Remittance Letter – Definition

Cite this article as:"Remittance Letter – Definition," in The Business Professor, updated October 10, 2019, last accessed October 21, 2020,


Remittance Letter Definition

A remittance letter is a letter attached to a payment that explains what the payment is meant for and provides explicit clarification so that the payment is made accordingly. When businesses do transactions that involves payment, a remittance letter is used. For instance, if Company A supplies goods or services to Company B, a remittance letter is sent by Company B to Company A to inform them that payment has been made for the goods supplied or services rendered.

Customers who receive payments through their banks can have their remittance letters sent through the banks. In this case, a bank sends a remittance letter to a supplier or creditor explaining that a certain payment is to be made to a customer.

A Little More on What is a Remittance Letter

Oftentimes, customers who have no direct or approved account with the creditor or supplier need remittance letters. If a financial institution or firm sends a remittance letter to a creditor, it contains why a payment needs to be made which enables the receiver to get the payment. Payments made through mails or checks contain remittance letters, the letters are attached for proper identification of the payment. Without a remittance slip or letter, payment might not be made to a customer’s account.

Remittance slips are sometimes called remittance letters, although, there is a little difference. These are documents that contain the receiver’s (customer’s name), the address, receiving account, amount to be paid, the due date for payment, among others.

Sending a Remittance Letter

A remittance letter can be used instead of a remittance slip. When sending a remittance letter, this letter should be enclosed in an invoice or a bill so that the customer’s account can be credited. Information that are contained in a remittance slip is entered by the customer on the remittance letter, such as name and address. The receiving customer is also required to input information that will help the creditor or supplier in fast tracking the payment of the bill. The information contained on a remittance letter are similar to those supplied in the remittance slip.

References for “Remittance Letter”

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