As a business owner, your mind is always occupied with how to keep your business running smoothly, and of course, how to help it grow. There are many ways in which to accomplish this, but maybe you have not yet considered investing in an EDI company. That could be because you don’t think that your company is big enough to need EDI or maybe you just think that doing it manually is better. 

Whatever the reasons might be, before you make a decision, you really need to know a little more about EDI and weigh up the pros and cons for your business. Here, we consider just a few facts about EDI that will help you along that journey. 

What is Electronic Data Interchange (EDI)?

EDI, short for electronic data interchange, is a computer-to-computer exchange of valuable business documents. An EDI software converts every document into a standard format so that the information can easily be exchanged from one business to another. Some of the information within these documents is extremely critical and needs to be processed in a timely manner. 

For example a retailer who is submitting a purchase order to the manufacturer needs to ensure that the information is correct and sent sooner rather than later. Not only does it make your job easier as the business owner but it will create a better overall experience for your customers. The customer will receive the right product every time with fast delivery speeds when your company uses electronic data interchange. 

How Exactly Does EDI Software Work?

So you already know the overall gist of how EDI works but there are certain steps involved to make it all possible. Here’s what they are:

  1. The sender exports a document from his/her inhouse system into the EDI software. 
  2. The document is then converted into the standard EDI format (this format can be determined by you, there are a few different options depending on your software).
  3. The document is sent through a validation process to ensure that the information is properly formatted and has no errors. 
  4. The data from the document is transmitted to the client using a direct connection (the software will have converted the document into the same format that the client uses). 

What are the Benefits of EDI Software for a Business?

The only potential con of using an EDI software is the initial investment but once you do your research you will realize that in the end you’ll be saving your company money. With electronic data exchange you’ll have no paper or postage expenses. You’ll also be able to run your business more smoothly which in turn could lead to a higher profit margin.