What is EDI & How to Achieve EDI Compliance

by | Jul 20, 2020 | Blog | 0 comments

What is EDI & How to Achieve EDI Compliance

by | Jul 20, 2020 | Blog | 0 comments

What is EDI & How to Achieve EDI Compliance

Electronic Data Interchange (EDI) is the computer-to-computer exchange of business documents in a standard electronic format between business partners. EDI includes business documents such as purchase orders, invoices, shipping notes, dispatch data and more.

EDI vs Traditional Systems  

Typically, such documents would have to be transmitted via paper, fax or mail. This information will then have to be processed manually by the receiver in their own system. This increases the overall time taken in exchanging the information. Moreover, the manual processing of data increases the risk of costly errors during data keying & rekeying.   

EDI eliminates these manual processes by replacing them with an automated exchange of information by creating a communication network between different eco-systems. EDI allows the creation of a business-to-business network connecting business systems of manufacturers, suppliers, distributor and retailers from all over the world.     

Companies are opting for EDI solutions like invoice automation, accounts payable automation solutions to manage their accounts payable process flawlessly.

Key Benefits of EDI

  • Improved data accuracy and efficiency by elimination of manual data handling   
  • Reduced operating costs with decreased paperwork and reduced staff requirements  
  • Maintains and improves the customer relationship 
  • Standardized business programs and procedures  
  • Increased productivity by eliminating redundancy in processing  
  • Increased information sharing, collaborative planning, and improved sourcing relationships between partners  
  • Improved customer service aided by better planning of shipments and deliveries  

EDI with Business Systems

Majority of businesses rely on Enterprise Resource Planning (ERP) systems for managing their business accounts and information such as orders, invoices, inventory levels, and dispatches. But each organisation has its own unique ERP systemwhich cannot necessarily be integrated into a trading partners ERP systemThis means that such ERP systems of two different businesses cannot communicate between themselves independently.   

EDI is the answer  to this problem. EDI facilitates seamless communication between various ERP & CRM systems as well as other business programs such as Webshops, accounting systems, etc. This ability to exchange and process data in real-time has a significant impact on the efficiency of the overall business operation. 

EDI for Small Businesses  


EDI solutions are ideal for both small and large businesses. It is especially beneficial for small businesses as the seamless, secure flow of information and improved data visibility allows them to deal with multiple client and trade in higher volume.   

EDI removes the need for manual processing of data. Thus, eliminating the costs associated with manual data entry, data storage as well as the losses incurred due to errors during rekeying of data.   

This improved efficiency of operations has a positive cash-flow impact on the overall business. With EDI, small businesses can automate their business operations, paving the way for scaling their whole business.   

It also allows small businesses to trade with large companies who require partners to have an EDI solution for transactions. So being EDI compliant not only saves money and improves the efficiency of SMEs but also enables them to grow at a faster pace and improve profitability.   

EDI Compliance   

Large businesses often impose EDI as a preliminary requirement becoming their trading partners. They insist that their suppliers become EDI compliant before they can take them on as a supplier.  

EDI compliance is complying with the preset electronic communication requirements set by a trading partner. Each company has a set of compliance requirements based on their industry and their specific organization. Once a company becomes EDI compliant, they can read and write the business data in EDI format & send and receive these documents with their trading partner.   

Why do businesses need to be EDI compliant?

Virtually all trading giants like Walmart, Home Depot, Bed Bath & Beyond, and many others companies often demand that the companies that they want to do business with should become EDI compliant. In a nutshell, your business requires EDI to receive your purchase orders & send out invoices.

How Do You Become EDI Compliant?

There are a few steps that help you to become EDI compliant.

What Does Your Trading Partner Require?

First, you need to understand the requirements of your specific trading partner. By visiting the website of your trading partner, you can get the full details of requirements and expectations.
Choosing Your EDI Solution
For choosing the right EDI solution, you can get two options. You can either outsource your EDI requirements to a third-party service provider, you can build in-house EDI solutions like invoice automation, accounts payable automation, etc. Since building an in-house solution is a huge challenge, hence most companies prefer to outsource their solutions.

Testing Your EDI

Once you have your EDI solution set up, you need to test your EDI. The test will ensure you whether all your important documents can successfully be exchanged in the proper format with your trading partners or not.

EDI Reporting

If you are using EDI 852, you need an EDI reporting solution. EDI 852 is a pivotal tool for your growing company.

Becoming EDI compliant can be a cumbersome and time-consuming task, especially for small & medium enterprises. Fortunately, HubBroker has simplified this painstaking process by making EDI apps ready to be usedHubBroker’s EDI service allows a business to exchange data securely with any trading partner with their on-premise or cloud-based EDI software. HubBroker understand the pain points and challenges various businesses are facing in an EDI setup and HubBroker is adjusting the EDI solution to existing business processes. HubBroker is able to provide low-cost, fully compliant end-to-end EDI solutionsTheir team of experts are available 24*7 to assist customers by answering their questions and provide technical assistance.




HubBroker provides flexible and scalable EDI solutions for small, medium & large-scale businesses. We provide integration services for various business systems such as ERP systems, webshops, business accounting systems and third-party logistics (3PL).