, audits, and dispute resolution. Requirements vary by jurisdiction and industry, so consult your accountant or legal counsel for guidance specific to your situation.
