What Is EDI & Why Does Your Business Need It?

• Standard

EDI, also known as Electronic Data Interchange, is the process of exchanging documents between businesses without involving a human component. It can benefit businesses by cutting out human error and decreasing the time it takes to transfer documents down to seconds.

Why EDI is superior to other forms of document exchange

Decades ago, the process for handling purchases orders and invoices for B2B companies was to send everything through the mail. Things sped up with fax and email finally allowed for fairly rapid exchange of documents. With these innovations, however, human error and coordinating efforts continue to present problems.

EDI has emerged as a solution to the shortfalls of previous technologies. It allows for the rapid transfer of documents between companies, in bulk, and without the need for an employee to type up an email, attach a document, and hit send.

Benefits of EDI

EDI has many benefits for business, including:

• Time savings. You won’t have to wait for invoices or messages to arrive by mail; you won’t even have to wait for a person to compile data in an email and send it to you. EDI documents arrive on a predetermined schedule.
• Cost savings. Costs associated with sorting, compiling, mailing, and processing documents will drastically decrease.
• Better accuracy. The data transmitted in an EDI file is correct, so there’s no need to worry about human error. Some EDI exchanges also include acknowledgement files from both parties so that receipt of invoices or other documents will automatically be confirmed.
• Improves customer service. Complaints, concerns, and requests can be handled in real-time, without having to wait for important information to reach your desk.

Common applications for EDI

Although email remains valuable for business, it is not very efficient for some applications. For companies that exchange vast amounts of documents on a daily basis, EDI provides a streamlined solution that cuts out the middleman.

Common applications include:

• Purchase orders
• Invoices
• Advance ship notices
• Inventory documents
• Shipping statuses

NextProcess has the expertise to aid in the implementation of EDI throughout your business; contact us today to learn more.