Electronic Data Interchange 820
There are millions of transactions taking place worldwide everyday. These payments always have a risk of failure when it comes to security and information. There are plenty of system tools which are used for providing better safety and clear information about payments. One among them is Electronic Data Interchange (EDI). EDI has a lot of transaction codes which abide by the system and one among them is EDI 820 which is used for payment purposes.
What is EDI 820?
Electronic Data Interchange 820 or EDI 820 is an EDI transaction set which is used for the transaction of information regarding payments. This is used in conjunction for payments through electronic payments of funds for insurance policies, payment of goods, or any other transactions. This system is coordinated with ACH system i.e. Automated Clearing House System. This EDi 820 transaction set can be used by:
- Businesses for providing instructions to the banks for making the payments like, funds transferring to a payee.
- Businesses for direct involvement in payments to the individual suppliers and retailers. Also for the communication of the details of a pending payment, including all the adjustments which are reflected in the payments.
- Companies which are providing the premium payment information to the health insurance plans.
This information which is provided in EDI 820 transaction set, includes the payee and payer’s identification, their accounts and bank IDs, number of invoices, paid and billed amounts. The EDI 820 is similar to the EDI 835. EDI 820 is for payer and payee which also includes health care plans. But EDI 835 is used by health plans to provide payment information to the health care providers.
EDI 820 Format
N1*PE*1 EDI SOURCE
The above format is the standard EDI 820 format.
EDI 820 Specifications
EDI 820 falls under X12 Transaction Set which contains the standard format and it establishes the contents of data of the Payment Order/Remittance Advice Transaction Set (820) which is within the contexts of Electronic Data Interchange (EDI). This transaction set is used for ordering the financial institutions for making the payment to the payee. It is also used for remittance advice by identifying the details that are needed to perform the cash transaction to the payee’s receivable accounts system.
Benefits of EDI 820:
The key benefits of EDI 820 are;
- It helps the seller to keep track of all the accounts that need to be settled by the buyers.
- There is encryption of data to make sure that the security is maintained when payments are made between two trading partners.
- It gives all the suppliers an ability to reconcile about an idea of which invoices have been completely paid.
- It can give the information to the buyers and the sellers about any changes that are made in the payment information and details.
It is very important to look for the safety and clarity of all the information when it comes to payments. EDI 820 can be used for these purposes as it proves to be a much safer and more clearer tool for any financial transaction activities.
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