What’s the EDI 820 Payment Order/Remittance Advice Transaction?

Think about the last time you had to reconcile a payment. You probably dug through emails, cross-referenced invoices, and chased down missing details. Tedious, right? Now, imagine if that process could happen automatically — fast, accurate, and hassle-free. That’s exactly what EDI 820 delivers.

The EDI 820 (Payment Order/Remittance Advice) transaction simplifies payment processing by electronically transmitting payment instructions and remittance details. It helps businesses move away from manual, error-prone workflows and brings speed and accuracy to payment operations.

In this guide, we'll explain what the EDI 820 is, how it works, and why it's essential for today’s financial systems.

What’s an EDI 820? Definition and Overview

The EDI 820 is an Electronic Data Interchange (EDI) transaction set that trading partners use to exchange payment instructions and related details in a streamlined, automated format. 

Organizations rely on the EDI 820 to initiate fund transfers and provide the information needed to apply those payments correctly, sharing key information with suppliers, vendors, and financial institutions. It’s especially useful for accounts payable (AP) teams when sending electronic funds transfers (EFT) through systems like the Automated Clearing House (ACH).

In high-volume B2B environments, where manual payment handling can lead to delays, mismatches, and errors, the EDI 820 helps keep things on track. By automating both payment directive and remittance data, it makes it easier to match payments to invoices and lightens the load for both accounts receivable (AR) and AP teams.

In many cases, an EDI 820 document is “wrapped” into an ACH transaction, combining payment tracking and cash application details. This keeps systems aligned and helps businesses prevent errors that could slow down payment processing.

The EDI 820 Specification, Format, and Elements

The EDI 820 transaction follows the ANSI X12 EDI standard, which businesses use to structure payment details in a consistent, machine-readable format. Instead of dealing with emails, PDFs, or paper checks, companies send payment details and remittance advice electronically. This approach speeds up transactions, reduces errors, and improves cash flow.

An EDI 820 document contains multiple segments and data elements, each serving a specific function in the payment process. These elements provide key details like who’s paying whom, for what, how much, and when.

Sample EDI 820 Document

Here’s a simple example of an EDI 820 document showing its key segments, which we’ll also explain below:

ISA*00*          *00*          *ZZ*1234567890   *ZZ*9876543210   *230101*1200*U*00401*000000001*0*P*>

GS*RA*1234567890*9876543210*20230101*1200*1*X*004010>

ST*820*0001>

BPR*I*1000*C*ACH*CCP*01*9876543210*01*1234567890*20230101>

RMR*IV*12345*1000*200*500*0>

N1*PR*ABC Corporation*93*1234567890>

N1*PE*XYZ Supplier*93*9876543210>

DTM*097*20230101>

TRN*1*9876543210*20230101>

ADX*INVOICE ADJUSTMENT*100>

SE*14*0001>

IEA*1*000000001>

Key Data Elements and Segments

Each segment in an EDI 820 document contains essential payment details that help businesses match payments to invoices, confirm transactions, and maintain accurate records. Let’s take a look at each segment, using the sample document above as a reference:

RMR*IV or RMR*PO (Invoice Number or Purchase Order)

Think of this as the transaction's reference point. It connects the EDI 820 transaction to a specific invoice number or purchase order so the payee can apply the payment correctly. Without it, sellers may struggle to reconcile payments, leading to unnecessary delays.

N1*PR and N1*PE (Payer and Payee Identification)

This segment identifies the payer (buyer) and payee (seller) so that the funds reach the right account. Mistakes here can cause payment misallocations, leading to confusion and extra work for accounts receivable teams.

RMR (Billed and Paid Amounts)

This lists both the billed amount and the actual amount paid. If the numbers don’t match, this segment explains why — whether invoice adjustment, a partial payment, or a discount for early payment.

BPR (Bank Account Number)

This section provides the bank account details for the electronic funds transfer (EFT). The EDI 820 format ensures the payment routes through the correct financial institution, reducing processing errors.

ADX (Invoice Adjustments)

If there’s a difference between the billed amount and the paid amount, this segment breaks down the reasons. It could be a pricing adjustment, a deduction, or tax information that affects the final payment total.

DTM (Date/Time Reference)

This section captures important dates, including the invoice date, payment date, and date of payment application. Tracking these helps businesses manage their financial records and comply with EDI billing standards.

