It’s common for people to think electronic data interchange (EDI) is used by big businesses only. But small business can actually benefit from EDI without heavy investment too.
The benefits of EDI to small businesses
Let’s get down to brass tacks. There are a few things you can get out of EDI as a small business. Here are just a few:
- Cost savings
The cost to process a paper invoice is estimated to be $30.87, $27.67 to process a PDF invoice, and only $9.18 to process an electronic invoice.
- Shortened procure-to-pay cycle
EDI can speed up your business cycles by 61%. EDI can reduce the order-to-cash cycle time by more than 20%.
- Better data accuracy
EDI improves data quality, delivering at least a 30-40% reduction in transactions with errors by eliminating manual data entry errors.
- Less manual handling
75% of businesses are confident they can process most inbound EDI/XML connections without a human touch.
- Better visibility into your supply chain
A study showed that 63% of businesses surveyed reported increased collaboration and visibility with suppliers after implementing EDI.
- Better customer service
60% of businesses say data integration has improved their customer service levels.
- Increase your potential business with EDI ready organisations
EDI ready businesses are more willing to work with each knowing they can benefit from their existing EDI setup.
- Reduce paper use and digitise your business operations
According to research, implementing EDI can lead to a 75% reduction in paper usage for transactional documents.
How does it work?
As the orders coming in increases, so does your business. But so does manual data entry, increasing workload and the risk of mistakes and errors. By using a EDI with your suppliers, you can raise orders and other messages as usual and they would be sent directly to your supplier’s software or EDI portal.
There, they respond to the order with a purchase order response, to let you know what they can supply, and can even let you know if your prices are incorrect, when they estimate the delivery to arrive and more. This information can be input into your software so your team can plan ahead. And if your software doesn’t support this data, you could take a hybrid approach and view this information in an EDI portal, like Colladium.
Your supplier can also issue you advanced shipping notices, which tell you exactly how the goods are being packed. Your supplier can even give you information like the best before or expiry dates, the batch numbers of the goods and more. This is especially useful if you have stock management or warehousing software. Again, once your supplier sends the information, it goes directly into your software – no need to re-key it. It also ensures your team have full visibility of the supply chain.
And finally, your accounts payable team will be happy about this – supplier invoices go directly into your software. There’s no receiving invoices attached to shipments, which your team need to enter, and no OCR scanning PDFs. The right data gets into your invoicing software straight away, where you may be able to automate the approval and payment of the invoice.
So what if your partners don’t use EDI? Easy, our web portal solution, Colladium, allows your suppliers and logistics provider to send you EDI messages directly to your software. Did I mention it’s free for them to use?!
Process for implementing EDI
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