EDI 820: Payment Order/Remittance Advice
EDI 820 Definition
The EDI 820 Payment Order/Remittance Advice document is an essential tool in electronic data interchange (EDI) transactions, facilitating the electronic transmission of payment information and remittance details between trading partners. This document serves a dual purpose: it instructs banks to transfer funds between accounts and provides sellers with details about which invoices are being paid, including adjustments or deductions taken, ensuring clarity and accuracy in financial transactions.
What is EDI 820 Used for?
Businesses use the EDI 820 to streamline the payment process, sending payment orders to banks for processing and providing remittance advice to sellers for reconciliation purposes. This document is crucial for automating the payment cycle, reducing manual work, and ensuring that payments are applied correctly to outstanding invoices, thereby improving operational efficiency and financial accuracy.
Key Elements of EDI 820
An EDI 820 document typically includes key elements to ensure comprehensive communication of payment and remittance information:
- Transaction Set Header and Trailer: Marks the beginning and end of the EDI 820 document, encapsulating the payment order and remittance advice.
- Payer and Payee Identification: Details about the entities involved in the transaction, including identification numbers and addresses.
- Bank and Account Information: Information necessary for executing electronic funds transfers, including bank names, routing numbers, and account numbers.
- Payment Amount and Currency: The total amount of the payment being made and the currency in which it is denominated.
- Invoice Reference Details: Specific references to the invoices being paid, including invoice numbers, dates, and amounts, as well as any adjustments or deductions.
- Payment Terms and Conditions: Any terms or conditions related to the payment, such as discounts for early payment.
Benefits of EDI 820
Utilizing the EDI 820 document offers several advantages:
- Efficiency: Automates and accelerates the payment process, reducing manual entry and processing time.
- Accuracy: Minimizes errors in payment processing and invoice reconciliation, ensuring that payments are accurately applied.
- Transparency: Provides clear and detailed information about payments and adjustments, enhancing visibility for both payers and payees.
- Security: Supports secure electronic funds transfers, reducing the risks associated with physical checks.
EDI 820 Document Example
Here’s a simplified example of what an EDI 820 might look like in raw data format:
ST*820*0001
BPR*C*1500*C*ACH*CTX*01*123456789*DA*987654321*15123456789**01*999999999*DA*888888888*20241130
N1*PE*Comparatio*1*92*12345
N1*PR*Customer XYZ*2*92*67890
REF*IV*123456
DTM*003*20241130
SE*6*0001
Guide to EDI 820 Terms and Elements:
- ST (Transaction Set Header): Initiates the EDI 820 document, identified by a unique control number.
- BPR (Beginning Segment for Payment Order/Remittance): Contains details of the payment transaction, including amount, payment method, and bank account information.
- N1 (Name): Identifies the payer and payee, providing essential identification and address information.
- REF (Reference Identification): Specifies invoice references for which the payment is being made.
- DTM (Date/Time Reference): Indicates the date of the payment transaction.
- SE (Transaction Set Trailer): Concludes the EDI 820 document, ensuring completeness and accuracy.
This example is designed to give a basic understanding of how an EDI 820 document might look, including the types of information it conveys. Remember, the actual implementation might vary based on specific business needs and partnerships.
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