What is a remittance?
A remittance is a transfer of money, usually a payment for goods or services. The word is derived from "remit" (to send back) and represents money sent to a person or place.
In HR and payroll terms, remittance refers to the process of transferring funds — specifically salaries but also tax withholdings, social security contributions and other statutory deductions —from an employer to employees or government agencies.
Things to know
- When an organisation transfers money to an individual or another business, they often include remittance advice. This is a document informing the recipient that the payment has been made in response to receiving their invoice or bill.
- Including remittance advice is not mandatory but one is often included as a professional courtesy, as it can be useful for matching invoices sent to payments received
- A wage slip is a form of remittance advice and should include all the relevant and legally required information for that employee and their pay
- Transfers of money — particularly non-commercial international transfers — are often referred to as a remittances. These transfers usually involve a foreign worker sending money to their families in their homeland
FAQs
What kinds of remittances are there?
The word remittance is often used to describe paying wages, paying the statutory authorities when payroll is run (such as for tax purposes), paying a bill or invoice from a supplier or paying money to family abroad.
What is remittance advice?
Remittance advice often accompanies a payment — in either digital or paper form — to confirm the amount, date and reason for that payment.
What is the difference between inward and outward remittances?
An inward remittance is money received into a country or bank account from abroad, while an outward remittance is a payment sent from a local account to a recipient in a foreign country.
