Getting Paid Faster and the 820 Remittance Advice Transaction

EDI is an integral part of getting paid faster. Electronic invoices are delivered quickly to customers. The invoices can be efficiently validated by the customer for accuracy by automatically comparing the invoices to the corresponding purchase orders and deliveries.

Many customers will then pay the supplier with electronic funds transfer using either an ACH bank transfer or a wire transfer of funds. Electronic payment is of course much faster than checks sent via “snail mail. Most customers will require EDI invoices in order to pay electronically.

The electronic payment presents a problem though. How does the supplier know which invoices have been paid when they see the deposit that has been made to their account?

The solution is the 820 Remittance Advice Transaction also known as an “820”  which is sent to supplier every time an electronic funds transfer is made.

The 820 Remittance Advice is similar to the information that would be printed on a check stub that is received on an old fashioned paper check.  Each invoice number, date and payment amount will be listed along with the billed amount. The payer, payee, and the bank to which payment was sent are also typically included. With this information, the supplier can then reconcile the invoices paid with the invoices sent.

For low volumes of invoices the 820 can be processed manually. For higher volumes, the 820 transactions can be interfaced with the supplier’s accounting system to increase the accuracy and speed of reconciliation. EDI software or a web-based EDI solution is needed in either case.

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