Electronic Data Interchange
Electronic Data Interchange
What is EDI?
Electronic Data Interchange [EDI] is a set of standards which allow for the exchange of electronic business documents between two companies. EDI provides a common “language” that enables business with dissimilar computer-based systems to communicate with one another and digitally exchange data. EDI basically standardizes the exchange format of documents between trading partners. It also replaces paper based documents with electronic ones increasing the effectiveness and efficiency of your company. For these reasons many companies require their business partners to be competent in their use of EDI and compliant with the widely accepted EDI standards.
How does EDI work?
EDI extracts information from a business process, e.i. Purchase Order, Invoice, etc. Then the data is automatically translated by the EDI system into a standardized “language” after which it is securely transmitted over a Value Added Network [VAN] and routed to the final recipient. The EDI system automatically translates the standardized data into a format that can be imported by the trading partners.
Benefits of EDI
EDI enables the automated digital exchange of data which requires little to no manual intervention and removes the risk of human error. Key benefits of using EDI are therefore the reduction or elimination of data entry errors, the increase in business information accuracy, a streamlined transaction processing, the reduction of business transaction costs and the improvement of customer satisfaction with faster response times. Ultimately, EDI will improve your cash flow by saving time and money when sending and receiving business documents.
