Top 5 Reasons to Start Using EDI

Apr 26, 2022

EDI stands for Electronic Data Interchange. EDI replaces paper documents, like invoices, by communicating that information electronically between two different businesses. It is faster, more affordable, and lets smaller businesses save time and money. Let us say that you are a smaller business that wants to supply products for a large company like Walmart. Some companies will only work with a business if they use EDI to send and receive documents like purchase orders, invoices, shipping manifests, and other business documents. Let us look at why EDI could be a great fit for your business. 

1. EDI Saves You Time and Money

If you do business the “old fashioned way,” you have someone on your team who sets up invoices, mails (or emails them), and reconciles your various accounts payable and receivable. EDI eliminates the cost of doing business. It also speeds up the process. A paper order can take up to 10 days to process. EDI lets you reconcile your accounts in as little as just one day.

2. EDI Brings the Business World to You

It is hard to say, but between 59% and 85% of businesses use EDI. Most large companies prefer EDI. Walmart, Amazon, Costco, and other large retail giants use EDI to do business with vendors.

EDI is accessible to small businesses, too. Outsourcing your business processes to a company like Integration, Inc. will make it so that you can do business with any size of company that you would like. 

3. EDI Streamlines Everything

There are many types of documents that are available, and which can be sent electronically. Purchase orders, invoices, shipping manifests, payment notices, and other documents are just a few of these document types. Each document performs a certain function like placing an order for your product, notifying your customer that product has shipped or your customer letting you know that money has been transferred into your bank account. There are specialized EDI transactions that also work for specific retail businesses, like grocers. 

4. EDI Reduces the Likelihood of Human Error

Manual processing makes it easy to make mistakes on documents. The most common mistakes made with manual invoices include:

  • Incorrect charges
  • Wrong address
  • Omitting information, such as the due date or an account number
  • Not getting the invoice out on time

EDI reduces the likelihood of human error. In 1994, when EDI was still in its infancy, EDI Group, LTD  did a study. They found an error rate of about 10.1% with companies that did manual document processing. Companies that switched over to EDI saw an error rate of about 4.4% on invoices and other documents. Fast forward to the 21st century and EDI has gotten even better, with an accepted error rate of just around 1%. EDI reduces the likelihood of human error. 

5. EDI Lets You Spend More Time Focusing on What Matters to Your Business

EDI not only saves you time and money, but it also lets you get access to cash faster. Some sources say that EDI can reduce order-to-cash cycle time by anywhere from 20% to 30%. Merchandise will arrive faster, and cash will enter your bank account quicker. At the end of the day, a better supply chain will result in:

  • More satisfied customers, because your is in stock.
  • Being able to focus more on growing your business and not simply sustaining your business. 
  • Finding new supply chain partners who help you move at the pace of business.

Integration, Inc. is the perfect partner to help you outsource your EDI. All our services make the EDI process hassle free. We are also affordable and make it so that you can work with any size business. 

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