A remittance advice is basically a letter that is sent by a customer to a supplier informing him that their invoice is paid. If the customer is making payments by cheque, the remittance advice is usually accompanied with the cheque. The remittance advice primarily consists of a literal letter or a voucher that is attached to the top of the check. However, the remittance advices are not strictly required. They assist the supplier’s accounts-receivable department for matching the invoices with the payments. The remittance advice also mentions the invoice number of the payment.
The companies in general design the invoice in such a way that a portion of the invoice is returned by the customers along with the payment and it is referred as the remittance advice. The employee on receiving the mail, compare the amount of cash received with the amount displayed on the remittance advice. In case, the customer does not return a remittance advice, a new remittance advice is prepared by an employee. The remittance advice actually serves as a record of cash received similar to the cash register.
Nowadays, there are modern systems in place that scan a paper remittance advice into the computer system and perform the data entry. In fact, these modern remittance advices include hundreds of invoice numbers along with other detailed information. Remittance advice can be complex in specialized fields such as medical insurance payments. The remittance advice in such cases comprises of document with large number of pages with detailed information.
An Electronic Remittance Advice refers to an electronic version of a payment explanation that offer the details related to the providers’ claims payment. In case, the claims are denied, it contains the needed explanations. HIPAA X12N 835 standard is the industry standard for sending Electronic Remittance Advice data.