What is the purpose of a remittance advice?

The purpose of a remittance advice is to notify suppliers about payments made by a customer. It acts as a communication tool that provides information on what invoices are being settled with a particular payment. This helps suppliers reconcile their accounts and understand which outstanding amounts have been cleared.

Remittance advice can include details such as the invoice number, the amount paid, and any deductions or adjustments that apply. This documentation is important for both the buyer and the supplier, facilitating a clear and mutual understanding of each side's financial tracking. This role is essential in maintaining good relationships and accurate records in business transactions.

Other options address different purposes that do not align with the primary function of remittance advice. For instance, recording sales transactions pertains more to sales documentation, issuing credit notes relates to transactions involving returns or discounts, and confirming receipt of goods deals with logistics rather than payment.