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. A trading partner will send an 820 Payment Order/Remittance Advice to a supplier when payment is made, especially in the case of an Electronic Funds Transfer. This document provides suppliers with the ability to reconcile which invoices have been paid in full for any given payment.

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 gross total that is to be paid.
• Payment Date: The date on which the payment is being issued.
• Payment Method: How the payment is to be made-either by check, electronic funds transfer.
• Bank Account Information: Information regarding the bank accounts of the payer and payee.
• Payment Reference Number: The unique identifier of that payment.
• Remittance Information: Any further information or comments regarding the payment.

How is EDI 820 Payment Order/Remittance Advice used?

The EDI 820 document is sent from the buyer to the seller and acts as a statement about the intention to pay. Once obtained by the department received once, through the EDI integration with the ERP system, the EDI 820 becomes matched with its respective EDI 810 Invoice or any other Invoice format. From there, EDI Solutions, ERP or accounting workers can use information to determine the open account.

Usually, the EDI 820 documents confirm the payment details of the seller, with a payment. However, they can also be used to inform the seller of significant adjustments for invoices, which may affect the total payment amount, or provide payment instructions to the bank. In addition, an EDI 820 may include information about the previous payment made to the same Challan, which provides complete visibility in the payment event.

Benefits of EDI 820

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

• Cash Flow Management: By providing time and accurate payment information, the EDI 820 companies help control the cash flow more efficiently, providing better financial planning and liquidity.
• Registration Inventory:EDI 820 provides detailed transfer information, assisted in accurate and comprehensive journal map for both payment and payment.
• Supplier Relations: Payment details and any adjustment of adjustment help to ensure clear and quick communication transparency and make a strong relationship with suppliers by reducing misunderstandings.
• Reconciliation: Automation of the reconciliation process through the EDI 820 simplifies the payment match with Challan, reduces administrative overhead and the ability to fault.
• Adjustment Management: EDI 820 may include adjustment information, such as discount or improvement, making it easier to manage and track changes to the payment amount.

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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