Remittance

The payment a customer sends to settle an invoice.

Why it matters

Remittance data from the customer determines how payments are applied across invoices, reserves, and fees. In factoring, remittances go to the factor lockbox rather than to the seller. When a customer sends a single payment covering multiple invoices, the factor must match each remittance to the corresponding funded invoice. Unapplied remittances create reconciliation problems that delay reserve releases. Some customers include partial payments, credits, or deductions in their remittance data, and each requires separate handling under the factoring agreement.

How it appears in contracts

In a factoring agreement, the factor controls the remittance address specified in the notice of assignment. If a customer misdirects a remittance back to the seller, the agreement typically requires the seller to forward it to the factor immediately. Remittance matching is tracked in the factor client portal and used to calculate reserve release timing. Frequent misapplied remittances signal a notification problem that can delay the entire reserve cycle.

Related terms

Related article: What is invoice factoring?

Related reading

Sources

  • International Factoring Association - International Factoring Association. Accessed 2026-05-19. Industry association source for factoring terminology and industry context.
  • Secured Finance Network - Secured Finance Network. Accessed 2026-05-19. Industry education source for secured finance and asset-based lending context.
Financial disclaimer. This page is educational only and is not financial, legal, tax, accounting, or credit advice. Factoring terms vary by provider and contract. Read the full disclaimer.