Remittance Letter

DEFINITION of 'Remittance Letter'

A document sent by a customer, which is often a financial institution or other type of firm, to a creditor or supplier along with a payment to briefly explain what the payment is for so that the customer's account will be credited properly. Remittance letters are often used when the customer does not have a fully established account with the counter party.

BREAKING DOWN 'Remittance Letter'

Many bills that are sent by mail to be paid by check contain remittance slips, a portion of the bill that is perforated so it can be torn off and sent with the customer's payment as a way of identifying the payment. The remittance slip will contain the customer's name, address, account number, balance due, due date and invoice number. The remittance slip, like a remittance letter, ensures that the customer's account is credit properly and the supplier or creditor keeps its books accurate.