Modern businesses are constantly striving to improve and automate their business processes, especially when it comes to supply chains. However, even the best-run supply chains can face situations where adjustments need to be made. If a problem arises with a purchase order, the trading partner uses EDI 812.
What is an EDI 812?
EDI 812, formally known as an EDI X12 812 Credit/Debit Adjustment Transaction Set, is an EDI document used by trading partners (buyer and seller) in B2B communication to indicate that adjustments have been made to a specific payment or to demand an adjustment or bill-back.
Using EDI 812 transaction, trading partners can reconcile payments with invoices and eliminate the need for paper credit or debit memos.
Who Uses The EDI 812 Debit/Credit Adjustment?
EDI 812 is used to automate B2B communications in all industries. This EDI document can be used by various companies such as:
- Retailers/ grocers
- suppliers of goods and services
- manufacturers of goods
- wholesalers
- warehouses
- 3 PL Logistics
- transport companies (providing road, rail, sea (river) and air transportation) and many others.
When is The EDI 812 Document Used?
Trading partners use EDI 812 Credit/Debit Adjustment in various cases, the most common examples are:
- The products that were ordered were not delivered.
- There was a mistake in sending the products.
- A defective, damaged, or spoiled item was received.
- The manufacturer’s discount or retailer’s markup needs to be adjusted.
- In the original purchase order or invoice, there was an error in the pricing.
- There is an inconsistency in the quantity of goods delivered. For instance, when more or less goods are delivered than ordered.
- Consumers are returning the goods to the retailer
What Information is Included in EDI 812 Debit/Credit Adjustment?
Generally, an EDI 812 document refers to a specific Purchase Order or Invoice and contains detailed information such as:
- The number of the original PO or Invoice.
- The total amount of the adjustment.
- The items that are being adjusted.
- Identification of the items.
- Quantity of the items.
- Credit, debit, or adjustment justification.
- Debit/Credit Memo
EDI X12 812 Transaction Set Specification
EDI X12 812 Credit/Debit Adjustment Transaction Set is an electronic document used in the context of EDI where:
EDI – Electronic Data Interchange is a technology used to exchange commercial data between companies in a structured digital form based on regulated message formats and standards.
X12 – is a cross-industry standard for electronic exchange of business documents between business partners. In the United States, it is the most commonly used EDI standard.
812 – is a unique three-digit number to identify an EDI transaction. A three-digit code is assigned to each type of EDI document that is used in the X12 standard.
Transaction Set – is an electronic document that is the equivalent of a paper document.
The following is an example of the specification for the EDI 812 Transaction Set. The 812 contains mandatory and optional data, as with any other EDI document. Depending on the field of activity and the requirements of the trading partner, additional data may be required.
A typical structure for this document would be as follows:
EDI 812 Transaction Set Heading:
| Segment ID | Name | Purpose: |
| ST | Transaction Set Header | Indicating the start of a transaction set and assigning a control number |
| BCD | Beginning Credit/Debit Adjustment | Provide the receiver with the identifying date and number for the transaction set and the monetary value of the transaction |
| N9 | Extended Reference Information | Transmit identifying information as specified by the Reference Identification Qualifier |
| PER | Administrative Communications Contact | Identification of the individual or office to whom administrative communications should be addressed |
| SHD | Shipment Detail | To specify shipment details, such as weight, quantity, and routing instructions regarding crediting or debiting returned products |
| N1 | Party Identification | Identification of a party based on type of organization, name, and code |
EDI 812 Transaction Set Detail:
| Segment ID | Name | Purpose: | |
| CDD | Credit/Debit Adjustment Detail | Provide information concerning a line item adjustment | |
| LIN | Item Identification | Identifying basic information about an item | |
| PO4 | Item Physical Details | To describe the physical characteristics, packaging, weights, and dimensions of an item | |
| N9 | Extended Reference Information | Ttransmit identifying information as specified by the Reference Identification Qualifier | |
| SE | Transaction Set Trailer | To specify the end of a transaction set and report the number of segments transferred (including beginning (ST) and ending (SE) segments). SE represents the final segment of a transaction set. |
What Communication Protocol is Used to Send and Receive EDI 812?
