What is EDI 820?
An EDI 820, also known as a Payment or Order Remittance Advice is a type of EDI document used in the exchange of transactional information between trading partners. The EDI 820 is based on the Accredited Standards Committee (ASC) X12 format, as defined by the American National Standards Institute (ANSI), the governing body that controls EDI formats in the U.S.
EDI 820 in the EDI Communication Process
An EDI 820 is typically issued by a buyer after the receipt of an EDI 850 document (Invoice). Basically, an EDI 820 is equivalent to sending your supplier a notice of intent to pay an invoice. Like other EDI documents, the EDI 820 must be generated through a specialized application, the EDI translator, and then sent to the recipient through some electronic means. The sender's computer will typically perform the translation of the EDI 820 into an EDI format, while the communication will take place either through an EDI Internet connection or through a Value Added Network (VAN).
Transmitting the EDI 820
Once the EDI 820 is ready to be sent to the recipient, one of two methods are going to be generally used. The first, and still most popular method, is the use of a VAN. A VAN acts as an intermediary between the two parties, facilitating the communication of the EDI 820 and other EDI documents. The VAN is also responsible for ensuring that the transmission is secure throughout the entire process. This is always vital but even more so with documents like the EDI 820 that may include bank account numbers, invoice numbers, etc. AS2 communication is a second option that is growing in popularity. It uses a direct connection through the Internet to exchange the EDI 820 between two parties. When using AS2 to send the EDI 820, the document is encrypted at the source and sent using secure Internet-based protocols to the recipient which then must have software capable of decrypting the EDI 820 prior to being translated.
Translating the EDI 820
Once an EDI 820 is received, the document must be translated next. An EDI 820, like any EDI document in its native format, is not meant to be read by a human operator. In the translation process, the EDI 820 will be converted into one of two forms - a "human readable" format (usually in the form of a report that is printed to a physical printer) or more likely into a file format that is easily imported into an ERP or accounting system. The translation of the EDI 820 into this more easily integrated format is the first key step in the reception of the EDI 820 before it can be used by the intended recipient.
Integrating the EDI 820 Into Your Business
Once the EDI 820 is translated into a computer-ready format, a secondary in-house process takes the new file with the information that originated in the EDI 820 and moves it into the recipient's ERP or accounting system. At this stage of the transformation, the EDI 820 can now be identified and used by the recipient as the sender intended.