Separate the message from the transfer
Scroll the table sideways to compare all columns.
| Term | Meaning |
|---|---|
| EDI | A structured format for exchanging business information. |
| ACH | The US Automated Clearing House payment network. |
| EFT | A broad term for an electronic funds transfer. |
An ACH payment is an electronic funds transfer, but “EFT” does not uniquely identify ACH. “Send it by EDI” does not identify a payment network either. Ask which bank or provider will submit and receive the money, and which message format and fields the recipient accepts.
What the payment message tells the recipient
X12’s 820 Payment Order/Remittance Advice transaction set can instruct a financial institution to pay, provide remittance information, or do both. Remittance advice explains how to apply money to outstanding invoices. It may go directly to the recipient or through an intermediary.
The message can arrive before the funds. Agree on a reference that connects it to the payment instruction and the bank or provider record.
Explain a $3,050 payment against two invoices
Suppose a wholesaler owes Invoice A for $1,800 and Invoice B for $1,400. The supplier separately approves a $150 credit against Invoice B. The amount to send is $1,800 + $1,400 − $150 = $3,050.
The remittance allocates $1,800 to Invoice A, settling it in full, and $1,250 to Invoice B after the credit. A shared reference connects the $3,050 bank payment with that advice. This explains the allocation; it is not an X12 message specification.
The supplier can see why Invoice B received $1,250, but must still check that the money arrived before closing the invoices. If only the advice arrives, investigate the payment. Sending another $3,050 without checking could create a duplicate.
Agree on a process with your trading partner
- Identify the payment method separately from the message format and delivery channel. Confirm the formats and connections supported by your bank, software provider and trading partner.
- Agree on invoice identifiers, credits, currency and a shared reference. Name who receives and validates the message and who checks the payment outcome.
- Test a partial payment, an unknown invoice and a rejected or repeated message. Assign someone to resolve unmatched records.
A browser portal or direct connection is a way to exchange data, not automatically a different payment network.
Keep the records useful after transmission
Consistent fields can reduce retyping, but a wrong invoice number can still be transmitted perfectly. Check totals and exceptions, keep supporting records and protect access to the systems exchanging them. EDI itself does not guarantee encryption, successful settlement or correct accounting.
Choose the process around the recipient’s required information and your invoice volume. Both sides need to match payments to invoices and investigate differences.