At present, most companies that use EDI to communicate with their business partners do so over the Internet using FTP, sFTP, or AS2 communication protocols. For a variety of reasons, some companies may opt to use VAN, which is a more expensive solution.
Learn more about EDI communication protocols in the free EDI guide: Introduction to EDI Communication
EDI B2B Automation Through 812 Translation
The information transmitted by EDI 812 needs to be translated into a functional format for further processing or for integration into the company’s business system. Many companies use the Fully Managed EDI Services from EDI2XML. Through this service, EDI 812 information can be synchronized with an internal system, such as an ERP/CRM or accounting system, eliminating the need for manual data entry. In this way, the data received from trading partners via EDI is immediately pushed into the business system and can be processed quickly.
Learn more about the Fully Managed EDI Service
As an alternative to fully managed EDI, to transmit and translate an EDI 812 or any other EDI document, company can use low-cost and flexible EDI solution from EDI2XML – the HTTP EDI Web Service (REST API).
EDI2XML Web service is a web-based HTTP service that runs over the Internet and converts EDI messages into XML and XML messages into EDI (based on EDI2XML’s proprietary XML schema).
Learn more about this EDI service in the article: How to Become EDI Compliant in Under 60 Minutes (Yes, Really)
Benefits of Using the EDI 812 Credit /Debit Adjustment
Both the seller and the buyer benefit from EDI 812 credit/debit adjustment by automating the transaction process. Below are some of the advantages that can be realized by both trading partners:
- Sending and receiving credits/debits can be done more quickly and with less effort
- Gain operational efficiencies by reducing paperwork
- Automated data entry reduces errors
- Maintains documentation for deductions and credits
FAQ – EDI 812 Credit/Debit Adjustment
What is the EDI 812 Credit/Debit Adjustment?
The EDI 812 is an X12 transaction used to communicate credit or debit adjustments between trading partners. It explains why an invoice amount has changed, such as returns, pricing errors, discounts, or chargebacks. This document helps automate corrections in Accounts Payable and Accounts Receivable systems.
What information is included in an EDI 812?
An EDI 812 typically includes the adjustment amount, the type of adjustment (credit or debit), the reason code, references to the original invoice, item-level details when needed, partner identifiers, dates, and currency. The exact structure depends on the trading partner’s companion guide.
How is the EDI 812 different from the EDI 810 Invoice?
The EDI 810 sends the original invoice, while the EDI 812 communicates a correction to that invoice. The 810 creates the billing request, and the 812 updates that request with new financial information, such as a reduced or increased amount.
When do companies use the EDI 812?
Companies use the EDI 812 when they need to correct previously issued invoices. Common situations include product returns, pricing discrepancies, quantity errors, promotional allowances, deductions, freight adjustments, or vendor chargebacks.
What are common reason codes in an EDI 812?
Reason codes describe why the adjustment is being made. Examples include damaged goods, incorrect pricing, promotional discounts, quantity shortages, transportation issues, or administrative errors. Many retailers also provide custom reason codes in their technical specifications.
What is the role of the 997 Functional Acknowledgement for the EDI 812?
The 997 confirms that the trading partner received the EDI 812 and that the document meets the required format and syntax. If the 997 reports errors, the sender must correct the file and resend it.
Which industries use the EDI 812?
The EDI 812 is widely used in retail, distribution, manufacturing, automotive, consumer goods, and logistics. Any business that deals with high invoice volume or frequent financial adjustments relies on this transaction.
Conclusion: All You Need to Know About EDI 812 Credit/Debit Adjustment
For more information on how to implement EDI 812 in your company, contact us for a free consultation with one of our EDI experts.
You can also gain a lot of useful knowledge about business and e-commerce automation and integration of EDI, ERP, and CRM by exploring our Blog
