What is remittance advice?

Remittance advice serves as a communication tool that accompanies a payment to notify the recipient that an invoice has been settled. This document typically outlines essential information, such as the invoice number(s) being paid, the amount, and the date of the payment. It acts as a confirmation to the supplier or vendor that the amount specified has been processed, ensuring both parties can reconcile their records accurately.

Understanding the purpose of remittance advice is crucial in accounts payable because it helps maintain clear communication between the payer and payee, reduces the chance of disputes, and facilitates proper record-keeping. It ensures that vendors know what payments correspond to which invoices, making it easier to track outstanding balances.

In contrast, other choices do not fulfill the role of remittance advice. For example, a payment statement lacks the detail about what invoices have been paid, while an invoice for future services does not pertain to payments that have already been completed. Lastly, a summary of financial statements does not provide specific details about individual payments or invoice settlements.