Often, the letter begins with the date of the correspondence, followed by the name and mailing address of the recipient. Using a simple salutation, the sender details in one or two paragraphs the reason for the payment, and any data that will help the recipient apply the payment properly.

What does remittance mean in banking?

to send back
Deriving from the term ‘remit’ (meaning “to send back”), remittance refers to a sum of money that is sent back or transferred to another party. It covers virtually any payment, from bills to invoices, and is typically used with overseas payments – when one party is based in another country.

What is the purpose of remittance letter?

A remittance letter is a document sent by a customer, which is often a financial institution or another type of firm, to a creditor or supplier along with payment to briefly explain what the payment is for so that the customer’s account will be credited properly.

What is the purpose of a remittance letter?

Updated Jan 31, 2018. A remittance letter is a document sent by a customer, which is often a financial institution or another type of firm, to a creditor or supplier along with payment to briefly explain what the payment is for so that the customer’s account will be credited properly.

What does a remittance advice ( Ra ) mean?

Remittance Advice (RA) is a document that a buyer sends to a seller conveying that an invoice is paid. Although, not mandatory, the buyer often sends it as a gesture of goodwill. They serve as a proof of payment, and thus, are equivalent to a cash register receipt. One can issue it in the form of paper or in electronic form.

How are remittances sent from one party to another?

Remittances are payments sent from one party to another, usually from a customer to a seller or supplier. Remittances can be sent via electronic payment, wire transfer, or a check.

Can a remittance letter be a proof of payment?

However, a remittance letter is not proof of payment, nor does it prove that the enclosed check cleared properly through the customer’s bank. In other words, the letter doesn’t prove that there were enough funds in the customer’s bank account to pay the balance.