Sent Is Not Settled: Auditing Buyer Payment Claims and Protecting the Late-Payment Clock

A customer emails to say that payment was sent last week. The remittance advice is attached, the payment-run screenshot is pasted below it, and the accounts contact is polite but firm: the matter is settled, so could the supplier please update its ledger? The supplier's bank statement says otherwise. This is the remittance mirage: the point at which a buyer's assurance of payment is mistaken for payment itself.

For a UK supplier, the distinction is not a matter of bookkeeping pedantry. It affects cash-flow forecasting, credit control, the date from which statutory interest can be calculated, and the evidence available if a dispute later arises. A payment that has been instructed is not a payment that has been received. A remittance advice is a statement of intent, not a receipt.

A remittance advice proves that a buyer has a payment process

Remittance advices are useful documents. They usually identify the invoices being paid, the amount, the payment date and the reference that the buyer has used. They are not, however, evidence that funds have left the buyer's account, still less that they have reached the supplier's nominated account. They are generated by the buyer's own systems and can be produced before a payment run is approved, during a payment run, or after a payment has failed.

The same applies to screenshots of payment-run dashboards and internal approval screens. These may show that an instruction was keyed, authorised or submitted. They do not show that the bank executed it, that the beneficiary details were correct, or that the receiving bank credited the funds. In practical terms, the only document that proves receipt is the supplier's own bank statement, supported where necessary by a bank payment trace.

Three explanations, and why they carry different risks

When a buyer says payment has gone out but the supplier has not received it, the explanation usually falls into one of three categories. Each requires a different response.

Stale bank details. The buyer may have paid to an old account, perhaps because the supplier changed banks and the buyer's master data was not updated. If the old account is closed, the payment may be returned to the buyer; if it remains open, the funds may be sitting in an account the supplier no longer monitors. The supplier should obtain the buyer's payment trace reference and ask its own bank to search for the incoming payment. It should also confirm, in writing, the correct account details and the date on which they took effect.

An internal payment run that has not yet been executed. The buyer may have included the invoice in a run that is still awaiting approval, or the payment may have been queued for a later value date. A remittance advice dated today does not mean the funds will arrive today. The supplier should ask for the value date the buyer has instructed, not merely the date on which the remittance was produced.

A wrong reference, amount or beneficiary. The payment may have been sent but cannot be matched to the invoice. This is common where the buyer has used a purchase order number, a truncated invoice number or a generic reference. In these cases the funds may have arrived but remain unallocated. The supplier should check unallocated receipts before treating the invoice as unpaid, and should ask the buyer for a corrected remittance advice if the reference is inadequate.

Bank-detail changes are a control failure, not an accident

A supplier that has changed bank details should treat every buyer's failure to update its records as a control issue. The safe practice is to issue a bank-detail change notice on company letterhead, signed by an authorised officer, and to verify it by telephone using a number already known to the buyer rather than one supplied in the notice itself. Email alone is not a sufficient channel for bank-detail changes, given the prevalence of intercepted-invoice and mandate fraud.

Buyers should also operate dual authorisation and callback verification for changes to supplier master data. Where Confirmation of Payee is used, the buyer should check that the account name matches the supplier's legal name before releasing payment. If a buyer claims to have paid old details, the supplier should ask whether the payment was returned, whether the funds remain with the receiving bank, and what trace reference the buyer's bank has provided. Until those questions are answered, the invoice should remain open.

The date that stops the clock is the date funds are received

For late-payment purposes, the relevant question is not when the buyer says it paid, but when payment was actually made. In practice, the supplier should record the date on which cleared funds reached its nominated account. The value date shown on the bank statement is the most reliable evidence; a remittance advice is not.

Under the Late Payment of Commercial Debts (Interest) Act 1998, a supplier may have a statutory right to interest on a qualifying commercial debt from the day after the agreed due date, at the prescribed rate, together with fixed compensation. The statutory rate is currently eight percentage points above the Bank of England base rate, although the contract may provide a different rate. The supplier should check the terms of trade before calculating a claim. The important discipline is to preserve the evidence: the invoice date, the due date, the date the remittance was received, the date funds were credited, and the amount actually received.

Build a payment verification log

A simple log is more useful than a long email chain. For each disputed payment, record the invoice number, the amount due, the contractual due date, the date the buyer claimed payment was sent, the value date stated in the remittance advice, the date funds were credited to the supplier's account, any bank trace reference, and the action taken. This log becomes the factual basis for a dated claim and, if necessary, for a letter before action or a court claim.

The supplier should also keep the remittance advice and the bank statement together. If the buyer has underpaid, deducted a disputed amount, or paid a different invoice, the supplier should write within a short period to confirm that the payment is accepted only as a partial payment and that rights are reserved. Silence in the face of an inadequate remittance can later be characterised as acceptance.

Preserve the relationship while preserving the claim

A formal response is not the same as an aggressive one. The supplier can acknowledge the buyer's remittance, state clearly that funds have not been received, request a bank trace reference and a corrected remittance advice, and set a short deadline for confirmation. If the invoice remains unpaid beyond the due date, the supplier should state that statutory interest and compensation will be calculated in accordance with the contract and the 1998 Act. That is not a threat; it is the ordinary consequence of late payment.

The cash-flow cost of treating an assurance as settlement is easy to underestimate. A supplier that marks an invoice as paid on the strength of a remittance advice may stop chasing, release credit, or commit to costs that the bank balance cannot support. The safer approach is to keep the invoice open until the money is visible, to record the date on which it became visible, and to treat every claim of payment as a claim to be verified rather than a fact to be booked.