EDI 820
Payment Order / Remittance Advice
The EDI 820 is sent by a buyer after the receipt of an invoice (EDI 810). Learn about EDI 820s by reading the guide below.
If you need to send or receive EDI 820s, we can help.
What is an EDI 820?
The EDI 820 is a specific EDI transaction, where payment data is transferred between a buyer and seller. An EDI 820 is widely known as a Payment Order or Remittance Advice document, which is typically delivered as a response to an EDI 810 Invoice or EDI 850 Purchase Order as to confirm payment details or advise the seller of any changes to the payment amount. Commonly, an EDI 820 is sent together with the actual payment through electronic funds transfer.
How is an EDI 820 used?
The EDI 820 Payment Order / Order Remittance Advice is usually issued when an open account needs to be settled or to advise the paying trading partner of the details or potential adjustments within a given payment. EDI 820 documents are sent from the buyer to the seller and serve as a payment intent statement. The EDI 820 is matched with its counterpart EDI 810 or another invoice format after being sent to the accounts receivable department via EDI integration with your ERP. The open account can then be settled using your EDI solution, ERP, or accounting staff.
After receiving the EDI 820, the buying trading partner generates a 997 Functional Acknowledgement to send back confirming the successful reception of the EDI 820 transaction.
What are the Essential Details of EDI 820?
EDI 820 Format: The EDI 820 has to contain essential information on payment details, including:
1. Buyer and seller identification, like business names, addresses, as well as identification number(s)
2. Invoice or purchase order number(s)
3. Buyer and seller banking information such as account ID
4. Billed or to be paid amounts, including adjustments and/or tax details
5. Payment tracking information
What are the Benefits of an EDI 820?
The EDI 820 document, when translated, contains the same information as a paper Payment Order or Remittance Advice. The data encryption used for electronic data interchange, on the other hand, keeps buyer, seller, and payment information much safer than sending these documents by fax, email, or PDF.
Both buyers and sellers can streamline their order processes by automating EDI 820 sending and receipt. This automation, in particular, enables management by exception, in which accounting teams only address open accounts when alerted to an issue, rather than tracking all accounts, re-typing data, or issuing functional acknowledgments manually for each order.
Here is an EDI 820 Transaction within Cleo Integration Cloud
Example EDI 820 transaction exchange:
1. First, An EDI 850 Purchase Order is sent from your trading partner (Lozier in this example) and received by your business
2. Second, your Cleo EDI Platform creates and sends an EDI 855 Purchase Order Acknowledgment to your trading partner to recognize that the EDI 850 Purchase Order was received.
3. Third, Cleo's cloud-based EDI platform generates an EDI 856 and sends the document to your trading partner, giving information on the contents of the shipment.
4. Fourth, Cleo Integration Cloud generates an automated EDI 810 invoice and sends the invoice to Lozier as a receipt for goods purchased.
5. Fifth, your trading partner sends an EDI 820 Order/Remittance to send the terms of the impending payment for goods purchased. The EDI 820 will confirm payment details and/or advise you (the seller) of any modifications to the payment amount.
EDI 820 Specification
This X12 Transaction Set contains the format and establishes the data contents of the Payment Order/Remittance Advice Transaction Set (820) for use within the context of an Electronic Data Interchange (EDI) environment. The transaction set can be used to make a payment, send remittance advice, or make a payment and send remittance advice.
This transaction set can be an order to a financial institution to make a payment to a payee. It can also be remittance advice identifying the detail needed to perform cash application to the payee's accounts receivable system. The remittance advice can go directly from payer to payee, through a financial institution, or through a third-party agent.
Sources
Accredited Standards Committee X12. ASC X12 Standard [Table Data]. Data Interchange Standards Association, Inc., Falls Church, VA. https://x12.org/index.php/products/transaction-sets
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