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 . edi  . Why Do We Need EDI 855 in our Business Transactions?
what is edi 855

Why Do We Need EDI 855 in our Business Transactions?

While replying back to an EDI 850 Purchase Order, an EDI 855 Purchase Order Acknowledgement is an EDI (Electronic Data Interchange) set, sent by a seller to a buyer. Besides confirming the receipt of a new order, EDI 855 informs buyers about the status of the purchase order. It helps buyers in understanding whether the purchase order was accepted, required changes or was rejected by the seller. EDI 855 works efficiently for large retailers and distributors but needs to be sent in a specified timeframe or at a specified step in order processing workflow, ensuring EDI compliance.

Optimum Usage of an EDI 855

The most important usage of EDI 855 is confirming the receipt and processing of a new order and communicating the seller’s ability to fulfill the order. In addition, EDI 855 also includes reporting any type of inaccuracies in the purchase order. If an EDI 850 document contains any type of errors or cannot be fulfilled as per the request then the seller can use an EDI 855 document to inform the buyer of any changes or can even reject the entire order. In perfect state-of-affairs, an EDI 850 will be accepted and EDI 855 will work as an affirmation of the order entertained by the seller.

While replying back to EDI 855, a buyer will send back an EDI 997 Functional Acknowledgement, which will confirm the receipt. In case, EDI 855 document has specified some changes to the order then the buyer has a couple of options to choose from. The buyer can send back an EDI 860 Purchase Order Change Request or issue a new EDI 850 Purchase Order and or even reach out directly to the seller to discuss the matter.

EDI 850 reports as well as informs that the order has been received and processed successfully. Conceptually speaking, EDI Purchase Order Acknowledgement comprises line item detail about the accuracy of the order and the seller’s ability to meet the order’s requirements.

The processed EDI 855 documents exchanged between buyers and sellers follow the x12 format prepared by the American National Standards Institute (ANSI).

Important details of EDI 855

The significant details regarding a new order primarily include-

  • The details procured from EDI 850 Purchase Order mainly include the PO number and date, product information and accepted quantities, and delivery information.
  • Seller’s Vendor Number
  • Issues, changes or errors that need to be addressed such as – Delivery Date Changes, Discontinued Items, Price Discrepancies, inaccurate product identifiers, Backordered or Cancelled Quantities, out-of-stock inventory and seller’s vendor number.

EDI 855 – Purchase Order Acknowledgment

EDI 855 is also referred to as EDIFACT ORDERS and Purchase Order Acknowledgment. The sellers can communicate receipt or rejection of an order to a buyer by using EDI Purchase Order Acknowledgment. In addition, EDI transaction codes also communicate changes or errors to an order.

Significant functions of EDI 855:-

  • It acknowledges receipt of a purchase order from a buyer.
  • It communicates the seller’s intent to fulfill the order.
  • It reports any type of errors in the order
  • It communicates issues regarding fulfilling the order.
  • It provides retailers with delivery status information that can be shared with customers for drop-ship orders.

Benefits of EDI 855 for buyers and sellers

As per EDI compliance, EDI 855 is encrypted in transit to protect buyers’ and sellers’ details. In this way, EDI 855 offers more security than any other communication method. It also eliminates the need to confirm new orders from customers through fax, phone calls or emails. In addition, the innovative features of EDI 855 help in reducing errors associated with manual retyping and numbers of customer service communications. EDI 855 alerts buyers to any type of order issues, preventing them from any type of issues relating to supply, payments or invoicing. From a buyer’s perspective, EDI 855 provides timely and automated visibility into a supplier’s commitment to accomplish an order. It reduces post invoice reconciliation issues and confirms e-commerce order details for customers.

Important data elements in EDI 855 Purchase Order Acknowledgment

Besides providing basic information, EDI 855 provides optional as well as additional information regarding Purchase Order. The important data elements provided by EDI 855 are:-

  • Purchase order number
  • Purchase order date
  • Requested ship and/or delivery date
  • Mention of location(s) where the product or services should be supplied to
  • Product item identifiers/services like UPC/EAN/GTIN are needed with their respective quantities

Additional or Optional Information provided is:-

  • Carrier and service levels
  • Vendor number
  • Item price
  • Item description
  • Expected charges and/or allowances
  • Mention of additional dates (like cancel by dates)
  • Mention of additional item identifiers like buyer item number and vendor part number

Use of EDI 855 by Companies

The usage of integrated EDI 855 facilitates new growth and revenue opportunities in companies. It gives its user a strategic advantage with trading partners and also helps in performing time-sensitive tasks in a more accurate and efficient way. If a company integrates EDI 855 with their accounting or ERP software then they eliminate extra manual efforts and errors. It also automates key processes and reduces labour costs. EDI 885 is comparatively faster than processing paper-based documents. It facilitates quicker payments, shortens order to delivery rotation, and accelerates the order-to-cash cycle. By optimum usage of EDI 855, companies can cut paper processing costs as it will reduce physical document storage, cost of printers and inks, postage costs, and cost of stationery items etc.

On the business front, it will improve customer experiences as it will automate documents processing which will ease business activities among buyers and sellers. It will bring positive vibes between companies as there will be fewer errors in business transactions. The consistency inefficient working will position companies in top slots in their business arena. It will make them more attractive to buyers and will encourage them to offer new products and services at a reasonable cost. After optimum usage of EDI 855, companies have become more responsive to changes and opportunities and are garnering more profits.

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