EDI 820: Payment Order and Remittance Advice, Explained

The EDI 820 is the Payment Order / Remittance Advice. It is how a payer (usually the buyer) tells a payee (usually the supplier) that a payment has been made and, crucially, which invoices that payment covers. It is the document that lets the receiver apply incoming cash correctly in their accounts-receivable system.

Two jobs in one document

The 820 can play two related roles. It can be a payment order, instructing a bank to move money, often through the ACH network. And it can be a remittance advice, explaining the detail behind a payment so the payee knows exactly what is being settled. Many 820s function primarily as remittance advice, traveling alongside a separate bank payment.

This matters because a payment without remittance detail creates work: the payee receives a lump sum and has to figure out which of dozens of open invoices it pays. The 820 removes that guesswork by itemizing the payment.

The key segments of an 820

BPR - Beginning Segment for Payment Order/Remittance Advice

The financial header. It carries the total payment amount, whether it is a credit or debit, the payment method, and banking details. BPR*C*1687.50*C*ACH indicates a credit of 1,687.50 paid via ACH.

TRN - Trace

A trace or reassociation number that links the remittance advice to the actual payment, so the payee can match the money to the explanation. This is essential when payment and remittance travel separately.

N1 loop - Parties

Identifies the payer and payee, and often their financial institutions.

RMR - Remittance Advice Accounts Receivable Open Item Reference

The heart of the remittance detail. Each RMR ties part of the payment to a specific invoice. RMR*IV*INV-3391**1687.50 means this payment applies 1,687.50 to invoice INV-3391. Adjustments such as deductions or short-pays appear alongside.

A simplified worked example

ST*820*0001~
BPR*C*1687.50*C*ACH~
TRN*1*0012345678~
N1*PR*BIG RETAILER INC~
N1*PE*ACME SUPPLY CO~
RMR*IV*INV-3391**1687.50~
SE*6*0001~

In plain English: Big Retailer Inc paid Acme Supply Co 1,687.50 by ACH, and the payment fully settles invoice INV-3391, traceable by reference 0012345678.

Common pitfalls when reading an 820

• Confusing payer and payee. The N1 qualifiers PR (payer) and PE (payee) tell you the direction of the money.
• Ignoring adjustments. An RMR may show a payment less than the invoice amount, with adjustment reason codes explaining the deduction. Missing these leads to misapplied cash.
• Assuming the 820 moves money. Sometimes it only advises; the actual funds move through a separate banking channel matched by the TRN.

Frequently asked questions