--- title: "What Is a Remittance Advice?" url: https://www.uncap.com/glossary/remittance-advice author: "Denis Dyli" published: 2026-10-28 updated: 2026-10-28 summary: "A remittance advice is a notice a payer sends to a payee that identifies what a payment covers, such as which invoices it pays, so the seller can apply the money to the right open items. It can travel separately from the payment or together with it, as in the X12 820 transaction set." --- # What Is a Remittance Advice? > A remittance advice is a notice a payer sends to a payee that identifies what a payment covers, such as which invoices it pays, so the seller can apply the money to the right open items. It can travel separately from the payment or together with it, as in the X12 820 transaction set. **Remittance advice**: A remittance advice is a notice a payer sends to a payee that identifies what a payment covers, such as which invoices it pays, so the seller can apply the money to the right open items. It can travel separately from the payment or together with it, as in the X12 820 transaction set. ## How it works A remittance advice carries the detail behind a payment. X12, the standards body behind the 820 Payment Order/Remittance Advice transaction set, describes a remittance advice as identifying the detail needed to perform cash application to the payee's accounts receivable system. It can go directly from payer to payee, through a financial institution, or through a third party agent. Sent on its own, it goes from the payer (the buyer) to the payee (the seller), saying that payment is pending or will be received for the identified invoices. If the advice arrives first, the seller can pre-apply the payment to the open invoice lines and clear those invoices. The payment itself is made in the agreed format, such as check or ACH (Automated Clearing House). How the advice arrives matters. X12 notes that a faxed or emailed remittance advice typically requires manual processing, which adds time and introduces possible errors. ## Types of remittance advice X12 describes two ways the 820 carries remittance: - Remittance advice only. The advice travels separately from the payment and tells the seller which invoices the coming payment covers. - Payment order and remittance advice. The payment and the remittance detail flow through the payment network together, such as the ACH system. The originating bank receives one file with both, and the receiving bank passes the information to the receiving party. In the ACH network, Nacha's developer guide describes two corporate formats that carry it: - CCD and CCD+. A corporate credit or debit entry that can contain a single addenda record to relay payment-related information. That record's Payment Related Information field is an optional 80-character freeform text field that travels with the payment instruction to the receiving bank. Whether the recipient sees it depends on the bank. - CTX (Corporate Trade Exchange). Compared with CCD+, a CTX entry supports up to 9,999 addenda records. It is commonly used between trading partners because a full ANSI ASC X12 message can be sent with the entry. Healthcare uses the term too: the X12 835 Health Care Claim Payment/Advice lets a health insurer send a health care provider a payment, an explanation of benefits remittance advice, or both. This page covers the B2B trade sense. ## Example A distributor's customer sends one ACH payment of $12,450. The remittance advice lists what it covers: - Invoice 1041: $4,200 - Invoice 1042: $5,750 - Invoice 1043: $2,800 - Credit memo for a returned case: minus $300 The math checks out: $4,200 + $5,750 + $2,800 = $12,750, and $12,750 minus $300 = $12,450. The distributor's accounts receivable team closes all three invoices and the credit memo. Without the advice, a $12,450 deposit matches no single invoice, and someone has to work out what it pays. ## On Shopify On Shopify B2B, payment terms decide when an order is due. During the term, B2B customers can log in to customer accounts, select an order and pay for it by clicking Pay now. After the terms expire, customers can still make payments, but the order displays as Overdue in customer accounts. Bank transfers are one of the common types of manual payment Shopify lists. Orders that accept manual payments are marked as unpaid, and after you receive payment you can mark the order as paid on the order details page. The remittance advice is what tells you which orders that payment covers. ## How Uncap helps Uncap's guide to [B2B ecommerce payments](/post/the-state-of-b2b-ecommerce-payments-and-what-you-need-to-know) describes how ERP integration via Uncap Connect closes the loop between order placement and financial reconciliation. When an invoice is marked paid in the ERP, Uncap Connect updates the Shopify order to paid status. ## Related terms - EDI 820 - ACH payment - Accounts receivable - Credit memo - Days sales outstanding (DSO) - Order to cash ## Sources - X12: Transaction sets (820 Payment Order/Remittance Advice) - X12: Supply chain flow - Nacha ACH Guide for Developers: ACH file details ## Frequently asked questions ### Is remittance advice the same as a receipt? No. A remittance advice comes from the payer and tells the payee what a payment covers, such as which invoices it pays. X12 describes it as identifying the detail the seller needs to apply the cash in its accounts receivable system. ### Why did I receive a remittance advice? A customer is paying you, or is about to, and is telling you which invoices the payment covers. Sent ahead of the money, it says payment is pending or will be received for the identified invoices, so you can match the payment to the right open items when it arrives. ### What are the different types of remittance advice? X12 describes a remittance advice that travels on its own, separate from the payment, and a payment order and remittance advice that move through the payment network together, such as ACH. In the ACH network, a CCD+ entry carries one addenda record of payment-related information, while a CTX entry supports up to 9,999 addenda records and can carry a full X12 message.