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4 min read

Key takeaways

  • Remittance advice provides essential payment details that streamline invoice reconciliation and improve payment-tracking accuracy.
  • Both paper and digital remittance advice formats are common, with many industries adopting standardized electronic formats for efficient processing.
  • While managing multiple remittance formats presents challenges, receivables automation tools can simplify reconciliation and reduce manual processing.

Remittance advice is a business document or electronic notification that accompanies an incoming payment. It provides the details needed to match payments to their corresponding accounts or invoices, helping maintain accurate records and efficient reconciliation. This documentation improves both payment tracking and cash flow visibility.

What is remittance advice?

When sending payment, a payer includes remittance advice to specify which invoices or claims the payment covers and when funds will arrive. This information can come as a traditional paper statement or digital document. Digital formats include electronic data interchange (EDI) formats like ANSI X12 and EDIFACT, as well as formats that lend themselves well to web-based remittance advice, such as extensible markup language (XML) and JavaScript object notation (JSON).

Key components of remittance advice

Standard remittance advice includes these key elements:

  • Payer and payee information: Names and contact information for both parties
  • Payment amount: The total amount of money being paid
  • Invoice or claim number: Reference numbers corresponding to the specific invoices or claims being paid
  • Breakdown of payment: An itemized list of what the payment covers, including multiple invoices or claims, any adjustments or deductions applied, and corresponding product descriptions or service codes
  • Payment method: How the payment was made, e.g., check, wire or ACH payment
  • Date of payment: The date on which the payment was sent

Specialized remittance formats

Some industries have developed specialized digital remittance advice formats. These include standardized EDI formats like the 820 payment order/remittance advice, as well as industry-specific standards like the Electronic Remittance Advice (ERA) notification used in U.S. health care payments.

Specialized formats like ERA contain industry-specific details—such as patient information and procedure codes in healthcare, or purchase order numbers and SKUs in retail. These standardized electronic formats help businesses efficiently process higher volumes of payments while maintaining detailed transaction records.

    

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Remittance advice simplifies your payment reconciliation

Remittance advice streamlines reconciliation by linking payments directly to invoices or claims. When discrepancies occur between submitted and received amounts, detailed remittance information helps quickly identify and resolve the variance. This systematic matching reduces manual processing time and potential errors.

Addressing common remittance advice challenges

Despite their usefulness, business-to-business remittance notifications can present several common challenges:

  • Varying formats: Remittance advice comes in different formats, which may be incompatible with your existing accounting and financial systems.
  • Lack of detail: Missing invoice number or payment references can make it difficult to match payments to their corresponding invoices.
  • Timing gaps: When remittance advice arrives separately from the payment—especially arriving later—it delays both processing and reconciliation.
  • Manual processing: Reconciling payments with remittance advice manually is time-consuming and prone to errors, increasing operational costs. 

These challenges can be addressed through receivables automation, which standardizes and streamlines the reconciliation process. Automation technology converts various remittance advice formats into a consistent, machine-readable structure. This simplifies payment matching, reducing reconciliation time. Automated systems can also fill in missing details to increase matching accuracy.

Through automation, businesses can reduce manual processing, minimize errors and shorten payment cycles.

We’re here to help

Contact us to learn more about solutions for your remittance advice challenges. We invest in world-class solutions1 to help you efficiently manage your receivables and streamline your reporting and reconciliation—no matter where you are on your journey.

JPMorgan Chase Bank, N.A. Member FDIC. Visit jpmorgan.com/commercial-banking/legal-disclaimer for disclosures and disclaimers related to this content.

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