An EDI 820 Payment Order/Remittance Advice is an electronic document that can be used to initiate payments and send remittance information. EDI stands for Electronic Data Interchange. Companies use EDI to reduce the errors and costs associated with the manual keying of data, and to speed up the process of sending and receiving Purchase 820.

A trading partner will send an 820 Payment Order/Remittance Advice to a supplier when payment is made, especially in the case of an Electronic Funds Transfer. This document provides suppliers with the ability to reconcile which invoices have been paid in full for any given payment.

EDI is a mature electronic document format that has been carefully defined both by the companies that require their trading partners to use EDI and by standards bodies. The two recognized standards for EDI are ANSI X.12 and UN/EDIFACT. ANSI X.12 is by far the most widely used standard in the United States. UN/EDIFACT is more popular outside the United States, although it is used by US automotive manufactures.

Each EDI Payment Order/Remittance Advice document will have data organized into segments and data elements. Each segment contains at least one data element. Each data element is a data field. The standards bodies have allowed for every conceivable possibility for data on the EDI Payment Order/Remittance Advice document. Any one company will use a small subset of the available choices within the ANS X.12 or UN/EDIFACT standards.

Each company that requires its suppliers to use EDI will have an EDI Guide or mapping document. The EDI Guide will specify each segment and data element, the allowable values for each, and the applicable business rules that must be followed. EDI guides are detailed and extensive. It is not unusual for an EDI Guide to be more than 100 pages long.