What is EDI? Your guide to electronic data interchange

EDI stands for “electronic data interchange.” As your business grows, so does your need to manage all your invoices, orders and other related messages within your purchase-to-pay and order-to-cash process. The most efficient way to do that is to digitalize the communication between you and your trading partners. And EDI does just that – it electronically sends and receives documents in a structured format according to a defined set of standards established between you and your trading partners. In turn, this creates a secure and paperless way to directly connect to each of your partners.

Whether you’re a buyer or a seller, your trading partners may use different financial systems than you and require different formats. With EDI, when you place an order or send an invoice, that document is standardized into a specific EDI version of that document. That document is then sent directly to your trading partner in the correct recipient format.

For buyers, EDI streamlines the buying process and cuts costs. For suppliers, it removes tedious manual work so you can serve your customers quickly, accurately and efficiently.

As more companies are looking to work faster and embrace the digital transformation, EDI helps you quickly adapt to the ever-changing landscape of how buyers and sellers exchange secure documents. Furthermore, EDI removes traditional – and typically more expensive – methods of paper, emails, phone calls and faxes. These traditional processes burden organizations with more manual work, lost revenue and more errors.

With the increasing need for automation and digital communication, it’s important to know that not all EDI solutions are the same. In fact, many EDI solutions only bring on more challenges and time dedicated to fixing those challenges.

First, traditional EDI typically comes as software that must be managed and upgraded by your in-house team. While your team can control the system, your staff has to invest more time to manage and upkeep all EDI connections within the software. You can outsource this job to external IT consultants to relieve your staff, but that quickly becomes a costly option.

Second, traditional EDI solutions use a value-added network (VAN) or manage the connections in-house, setting up a customized connection for each of your trading partners. This is called “point-to-point,” meaning that a separate connection is created and configured for each of your trading partners. A point-to-point approach takes lots of time from your IT team or consultants because it requires a great amount of consistent maintenance.

At Pagero, we believe business should be easy. That’s why we approach EDI differently to combat all challenges that come with traditional EDI. We go beyond traditional EDI by fully managing all of your documents as a single vendor. Regardless of format requirements, you can connect to Pagero’s cloud-based platform as your single source to communicate securely and effectively with each of your trading partners.

Whether you currently use EDI or are interested in learning more about it, EDI creates more efficiencies and security in your processes. The right EDI provider will help you save time, cut costs and enable you to scale your organization. However, it’s important to weigh the pros and cons to find the right partner for your organization.