When you receive a remittance advice?

[superpav]

Hi all,

Apologies for these basic questions...

Do you mark a sales invoice off as paid when you receive the remittance advice or only when you can confirm the payment has been received on your bank statement?

How do you file remittance advice notes that you receive? (by payment date? customer?)

Thanks!

 

[semsley]

I would say when the money has cleared the bank. I usually attach them to the sales invoice.

 

[David Griffiths]

I would say when you receive the money. If it doesn't clear you can deal with that later

And I file remittance advices in the round grey filing container called a bin.

 

[maxine]

Hiya

The rem advice is just to tell younits on it's way so do nothing with this until payment actually in the bank

You could file this either just with customer correspondence or by actual payment date so it serves as supporting document for what invoices the payment related to

Hope that makes sense

 

[QuickHomeBuyers]

I have dealt with a lot of international payments so I can guide you a little however international payments were recieved in personal accounts so cant say it will differ from business.

Remmitance advise usually is a confimation of cleared credit and also tell you if there is any charge from your bank, which usually is dedected from the payment before reaching your account.

 

[superpav]

Thank you very much for all of your responses.

We currently receive about 20 remittance advice notes (for bacs payments) a week and at the end of every month I go through them and mark the relevant invoices off as paid without checking our bank statement.

So the process should really be...

- Receive remittance
- Confirm payment received on bank statement
- Mark sales invoice(s) as paid

Would people also suggest physically marking (highlighter pen) each payment on my bank statement to help identify payments where the customer has not sent me a remittance advice?

Many of the remittances we receive cover multiple invoices so filing them with the sales invoices (which we file numerically) wouldn't be ideal. Filing them by payment date is probably best for us then...although that round grey filing container does sound appealing!

 

[maxine]

Remittances advices are useful to refer back to for cash allocation and deduction of credit notes if that applies to you. Sometimes they may show for example that a debtor has paid a recent invoice but not an old one. Or perhaps used a credit note twice. Remittances are NOT proof of actual payment and should be reconciled with actual payments at bank. Sometimes the payment may not be for 30 days or whenever the bacs run is for larger companies so may cause timing differences at year end etc

 

[David Griffiths]

I'm guessing from your comments that you are using some kind of manual bookkeeping system? (Or Excel, which to me is manual)

That's going to be much more time consuming than a computer package which will mark the invoices as paid and deal with the bank transaction at the same time. If you use an online system (Xero, AccountsPortal, KashFlow) you can import bank statements and match with invoices on the fly

I'd also recommend that you refer to the bank "statements" much more regularly than once a month, and you can do this with online banking. I import weekly, but you can do it daily if you want. Dealing with 20 remittances four times weill seem much less work than doing 80 in one go.

Get yourself set up properly and you will save a huge amount of your own time and present better figures for your accountants at the end of the year, reducing their charges as well.

 

[GRDCredit]

at the end of every month I go through them and mark the relevant invoices off as paid without checking our bank statement.

I'd also recommend that you refer to the bank "statements" much more regularly than once a month, and you can do this with online banking.

Got to agree with David - the way you are doing it at present scares me to be frank (I am easily scared!)

The 'system' you are using at present assumes that payment is actually made into your bank account. Normally this will be the case but not always - just because you receive the remittance advice does not mean they paid - sometimes for legitimate reasons (bank problems, wrong bank details set up) and sometimes for concerning reasons (bank refused payment through lack of funds

The bank statement is the key document - use the remittance advice only to tell you which invoices have been paid. Allocate at least weekly from the bank statement to your accounting records

 

[bovine]

I tend not to send out remitances, most of our transactions are simple. The more complicated ones I email.

I do have a supplier I use a couple of times a year who calls up chasing payment from about six months ago, which i have paid about 5 months ago. When I ask why she is chasing " because you didnt send a remittance). So, next time I use them, im going to send a remittance and no payment and see what happens!

 

[superpav]

I'm guessing from your comments that you are using some kind of manual bookkeeping system? (Or Excel, which to me is manual)

That's going to be much more time consuming than a computer package which will mark the invoices as paid and deal with the bank transaction at the same time. If you use an online system (Xero, AccountsPortal, KashFlow) you can import bank statements and match with invoices on the fly

I'd also recommend that you refer to the bank "statements" much more regularly than once a month, and you can do this with online banking. I import weekly, but you can do it daily if you want. Dealing with 20 remittances four times weill seem much less work than doing 80 in one go.

Get yourself set up properly and you will save a huge amount of your own time and present better figures for your accountants at the end of the year, reducing their charges as well.

That is correct we are using a manual bookkeeping system and are in fact currently in the process of setting up Kashflow! Once set up I intend to check my statements at least once a week as you suggested. Please excuse my ignorance but what do you mean by "you can import bank statements and match with invoices on the fly"?

Thank you and everyone else for your advice it really is appreciated.