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X12 transaction guide · Finance

EDI 827 Financial Return Notice

The X12 document used to tell the originator of a payment order that it could not be processed, or was modified.

Sent by
Financial institution
Received by
Payment originator (company)
Standard
ANSI ASC X12

What is an EDI 827?

The EDI 827 Financial Return Notice is the ANSI X12 transaction set used to report to the originator the inability to process, or modifications to, the original payment order.

When a company sends payment instructions, for example with an 820, some payments may fail: the beneficiary account may be closed, or details may be invalid. The return notice tells the originator which payments were returned or changed and why, so it can correct the details and pay the beneficiary another way.

How the EDI 827 worksDiagram of the EDI 827 Financial Return Notice. Financial institution sends it to payment originator (company). It usually follows 820. It is usually followed by 997. Inside the ISA, GS and ST envelopes, X12 release 008010 requires, in the heading: RIC (Financial Return). 1 optional loops are listed by their first segment.How the EDI 827 worksFinancial Return Notice: who sends it, where it fits and what the standard marks required1 WHERE IT FITSUSUALLY FOLLOWS820PaymentOrder/Remittance AdviceEDI 827SENDERFinancial institutionRECEIVERPayment originator(company)997 or 999 acknowledgment back, if the partners agreeUSUALLY FOLLOWED BY997FunctionalAcknowledgment2 WHAT X12 RELEASE 008010 REQUIRESInterchange: sender and receiver IDsISA … IEAFunctional group, ID code FRGS … GETransaction set 827ST … SEHEADINGRICFinancial Return+ 1 optional loop, starting with:NM1Blue box: required loop. Optional loops are listed by the segment that starts them; when a loop is used, that first segment is required. Optional segmentsoutside loops are not drawn.Structure: required segments and loops in the X12 008010 listing for the 827. Your trading partner's implementation guide adds its own requirements.
How the EDI 827 worksDiagram of the EDI 827 Financial Return Notice. Financial institution sends it to payment originator (company). It usually follows 820. It is usually followed by 997. Inside the ISA, GS and ST envelopes, X12 release 008010 requires, in the heading: RIC (Financial Return). 1 optional loops are listed by their first segment.How the EDI 827 worksFinancial Return Notice: who sends it, where itfits and what the standard marks required1 WHERE IT FITSUSUALLY FOLLOWS820Payment Order/Remittance AdviceEDI 827SENDERFinancialinstitutionRECEIVERPaymentoriginator(company)997 or 999 acknowledgment back, if the partnersagreeUSUALLY FOLLOWED BY997Functional Acknowledgment2 WHAT X12 RELEASE 008010 REQUIRESInterchange: sender and receiver IDs (ISA… IEA)Functional group, ID code FR (GS … GE)Transaction set 827 (ST … SE)HEADINGRICFinancial Return+ 1 optional loop, starting with:NM1Blue box: required loop. Optional loops are listedby the segment that starts them; when a loop isused, that first segment is required. Optionalsegments outside loops are not drawn.Structure: required segments and loops in the X12008010 listing for the 827. Your trading partner'simplementation guide adds its own requirements.

How to read this diagram: the top row shows who sends the 827, to whom, and which documents usually come before and after it. The lower part shows what X12 release 008010 itself requires: the envelopes around the 827 and the segments and loops the standard marks as required, area by area. Optional loops are listed by the segment that starts them rather than drawn in full. This is the standard's minimum, not a trading partner's requirement: each partner's implementation guide usually makes some optional loops mandatory, restricts the codes and may use a different release.

Expand diagram Download SVG

When it is used

  • Reporting returned payments
  • Reporting payments the bank could not process
  • Reporting modifications made to a payment order

Where it fits in the document flow

Usually follows 820 Payment Order/Remittance Advice
This document 827 Financial Return Notice
Usually followed by 997 Functional Acknowledgment

Structure

Mandatory segments in the 827 (X12 release 008010)

The segments X12 release 008010 marks as mandatory at their level, in order. Segments inside optional loops are needed only when the loop is used. This is the standard's requirement, not your trading partner's: each partner's implementation guide names the release it uses, adds the optional segments it requires and restricts the values. The requirement status comes from one published X12 reference listing and has not been checked against a second source.

  • ST
  • RIC
  • NM1
  • SE

Practical example

The 827 in practice

A company sends its bank an 820 with 300 supplier payments. Two are returned because the beneficiaries' accounts are closed. The bank sends an 827 identifying both payments and the return reasons. The company contacts the suppliers for new bank details and reissues the payments.

Implementation

Implementation considerations for the 827

  • Map return reason codes to actions in accounts payable.
  • Match returns to the original payment orders.
  • Reverse payment postings promptly when funds come back.
  • Monitor return rates to catch bad vendor bank data.

How ECOM helps

Automate the 827 with ECOM

Solution

Financial Document Automation

Automate invoices, remittances, payment files and bank statements from capture to posting.

Industry

Financial Services

Secure file transfer and B2B integration for banks and financial institutions.

Solution

Procure-to-Pay Automation

Automate purchasing, receiving and supplier invoicing across EDI, portals and documents.

More general questions about EDI are answered in the EDI FAQ.

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