EDI 820 Payment Order/Remittance Advice

EDI 820 is an electronic document used in the financial realm to transfer payment data between buyers and sellers. In this guide, you'll learn about EDI 820 transaction sets.

What is an EDI 820?

An EDI 820 Payment Order/Remittance Advice is an electronic document that can be used to initiate payments and send remittance information. This document allows an organization, such as a buyer or payer, to provide payment details to a supplier or payee, along with information on the invoices being paid. It is commonly used in accounts payable processes to streamline payments and improve cash flow management.

What are the Key Elements of EDI 820?

The EDI 820, or Payment Order/Remittance Advice, typically includes the following essential components.

• Payer and Payee Identification: This includes company names, addresses, and unique identifiers for both parties.
• Invoice or Purchase Order Number: This links the payment to the original document.
• Payment Amount: The total amount being paid.
• Payment Date: The date the payment is issued.
• Payment Method: The method of payment (e.g., check, electronic funds transfer).
• Bank Account Information: Details about the payer's and payee's bank accounts.
• Payment Reference Number: A unique identifier for the payment.
• Remittance Information: Additional details or explanations regarding the payment.

How is EDI 820 Payment Order/Remittance Advice used?

Typically sent in response to an EDI 810 Invoice or EDI 850 Purchase Order, the EDI 820 confirms payment details and any adjustments to the payment amount. EDI 820 functions as a formal electronic document sent from a buyer to a seller to confirm payment details and facilitate reconciliation. Upon initiating a payment, the buyer generates the EDI 820 document, which provides comprehensive information about the payment amount, method, and date, and matches it against the corresponding invoice, such as an EDI 810. This document is then integrated with the seller's accounts receivable system via EDI, allowing for accurate matching and settlement of the open account.

Additionally, the EDI 820 can include details about any adjustments to the invoice, such as discounts or corrections, and offer instructions for processing the payment through the bank. By automating and streamlining these processes, EDI 820 enhances financial accuracy and efficiency, helping both parties manage their cash flow and maintain clear financial records.

Benefits of EDI 820

Using the EDI 820 Payment Order provides numerous benefits for businesses:

• Cash Flow Management: By providing timely and precise payment information, EDI 820 helps businesses manage their cash flow more effectively, allowing for better financial planning and liquidity.
• Record Keeping: EDI 820 offers detailed remittance information, aiding in accurate and comprehensive record-keeping for both the payer and the payee.
• Supplier Relations: Clear and prompt communication of payment details and any adjustments helps build stronger relationships with suppliers by ensuring transparency and reducing misunderstandings.
• Reconciliation: Automating the reconciliation process through EDI 820 simplifies the matching of payments with invoices, reducing administrative overhead and the potential for errors.
• Adjustment Management: EDI 820 can include information on adjustments to invoices, such as discounts or corrections, making it easier to manage and track changes to payment amounts.

EDI 820 Format

Each EDI Payment Order/Remittance Advice document will have data organized into segments and data elements. Each segment contains at least one data element. Each data element is a data field. The standards bodies have allowed for every conceivable possibility for data on the EDI Payment Order/Remittance Advice document. Any one company will use a small subset of the available choices within the ANS X.12 or UN/EDIFACT standards.

Here is a simplified example of an EDI 820 document, illustrating its key components and structure. This example assumes the use of a basic EDI format for clarity.

Example EDI 820 Document

ST*820*000000001~

BPR*I*5000.00*C*CHK*123456789*20170801~

REF*AC*987654321~

N1*PR*Payment Provider Name*9*123456789~

N3*789 Payment St~

N4*Payment City*CA*67890~

N1*PE*Supplier Name*9*987654321~

N3*456 Supplier Ave~

N4*Supplier City*NY*12345~

RMR*INV*12345*1000.00~

RMR*INV*12346*1500.00~

DTM*003*20170801~

SE*10*000000001~

Explanation of the Example

ST (Transaction Set Header): 820 is the transaction set identifier, and 000000001 is the control number.

BPR (Beginning Segment for Payment Order/Remittance Advice): Indicates the payment amount (5000.00), payment method (C for check), and provides details about the payer's bank account (123456789) and the payment date (20170801).

REF (Reference Identification): Contains additional reference information, such as the payer's account number (987654321).

N1 (Name): Identifies the parties involved. PR represents the payment provider, and PE represents the supplier. Each has associated identification numbers and addresses.

N3 (Address Information) and N4 (Geographic Location): Provide detailed address information for the payment provider and supplier.

RMR (Remittance Advice Accounts Receivable Open Item Reference): Details the invoices being paid, including invoice numbers (12345 and 12346) and the amounts (1000.00 and 1500.00).

DTM (Date/Time Reference): Specifies the payment date (20170801).

SE (Transaction Set Trailer): Marks the end of the transaction set, with a control number matching the ST segment.

This example demonstrates the structure and content of an EDI 820 document, including payment details, remittance information, and party identification. Actual implementations may vary depending on specific business requirements and EDI standards.

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