Remittance advice
In accounting, remittance advice means the payer's note of which invoices a payment covers and of any deduction taken — the first thing cash application reads.
Not a rule. Commercial practice — not codified. US GAAP governs recognition, measurement and presentation, not bookkeeping mechanics. Sources
A real example, booked
A customer owes $8,000 on an invoice due October 15, 2026. It pays $7,800, with a remittance note deducting $200 for two damaged units. The company checks the delivery record, agrees, and issues a credit note for the difference.
Transaction · October 14, 2026
JE-1 14 Oct 2026 Manual posted
Apply the cash to the invoice.
Read-onlyBalanced
- Open on the invoice
- $8,000
- Received
- $7,800
- Short paid
- $200
The lesson that teaches this
From the free founder back-office course, taught on one company's books, with exercises to work it yourself.
For founders
The same idea written for a founder: what it costs a startup that ignores it, and what to do in a real month.
- AR aging and collections: a practical guide for startupsHow to read an AR aging, work out DSO, run a dunning cadence, record a promise to pay, escalate a late account and clear unapplied cash.
- Card and ACH payments: applying and reconciling themHow customer card and ACH payments land in the bank net of fees, how to apply them to invoices, handle partial payments and reconcile the deposit.
More worked entries
Worked journal entries that use the term, each computed and proved to balance.
What it is not called
Each of these means something else. Use one here and an accountant reading the product notices.
- receipt
- payment confirmation
Nearby in the catalog
No component names this concept outright. These sit in the same part of the system.
Also in Receivables
Work with this concept
The calculators that compute it and the ledger payloads that carry it.
- Journal entry for a customer short paymentDebit Cash for what arrived and credit Accounts receivable for the same amount. If the deduction is agreed, issue a credit note: debit Sales returns and allowances, credit Accounts receivable. If it is not, leave the difference open on the invoice, marked disputed.
- Journal entry for unapplied customer cashDebit Cash and credit Accounts receivable for the customer, unapplied, on the day the money arrives. When the invoices it pays are identified, apply it to them; the entry is already made, so only the subledger changes. Never credit revenue.
Defined in Lexicon. This page is generated from that document, so the two can't disagree.