A remittance advice is a short note from a payer to a payee listing which invoices a payment covers. It has no legal weight and it removes a surprising amount of work on both sides, because a payment arriving without one cannot be allocated, and an unallocated payment produces a phone call to whoever sent the money.
What it contains
Your name, the payment date and total, and the list of invoices covered with their numbers and amounts, plus any credit notes applied. The list is the substance. A supplier receiving one transfer covering eleven invoices cannot allocate it without knowing which eleven, and guessing produces errors that surface later as a disputed statement.
Why sending it reduces your work
Unallocated payments generate supplier queries, which land on your team. They also produce incorrect supplier statements, which then need reconciling, which lands on your team again. Sending a remittance prevents both at effectively zero cost, and it is one of the few payables improvements with no trade-off whatsoever.
When it matters most
Where one payment covers several invoices, where credit notes are applied, and where the amount differs from any single invoice. Those are exactly the cases the supplier cannot resolve alone. Sending remittances only for simple single-invoice payments is sending them where they are least needed.
Questions people ask about remittance advice meaning
Is it legally required?
Generally not, and it is a strong convention because it makes the payment usable. Requirements vary, so check your own if it matters.
How should it be sent?
By email to the supplier's accounts address, automatically as part of the payment run. Manual sending gets skipped in a busy week.
Is it the same as a receipt?
It serves a similar purpose from the payer's side, telling the payee what was settled rather than confirming receipt of money.