9 minute read

Using EDIFACT Parties Correctly - A Breakdown

While maintaining master data is extremely important if a business is to experience streamlined B2B message exchange, it’s not always simple. The multitude of potential EDIFACT parties that can be involved in a transaction can be confusing and it’s imperative that certain processes are established and adhered to if costly errors are to be avoided.

Why master data errors happen

One of the most common sources of master data issues is the conflation of EDIFACT parties – i.e. the parties referenced in EDIFACT messages. To those inexperienced with EDI and EDIFACT, it may not seem like an issue to use certain EDIFACT parties interchangeably if the underlying information is the same for a certain transaction. However, just because Buyer and Ultimate consignee or Invoice recipient may be the same value in a B2B transaction with business partner A, for example, that doesn’t mean they always will be in all other B2B transactions with other business partners.

The two core principles one must adhere to here are:

  • Always consult the respective EDI message implementation guideline and potentially accompanying documents, to check which partner role is required where.
  • Always cross check with other document types in the same process choreography, to spot potential interdependencies. E.g. an INVOIC usually must contain the same role identifiers (AKA party codes) as the underlying ORDERS and DESADV. It may of course also contain additional role identifiers, not contained in the underlying document types.

Making the wrong assumptions and not cross-checking exactly with the requirements will ultimately lead to errors and the swift deterioration of your master data’s integrity.

Admittedly, setting up EDI connections with certain partners can be challenging, as you may encounter requirements, such as those 3M sends to their partners (pictured below).

3M Message Requirements

In such cases it is even easier for users to confuse EDIFACT parties.

The impact of master data errors

Without trained personnel and processes and procedures in place to protect the integrity of your master data (such as conducting a full master data sync before onboarding a new partner), data quality is likely to deteriorate over time. In such situations, the only solution is a time-consuming audit and correction process.

Meanwhile, in the short term even the smallest error can have significant repercussions. For example, large consumers will often reject an invoice, no matter how big, if the data on it does not align with their records.

To help you avoid making expensive mistakes, in the following sections we will explore the subject of EDIFACT parties in detail, looking at the three popular EDIFACT subsets (EANCOM, EDITEC and VDA).

Before diving into these subsets, however, let’s first look quickly at EDIFACT as a whole…

White Paper - 7 Mistakes EDI Solution Buyers Make

Understanding EDIFACT and EDIFACT parties

UN/EDIFACT stands for the United Nations rules for Electronic Data Interchange for Administration, Commerce, and Transport. It is a set of internationally agreed standards that was created to facilitate the exchange of structured data between business partners.

As UN/EDIFACT is used across many different industries, the list of UN/EDIFACT parties (also known as “party function code qualifiers” and by the code “3035”) that can be used in B2B exchanges is very long. The full list of UN/EDIFACT party codes in the D01B version of the standard, which are used for the NAD (name and address) segments of EDI messages, can be found here.

As no company would ever need to use all of these party codes (and maintaining so many master data fields accurately would be virtually impossible), UN/EDIFACT users rely on standard subsets instead. These subsets are tailored towards specific industries and reduce the various EDI messages to essential fields that are mandatory to specific business processes or for specific message types. As a result, companies are only required to recognise and use a fraction of the available EDIFACT party codes.

Now let’s look at the key parties in each of these subsets and how they differ from one another, using the example of an INVOIC (invoice) transaction in each case.

EDIFACT subset 1: EANCOM (D01B INVOIC)

EANCOM is arguably one of the most popular subset of the UN/EDIFACT standard. Initially created for the retail industry, EANCOM is now also used by some other industries too.

The EANCOM standard currently includes about 50 different message types. For the purposes of this article look at one of these – the D01B INVOIC – as an example.

From the hundreds of parties available under the extensive UN/EDIFACT standard, the EANCOM D01B INVOIC guideline uses just 35. The most commonly used of these, and their descriptions, are listed below…

Party code Party Party description
BY Buyer The party to which the merchandise/service is sold
DP Delivery party  The party to which the goods should be delivered (if not the same as consignee/buyer)
IV Invoicee The party to which the invoice is issued
OB Ordered by The party that issued the order
PE Payee  The credit party when not the beneficiary
PR Payer  The party initiating payment
SF Ship from The party from where goods will be (or have been) shipped
SU Supplier The party supplying the goods or services
UC Ultimate consignee The party designated on the invoice or packing list as the final recipient of the stated merchandise

In most EANCOM D01B INVOIC transactions you are unlikely to need to refer to any party outside the nine listed above. However, there are a number of others that may be required from time to time.

