A remittance advice is the note a payer sends with a payment telling the supplier which invoices, credit notes and deductions the transferred amount covers.
A remittance advice is the explanation that travels alongside a payment. It lists the documents being settled, invoice by invoice, with the gross amount, any credit note applied, any early payment discount taken, and the net amount actually transferred. It is not a payment instrument and it does not move money: the bank transfer does that. Its only job is to let the supplier match the cash that lands in their account to the right open items.
Without it, a supplier receiving one lump sum has to guess. They post the amount on account, your invoices stay open on their side, and their system starts reminding you for invoices you have already paid, sometimes putting deliveries on credit hold. Your own team then spends time answering payment queries and reconciling statements. The problem gets worse with deductions: a payment that is short by the value of a credit note or a discount looks like an underpayment until someone explains it. Payment files do not solve this either, because in ISO 20022 credit transfers the unstructured remittance information field is limited to 140 characters, which is nowhere near enough for a run covering twenty invoices.
Business Central ships two standard reports. Remittance Advice Journal is run from the payment journal before posting and prints what the journal lines are about to pay, which is the version most teams send. Remittance Advice Entries is run from the vendor ledger entries after posting and rebuilds the picture from the applied entries. Both can be printed or sent as a PDF using the normal report output options. The gap is distribution: there is no vendor side equivalent of the document sending profiles used for customer documents, so splitting one payment run into one advice per vendor and emailing each to the right accounts receivable mailbox is not standard behaviour, and neither is an EDI remittance message. Teams either send them one by one, or add an extension for the split and send.
On 30 June 2026 you pay vendor V10000 for invoice PI-2026-0311 of CHF 8 400.00, invoice PI-2026-0355 of CHF 1 250.00 and credit memo PC-2026-0022 of CHF 900.00, taking a 2 percent early payment discount of CHF 168.00 on the first invoice. The transfer is 8 400.00 plus 1 250.00 minus 900.00 minus 168.00, so CHF 8 582.00. Without an advice the supplier sees CHF 8 582.00 arriving against CHF 9 650.00 of open invoices and has no way to know which document absorbed the difference. With the advice, all four lines are named and the cash is applied the same day.
The usual mistake is not applying the entries properly at posting time, because the advice built from ledger entries then shows the wrong picture, or shows nothing at all. Sending the advice to the supplier's sales contact instead of their accounts receivable mailbox has the same effect as not sending it. Advices that hide the reason for a deduction cause disputes rather than preventing them, so the discount or credit note should appear as its own line. A practical measure is the share of payments that went out with an advice, the number of payment queries received per month, and the size of unexplained differences at supplier statement reconciliation.
It is normally a matter of commercial practice rather than a statutory document, and some contracts and framework agreements ask for one explicitly. It carries no accounting posting on either side.
Only for small payments. The unstructured remittance field in ISO 20022 credit transfers holds about 140 characters, so a payment covering more than a handful of invoices will not fit and a separate advice is the usual answer.
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