What is EDI Compliance and How You Can Achieve It

Aug 15, 2023

It is essential for businesses to achieve and maintain EDI compliance systems in order to foster business partnerships with most big corporations, like Walmart and Target. Businesses will need to be EDI-compliant in order to forge new strong relationships and maintain that status to avoid penalties in existing trade agreements. 

However, many small or medium-sized businesses may be unaware of this important practice and find that they come up short. To help with this, we’ll explain the definition of EDI compliance and why it’s important to your business’s growth. We’ll also go over how you can become EDI-compliant to ensure your trading partnerships thrive. 

What Does It Mean to Be EDI Compliant?

When starting a new business, owners may not be familiar with EDI requirements when beginning trade partnerships with larger corporations. However, it’s important to understand this simple term so you can continue to grow your business. EDI compliance refers to a business’s ability to accurately send and receive business documents according to the EDI requirements of its trading partners. 

What does EDI mean? Electronic data interchange is a standard format that replaces paper documents, such as invoices and purchase orders. By automating business transactions, organizations save time and money instead of manually inputting information. Most industries utilize EDI integration with their trading partners as part of their B2B communication channels.

For brands looking to sell to major retailers, EDI compliance is a must. Most large retailers exclusively use EDI communication with their trading partners. If your brand can’t or won’t meet these requirements, then you may lose out on that business opportunity.

Why Is It Important for Businesses to Be EDI Compliant?

It’s important for brands to be EDI compliant in order to do business with major retailers. When your business is EDI compliant, you’ll keep strong trade partnerships, which is important for your business. EDI will enable you to easily and successfully receive purchase orders and send out invoices. Without EDI, you will be locked out of doing business with the most important companies in the country.

What Are the Risks of EDI Noncompliance?

There are a few risks of EDI noncompliance. For starters, you won’t have the ability to begin new trade partnerships with big retailers. For new brands and small businesses, building trade relationships with bigger companies is highly lucrative. When you partner with a large retailer like Amazon, you’ll get your products in front of more people, which can mean exponential growth for your business. However, big corporations may refuse to do business with your company if you haven’t implemented EDI or are unable to become fully EDI compliant.

The other risk of EDI noncompliance is penalty fees or chargebacks. Chargebacks vary dramatically depending on the issue. Companies may charge hundreds or thousands of dollars if your business is EDI non-compliant. Examples of EDI noncompliance might include late EDI documents or inaccurate information. 

How Can a Business Become EDI Compliant?

Implementing EDI integration can be challenging, especially for small and medium-sized businesses. You’ll want to ensure that the processes are set up correctly in order to be compliant with all that your trading partner requires. The risks of falling into non-compliance could mean paying substantial chargebacks. You may also lose out on trade partnerships if you don’t implement EDI in time, which means you’ll lose out on a big deal for your business. 

Become EDI Compliant – Quick and Easy

How do you become EDI-compliant to work with large corporations? Most small businesses find that outsourcing their EDI needs to another source is the most practical option. Implementing and managing EDI technologies in-house tends to cost quite a bit of money and is challenging to do. Luckily, there are EDI outsourcing companies that can implement and manage businesses’ EDI integration needs. 

Whether you have many trading partners or only one, our company can help you implement the right EDI solutions quickly. Since trading partners may have different requirements, we can help you ensure that you remain in full compliance with whatever EDI guidelines your trading partner requires. We can also help support you after onboarding to make adjustments or help you with any of your EDI needs. 

Let Us Help You!

Integration, Inc. can help you with your EDI needs, whether you’re a small business starting out or you’re looking to grow substantially with new trade partners. Since most retailers and suppliers rely on EDI for their B2B communications, you’ll need to figure out how to be fully compliant in order to grow your business. Get in touch with a member of our team to discuss your EDI needs.

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