EDI 823: Lockbox
EDI 823 Definition
The EDI 823 Lockbox document is a critical component in the suite of electronic data interchange (EDI) transactions, designed to facilitate the electronic transmission of banking and payment information directly from a bank’s lockbox service to a company. A lockbox service is used by businesses to expedite the collection and processing of customer payments. The bank collects payments sent to a post office box and then sends the payment information electronically to the business, often using the EDI 823 format. This process enhances the speed and accuracy of payment processing and reconciliation.
What is EDI 823 Used for?
Businesses use the EDI 823 to receive detailed payment information from their bank’s lockbox service. This document allows companies to automate the reconciliation of customer payments with outstanding invoices, significantly reducing the manual effort required and improving the accuracy of their accounts receivable processes.
Key Elements of EDI 823
An EDI 823 document includes several key elements to accurately convey payment information:
- Transaction Set Header and Trailer: Marks the beginning and end of the EDI 823 document, encapsulating the lockbox transaction details.
- Bank and Customer Account Information: Details about the bank's lockbox where payments are collected, including the bank's identification and the customer's account information.
- Payment Amount and Details: Information on each payment processed through the lockbox, including payment amounts, payer details, and any associated invoice numbers.
- Adjustments: Details of any adjustments made to the payments, such as service fees or payment discrepancies.
- Deposit Information: Information about the deposit into the company's account, including total deposit amount and date.
Benefits of EDI 823
Implementing the EDI 823 document offers several advantages:
- Speed: Accelerates the payment collection and reconciliation process by receiving payment information electronically.
- Accuracy: Reduces manual data entry errors, ensuring that payment information is accurately reflected in the company's financial systems.
- Efficiency: Streamlines the accounts receivable process, freeing up resources for other tasks.
- Visibility: Provides detailed information on customer payments, enhancing financial reporting and analysis.
EDI 823 Document Example
Here’s a simplified example of what an EDI 823 might look like in raw data format:
ST*823*0001
BTR*01*20241130*123456789
N1*DE*Bank XYZ*1*ABA123456
N1*RE*Comparatio*2*92*654321
ENT*1
RMR*IV*123456*PI*1500*1500
DTM*003*20241130
SE*6*0001
Guide to EDI 823 Terms and Elements:
- ST (Transaction Set Header): Initiates the EDI 823 document, identified by a unique control number.
- BTR (Beginning Segment for Treasury Receipts): Indicates the start of the lockbox transaction, including the date and the lockbox number.
- N1 (Name): Identifies the bank (DE for Depository Financial Institution) and the company receiving the information (RE for Receiver), including identification numbers.
- ENT (Entity): Represents a single payment transaction processed through the lockbox.
- RMR (Remittance Advice): Details the payment, including the associated invoice number and the amount paid.
- DTM (Date/Time Reference): Specifies the date of the payment transaction.
- SE (Transaction Set Trailer): Concludes the EDI 823 document, ensuring completeness and accuracy.
This example is designed to give a basic understanding of how an EDI 823 document might look, including the types of information it conveys. Remember, the actual implementation might vary based on specific business needs and partnerships.
Elevate Your Lockbox Transactions with Comparatio
Ready to transform your receivables management with EDI 823? Contact Comparatio today to discover how our EDI solutions can streamline your lockbox transaction processing, enhance cash flow management, and improve financial reconciliation accuracy.
