Introducing the EDI 810 Invoice
In today's fast-paced global business environment, efficient communication and data exchange between trading partners are crucial to maintaining a competitive edge. One way to achieve this is through the use of EDI 810 invoices. This article will introduce you to the world of Electronic Data Interchange (EDI) and explain the benefits and components of the EDI 810 invoice, a critical transaction set within the ANSI ASC X12 standard.
By understanding and implementing EDI 810 invoices, businesses can reduce costs, increase efficiency, and foster stronger relationships with their trading partners, ultimately streamlining supply chain transactions and enhancing overall performance.
What is EDI?
EDI, or Electronic Data Interchange, is a technology enabling trading partners in a supply chain to create, send, receive, and validate business documents in a structured, standardized format.
How many EDI standards are there?
There are numerous EDI standards in use today, including ANSI, EANCOM, HIPAA, ODETTE, Oracle Gateway, RosettaNet, SAP, SWIFT, Tradacoms, UN/EDIFACT, VDA, and VICS, with different versions like ANSI X12, ANSI 5010, and EDIFACT D12. Trading partners can either agree on a specific EDI format and version or use an EDI translator to support multiple formats and versions. This translator can be software or an EDI service provider.
What is ANSI ASC X12?
ANSI ASC X12, one of the most common EDI standards used by American and international companies, is an acronym for 'American National Standards Institute' and 'Accredited Standards Committee.' It includes various codes for EDI transaction sets related to the supply chain, such as:
- 820 Payment Order/Remittance Advice
- 832 Price/Sales Catalog (non-food)
- 850 Purchase Order
- 855 Purchase Order Acknowledgement
- 856 Ship Notice/Manifest
In this article, we will describe and explain the 810 EDI Invoice.
What is an EDI 810 Invoice?
Under the transaction set of the ANSI ASC X12, an EDI 810 Invoice is a specific type of electronic invoice that follows the EDI standard format for exchanging business documents between trading partners. It is used to request payment for goods or services that have been provided by the seller to the buyer.
The EDI 810 Invoice includes detailed information about the invoice such as the invoice number, date, amount due, and itemized list of goods or services provided. It may also include additional information such as taxes, discounts, and shipping charges.
When an EDI 810 Invoice is sent, it is typically accompanied by other EDI documents such as a purchase order (EDI 850) and an advanced shipping notice (EDI 856). This allows the buyer to reconcile the invoice with the original purchase order and confirm that the goods or services were received as expected.
What are the benefits of EDI 810 Invoices?
Companies using EDI 810 invoices can experience numerous benefits, including:
- Reduced costs and increased cash flow: EDI 810 invoices eliminate the need for printing, reproduction, postage, and physical storage, improving payment processes and reducing late payment risks.
- Faster invoice processing time: Automatic information exchange and the absence of manual data entry streamline the invoicing process.
- Reduced errors: The automated nature of EDI 810 invoices minimizes human error and ensures compliance with relevant legislation.
- Improved business partner relationships: Efficient information exchange strengthens business relationships, streamlining supply chain transactions.
What is the content of an EDI 810 Invoice?
An EDI 810 invoice should minimally include:
- Purchase order number or reference
- Total invoice amount with net amount, unit price, bonuses, discounts, allowances, tax amounts, other charges, and total amount
Trading partners can agree to include additional information, such as:
- Product/Item description or characteristics (goods or services), also known as PID
- Contract reference
- Measurement code
- Packaging
- Reference data (e.g., invoice number)
- Relevant dates (e.g., invoice date, supply date)
- Tariff data (terms of sale)
- Names of parties involved in the purchase
- Destination quantity breakout
- Delivery locations (ship to and remittance)
- Tax information
- Subline data
- Port and vessel information
The EDI 810 invoice should correspond to the information in the 850 Purchase Order transaction set. Once sent, the receiver's system will automatically validate the EDI 810 invoice. If incorrect, the recipient may notify the sender of discrepancies via an electronic document, such as transaction set 864 ('text message'). If correct, the receiver sends a 'functional acknowledgment' (EDI transaction set 997) to confirm successful receipt of the EDI 810 invoice.
What are the components of an EDI 810 invoice electronic message?
An EDI 810 invoice electronic message contains three components:
- Data elements: Units of information in each transaction set, which can be a number, code, or word (e.g., point of sale (POS), product/service ID, unit of measure).
- Segment: A group of data elements, such as name, address, terms of sale or conditions, and tax information.
- Envelope: The structure containing the EDI message, which has three inner envelopes, each with a header and a trailer:
Transaction Set Envelope (ST Transaction set header/SE transaction set trailer) includes one EDI 810 invoice transaction set.
Functional Groups Envelopes (GS Functional group header/GE functional group trailer) contain one or more EDI 810 invoice transaction sets or other types of transaction sets.
Interchange Control Envelopes (ISA Interchange control header/IEA interchange control trailer) summarize all data sent in one electronic transmission and may include one or more functional group envelopes.
Example of EDI 810 invoice transmission
The following is an example of an EDI 810 invoice transmission with its respective components:
ST*810*0001~
BIG*20000513*SG427254*20000506*508517*1001~
N1*ST*ABC AEROSPACE CORPORATION*9*123456789-0101~
N3*1000 BOARDWALK DRIVE~
N4*SOMEWHERE*CA*98898~
ITD*05*3*****30*******E~
IT1*1*48*EA*3**MG*R5656-2~
TDS*14400~
CTT*1~
SE*10*0001~
In this example,
- The ST and SE segments indicate the beginning and end of the transaction set, respectively.
- The BIG segment provides invoice details, such as invoice creation date, invoice number, and purchase order number.
- The N1, N3, and N4 segments contain the ship-to party's information.
- The ITD segment specifies payment terms, and the IT1 segment contains line item details.
- The TDS segment represents the total invoice amount,
- The CTT segment indicates the total number of line items.
By implementing EDI 810 invoices, companies can significantly reduce costs, increase efficiency, and improve relationships with their trading partners. This electronic exchange of information reduces errors and ensures smoother supply chain transactions.
How can Fonoa help?
As a tax technology company, Fonoa can help businesses navigate the complexities of various EDI standards, formats, and versions, ensuring seamless integration and accurate data exchange with their trading partners. By leveraging the expertise of Fonoa businesses can focus on their core competencies while enjoying the benefits that comes with deploying world leading tax technology.
Get in touch to discover how we can help you meet the challenges posed by the shifting tax landscape and take the complexity out of tax.
