Tag Archives: cheques

Remission Advice

Australian companies have this strange habit, they issue “remission advice” notifications when they’ve paid an invoice.

I suppose the practise comes from back when a cheque would be in the mail for at least a few days before arriving, and after that, paper bank statements issued once a week. But does it make sense today? I don’t think so, and here is why:

  1. credit card and some Paypal payments are instant.
  2. bank transfers only take 1-2 days.
  3. any self-respecting business has electronic banking and will view it almost daily.
  4. cheques are sometimes still issued by companies, but from my experience it’s mainly abusively for cash flow reasons.
  5. similarly, companies issue remission advice to say they’ve paid, and then it still takes over a week to see anything show up. This is because the advice notice is often created by their own accounting system. Essentially it’s as a good as “made up”. There again it’s just a cash-flow trick.

You know what’s unequivocal proof of payment? The recipient actually seeing the money in their online banking. It’s the only proof any of my businesses accept, and that’s explicitly stated policy.

Some clients still send remission advice notices. It can be entertaining to see the discrepancy between notices and the actual arrival date of the money. Basically the accounts payable people of those businesses go out of their way to prove that they’re lying. I don’t understand why they would bother doing a silly thing like that, but perhaps they deal with more gillible accounts-receivable departments, and hey it’s accepted practise!

How do you handle accounts receivable?

Why do some Companies still pay by Cheque?

(btw that’s correct spelling for Australian – “Check” if you’re American)

At least inside Australia, paying by direct bank transfer is very easy, and fast. For some things, paying by credit card is easier although one side tends to have to eat some costs for that (% to the credit card gateway).

What surprises me is that some companies still pay by cheque. Process-wise, this makes no sense to me:

  1. write out the cheque
  2. get signature from authorised person in the company
  3. address envelope
  4. post

What a lot of effort!

After due consideration, I can think of only one reason why companies do this: cashflow management, aka by sending a cheque through the mail they’re actually delaying the payment coming out of their bank account.

If it is just cashflow trickery, do you feel that kind of business process is valid? Shouldn’t a company just be able to pay its invoices when they come in?

What do you think? Any other plausible reasons?