A remittance is any form of payment completed between two parties for goods or services received.
It is a broad term that can refer to many forms of payment.
In accounting terms, remittance generally refers to any transfer of payment which completes a business transaction.
For example, if one business purchases supplies from another business, payment made for the supplies completes the transaction and is considered a remittance.
By itself, remittance does not tell the receiving business anything about the payee.
That is why a remittance is often accompanied by a separate document, referred to as a remittance letter or a remittance slip, with details about the transaction and the customer.
Historically, remittance was made in one of two ways—by cash or check. While these traditional methods are still widely used, with the aid of technology, remittance can now be made electronically.
Remittances are sometimes referred to as either an outward remittance or an inward remittance. An outward remittance is payment made from an account. An inward remittance is a payment that is received.
