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Marlow on Standardization |
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Written by Marlow Atticus
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Monday, 21 January 2008 |
By now the
Holiday rush is over and it time to pay for those Holiday orders you received
last fall. Many Payers
are moving to using the 820 remittance. If you have never done Electronic
payment/remittance you may want to consider the following -
In the EDI
world there is EDI (Electronic Data Interchange) and there is Financial EDI
(Financial Electronic Data Interchange). The use of Electronic payments is
dependent on the movement of funds verses the movement of Remittance
information along with the capabilities of the trading partners and the
capabilities of the trading partner banks.
Below are the typical ways this can be done -
- The
movement of funds can be done via wire transfer,
with the remittance details mailed
- Payer initiates wire transfer
with their bank to the
payee's
bank
- Payer mails "Non-negotiable" check with the remittance detail
included
- The
movement of funds can be done via ACH and remittance details mailed
- Payer initiates a CCD or CCD+ format file to their
bank where the funds are moved to the payee's bank in the same fashion
- Payer mails "Non-negotiable" check with the remittance detail
included
- The
movement of funds can be done via wire transfer and remittance details can be done via 820 transaction
- Payer initiates wire transfer
with their bank to the
payee's bank
- Payer sends an EDI 820 for the remittance detail to
the payee
directly
- The
movement of funds can be done via ACH, and remittance details can be done via 820 transaction
- Payer initiates a CCD or CCD+ format file to their
bank where the funds are moved to the payee's bank in the same fashion
- Payer sends an EDI 820 for the remittance detail to
the payee directly
- The
movement of funds can be done via ACH using 820 transaction data
- Payer initiates the Corporate Trade Exchange (CTX)
format file with their bank, which must be used, and include the EDI 820 transaction set. The data is moved to the payee's bank in the same
fashion, and the
820 data is passed on to the Payee.
The
typical reason for doing Financial EDI (EFT/820) between the Payer and Payee include -
- Payee is offering a payment discount to move funds
electronically. All five of the options below would satisfy this because the value is
in the movement of funds and not necessarily around the movement of
remittance data.
- Payee wants the EDI remittance data so the information
can be populated to their accounts
receivable
system. Bullet points 3, 4 and 5 below would satisfy this one.
Again this would be at the
request of the
payee and not a requirement of the payer.
- Payer does not want to manually create checks for payee. Options 3, 4 and 5 below would satisfy this one, however this would be
at the request of the
payer,
and thus could be a requirement.
In working
with hundreds of 820 EDI guidelines over the years I have found that
there are basically 12 different flavors of 820. These differences are found in both structure and content.
When working on
designing your 820 EDI requirements, consider your audience. Many payees are only prepared to
receive the basics, -
Summary Level
o
Check Date
o
Check Number
o
Check total
o
Payment Type
Detail Level
o
Transaction
number
o
Transaction
date
o
Gross Amount
o
Cash Discount
Amount
o
Net Amount
(amount after cash discounts)
Additional information may end up
not being using by your
trading partner. The basics are normally that a trading partner reports payment
of an invoice in full, deduction
of a credit memo in full, or a deduction of a Debit memo (or 812) for discrepancies on
an invoice. Some trading partners may pay an invoice short verses paying in
full, and create a deduction for the
discrepancies. For those types of processes, I have seen a trading partner send
information within the invoice details.
Again I
re-iterate that
you consider to whom you are sending this data.
There are several companies that loop the 820 data by each retail store (Retailer Corporate entity is acceptable i.e. Division). Where
this is good information, it adds to the complexity of the data for a
retailer's supplier. Remember that the primary information a supplier needs is the information that
I mentioned above.
The most
favorable way to
send the 820 remittance information structurally is within the ENT
loop,
- If you create
debit memos, create an
ADX loop for these. This can also include payee-created credit memos. With
the ADX, indicate the date and any other reference numbers associated with
that transaction.
- The RMR loop is
used for the invoices
and payee-created credit memos. With the RMR, indicate the date and
any other reference numbers associated with that transaction.
- If a given
invoice is being paid short,
then use the ADX loop within the RMR loop indicating the date, any other
reference numbers associated,
and reason for with that deduction.
Happy New Year!
Marlow
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Marlow Atticus |
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