These less commonly used EDIFACT parties are listed below:

Party code Party Party description
AB Buyer’s agent / representative The third party that arranged the purchase of merchandise on behalf of the buyer
BF Beneficiary’s bank The account servicer for the beneficiary or payee
CA Carrier The party undertaking or arranging transport of goods 
CN Consignee  The party to which goods are consigned
CO Corporate office The head office of a company
DL Factor A company offering a financial service whereby a firm sells or transfers title to its accounts receivable to the factoring company
DS Distributor The party distributing goods, financial payments or documents
FW Freight forwarder The party arranging the forwarding of goods
II Issuer of invoice  The party issuing the invoice
ITO Invoice recipient party (GS1 Code) The party to which the invoice is sent and which processes the invoice on behalf of the invoicee (the invoicee can be different to the processing party)
LC Party declaring the Value Added Tax (VAT) The party responsible for declaring the Value Added Tax (VAT) on the sale of goods or services
LF Buyer’s corporate office The buyer’s head office
LG Supplier’s corporate office The supplier’s head office
LSP Logistic Service Provider (GS1 Code) A party providing logistic services for another party (e.g re-packing suppliers products) on products which may lead to added value for the product
MF Manufacturer of goods The party that manufactures the goods
MR Message recipient The party that receives a message
MS Document / message issuer / sender The party issuing a document and/or sending a message
N1 Notify party no. 1 The first party to be notified
N2 Notify party no. 2 The second party to be notified
NI Notify party The party to be notified of arrival of goods
PB Paying financial institution The financial institution designated to make payment
PW Despatch party  The party where goods are collected or taken over by the carrier (if other than consignor)
RB Receiving financial institution The financial institution designated to receive payment
SF Ship from The party from where goods are being or have been shipped
SN Store number The number allocated to identify the store in question
SR Supplier’s agent / representative The party representing the seller for the purpose of the trade transaction
UD Ultimate customer The final recipient of the goods

EDIFACT subset 2: EDITEC (INVOIC 4.1)

The EDITEC subset offers standards for the communication between the plumbing/heating/air conditioning industry (in German: SHK for Sanitär-Heizung-Klima) and the respective wholesale sector. This is also known as the Heating, Ventilation & Air Conditioning industry – better known as HVAC (although this does not include plumbing).

EDITEC’s INVOIC 4.1 standard uses six party function code qualifiers. These are listed below:

Party code Party Party description
AB Central regulator  The party, who settles the payment. Usually a central payment settlement company.
DP Ship-to party The party to which the goods should be shipped
IV Invoice recipient The party to which the invoice is issued
ST Delivery address The address the goods should be delivered to
SU Manufacturer / Supplier (Industry) / Invoicing party The supplier of the invoiced goods
WS Wholesaler The wholesaler

EDIFACT subset 3: VDA (VDA 4938)

VDA stands for “Verband der deutschen Automobilindustrie” (German Automobile Industry Association). Unsurprisingly, given its name, VDA is almost used exclusively by the German automotive industry.

Within VDA’s INVOIC standard (VDA 4938) the ten most commonly used EDIFACT parties, or party function code qualifiers, are…

Party code Party Party description
BY Buyer The party to which the goods are sold
II Invoice issuer The party that issues the invoice
IV Invoicee  The party to which the invoice is issued
LC Party declaring the Value Added Tax (VAT) The party responsible on the supplier’s side for declaring the Value Added Tax (VAT) on the sale of goods 
LD Party recovering the Value Added Tax (VAT) The party responsible on the customer’s side for recovering the Value Added Tax (VAT) on the sale of goods 
MF Manufacturer The manufacturer of goods
PE Payee The credit party
SE Seller The party selling the goods
SF Ship from The party from where goods will be (or have been) shipped
ST Ship to The party to which the goods should be shipped

Want more information?

If you would like help or advice on using EDIFACT parties correctly, avoiding master data issues or any other EDI topics, please get in touch. We are always happy to help!

You can also find a wide selection of articles, webinars, white papers and infographics in our resources section.

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