A remittance letter is a document sent by a customer, which is often a financial institution or another type of firm, to a creditor or supplier along with 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 counterparty.
Breaking Down Remittance Letters
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.
Sending a Remittance Letter
Customers can use a remittance letter in instances where there is no remittance slip accompanying an invoice or a bill. The customer should manually include information in the remittance letter what would otherwise be included on a remittance slip so that the supplier or vendor can appropriately credit the payment to the customer's account. Similar to the remittance slip, this information includes the customer's name, address, account number, balance due, due date, and invoice number. The customer should also include any other specific information they feel would be helpful to the supplier or vendor in crediting the payment appropriately.