TRN (Payment Tracking Information)

To simplify reconciliation, this segment provides a payment tracking number. It allows both the payer and payee to confirm the payment’s status, helping prevent disputes and delays in processing.

7 Benefits of the EDI 820

Implementing the EDI 820 can significantly transform how you manage payments and remittance advice — everything from invoicing to reconciliation is faster and smoother. Here's a more detailed look at how the EDI 820 can benefit your business:

Streamlined Order Processing

The EDI 820 makes the procure-to-pay process more efficient. It automatically handles payment details and remittance advice, cutting down on manual work so there’s a quicker, more accurate payment process. This is especially useful in dropshipping, where quick and seamless payment processing helps suppliers fulfill orders without delays.

Enhanced Accuracy

Because the EDI 820 automates data flow, the chances of human error drop drastically. It processes payment details, invoice numbers, and payment tracking electronically, which leads to more consistent, accurate results.

Automated Reconciliation of Payments

One of the standout features of the EDI 820 is the automatic reconciliation of payments. The document helps match payments to invoices, making it easier to keep your books accurate and up to date.

Increased Data Security

By transmitting sensitive financial data electronically, the EDI 820 improves payment security and reduces the risks associated with paper checks, emails, or other manual processes.

Faster Payment Application

Since the EDI 820 streamlines how you apply payments, your accounts are updated faster, which improves cash flow. This speed benefits both the payer and payee, allowing for quicker resolution of payments.

Improved Visibility

With the EDI 820, you get clear, real-time insights into your payment transactions. You'll always know where things stand with your payments, helping you avoid delays and confusion with trading partners. A predictable, consistent EDI process ensures that payments are tracked, reconciled, and processed smoothly, giving you greater control over your cash flow.

Improved Trading Partner Collaboration

The EDI 820 facilitates better communication with your suppliers, buyers, and other trading partners. By making payment details easily accessible and standardized, everyone involved stays in sync, leading to fewer disputes and stronger long-term business relationships.

3 Common EDI 820 Issues

While the EDI 820 offers plenty of benefits, businesses can run into some hurdles during implementation. Here are some common challenges and how to address them:

Complexities Due to the Number of Parties Involved

When you’re coordinating with multiple stakeholders — payers, payees, financial institutions, and sometimes third-party agents — things can get complicated fast. The more people involved, the greater the chance for confusion and mistakes. To prevent misunderstandings, make sure everyone is aligned with standardized communication protocols. Providing proper training in the EDI 820 format and clearly defining roles and responsibilities can help streamline the process.

Manual Processing in AR Departments Leading to Errors and Delays

Mistakes are more probable if your AR team manually matches payments to invoices. Manual processes can also lead to payment delays and cash flow issues. Automating the process with EDI 820 reduces the chance of human error and speeds up cash application. Integrating EDI validation with your enterprise resource planning (ERP) system allows you to reconcile payments in real time — making your AR workflow faster and more accurate.

Difficulties in Reconciling Payments for Orders Using Manual Methods

Manually tracking invoice numbers, payment details, and adjustments can quickly become overwhelming. It’s easy to lose track and end up with discrepancies. Fully adopting the EDI 820 helps automate the reconciliation process, ensuring payments match the correct invoices without the need for tedious manual checks.

Talk to an EDI Expert

If you’re ready to unlock the full potential of the EDI 820 in your logistics operations, connecting with an EDI expert is the next step.

An EDI professional can guide you through choosing an EDI platform and help you optimize your payment processes. You'll see smoother transactions, fewer errors, and faster reconciliations — whether you're managing payment details, handling invoice adjustments, or integrating EDI remittance advice into your systems.

Get in touch with an expert today to learn how a modern cloud-based EDI solution can help streamline your operations and boost efficiency.

Eager to learn more about other EDI transaction sets? Explore LearnEDI’s library of EDI document guides, including the EDI 810 (Invoice), EDI 811 (Consolidated Service Invoice/Statement), EDI 812 (Credit/Debit Adjustment), EDI 816 (Organizational Relationships), EDI 823 (Lockbox), and EDI 835 (Healthcare Claim Payment and Remittance Advice). Each guide outlines the document’s role and offers practical tips for using it in your EDI workflows.