All 23 Cash Application questions
More in Cash Application
What is cash application in accounts receivable? What is the journal entry to record a customer payment received? What is unapplied (or unidentified) cash? What is the difference between a payment and a receipt in AR? What does it mean to post a receipt 'on account'? What happens to the AR balance when a receipt is applied? How does automated cash application (auto-matching) work? How do you handle a short payment or overpayment during cash application? What are customer deductions (chargebacks) and how are they managed? What is a lockbox and how does it help cash application?
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Accounts Payable & Receivable › Cash Application

What is remittance advice from the customer's side and why is it important for cash application?

Beginner

Answer

Customer remittance advice lists which invoices a payment covers. It's the key input that lets AR match cash to invoices quickly and accurately. Missing or vague remittance is the top cause of unapplied cash and manual research, so AR often provides portals or standard references to encourage clear remittance.
Real-world example A customer portal captures structured remittance so incoming payments auto-apply instead of becoming unapplied cash.

Common follow-ups: Why does poor remittance cause unapplied cash? | How can you improve remittance quality?

Cash Application Reconciliations Collections & Bad Debts
All 23 Cash Application questions