Even in the age of electronics, businesses still use reams of paper. In the UK, office workers use more than 8.5 million tons of paper every year.
Your office may not be using quite that much paper, but you may still find your filing cabinets overflowing and stacks of paper piling up on desks. It’s important to note that all that paper and ink are costing you money.
Perhaps most worrying is how inefficient it is to use paper to manage documents like invoices and purchase orders. If you haven’t discovered electronic data interchange, or EDI, just yet, now’s the time to get acquainted. Read on to learn all about it.
What is EDI?
As established, “EDI” stands for electronic data interchange. The term refers to systems that allow for computer-to-computer exchanges.
You might be wondering, “Don’t we do that already?” After all, you have email.
While email is an electronic format, it still needs human intervention for document transfer. Think about how many times you’ve had to respond to a message, asking if the sender forgot to attach a file. Even if they do attach the file, you may not have the right program to open it.
EDI eliminates these hassles. In turn, it streamlines how your business and its partners handle all kinds of documents.
How EDI Works
This all sounds fantastic, but how does an EDI system actually work?
Most EDI systems make use of a software interface. The program is run on both the sending and receiving computer. The use of the interface allows for direct transfer of documents between machines.
At the sender’s end, an employee will enter into the system. They’ll then generate the document, such as an invoice or a purchase order within the system. Once they’ve completed this task, the document is available to the recipient at the other end.
EDI processes are often run overnight, although they take much less time. In turn, they reduce the amount of time it can take to prepare an invoice, upload it, and send it out.
What Are the Benefits of EDI?
As you might imagine, working with an EDI capable system offers businesses some serious advantages. Perhaps the most noticeable is how much more efficient the process is.
Invoicing, generating purchase orders, and other document-related tasks take a good deal of time. First, they have to be generated. Then they’ll need to be sent out, often through fax or email.
They must then be received by a person at the other end of the line. If the transmission fails, then you’ll need to spend extra time getting it into the other person’s hands.
With an EDI system, you can remove these inefficient steps. There’s no more printing, scanning, faxing, or mailing to take care of. You simply generate the document within the system, and it arrives where it needs to go in short order.
As a result, your business cycle can become much shorter. Instead of waiting days or weeks for documents to arrive, you can transfer them in just a matter of hours.
Creating Efficiency Through Standardisation
Another benefit of using an EDI process for your business is standardisation.
Suppose you work with three different vendors. You need to send each of them a purchase order, but each asks for the PO in a different format. You must then spend time formatting each PO, perhaps in three different programs.
At the end of this process, each vendor will send you an invoice. Each invoice is in a different format. Your accounting team will spend time decoding each invoice, locating the relevant data so you can make payments.
If you and the vendors use the same system to manage documents, the process becomes more streamlined. Your POs and invoices will all be in the same standard format. This eliminates the need to play detective with each document.
Improved Accuracy Turns into Efficiency
Another major upside of EDI is increased accuracy. Automation reduces the risks of manual input errors. Missing documents, corrupted document, or illegible documents become a thing of the past.
With higher accuracy, your team will spend less time deciphering documents. Processing can then take place in short order. Higher accuracy also reduces errors, which means you’ll spend less time and effort on making corrections.
Save More than Time with EDI
Beyond saving time, though, the biggest benefit of EDI is saving money.
In business, time is money, as the old saying goes. Think about how much time and effort your team puts into managing your documents. Depending on the size of your business, paperwork can be quite time-intensive.
More than a quarter of employees in the UK feel overwhelmed by the volume of email they receive. By switching to EDI, you could reduce the number of emails they receive. In turn, they’ll spend less time in their inboxes.
With more streamlined processes, your team can save time on routine tasks. Automation takes care of many of the time-intensive tasks they need to attend to, reducing employee involvement and effort. That, in turn, turns into lower labour costs for your business.
Your team may even become more productive in the long run. The time they save on routine tasks such as invoicing can be spent on other endeavours. That might mean they can deliver better customer service or complete other accounting tasks sooner.
Going Paperless Saves More
There’s plenty of talk about how switching to paperless workflows is one great way to “green” a business. It’s true that reducing the amount of paper you use can reduce your environmental footprint.
It could save you some money as well. The less paper you use on invoices and other documents, the less you’ll need to spend on paper, printer toner, and other supplies. You may even be able to cancel the fax line.
In short, EDI helps you contribute to the health of both the environment and your bottom line.
It’s Time to Make the Switch
If you’re still using a fax machine or couriering paper copies of invoices, it’s time to leap into the future. EDI offers so many benefits for today’s businesses. You’ll wonder why you didn’t make the switch beforehand.
Not sure where to get started with an EDI system? Get in touch with the experts and discover what the right system can do for your business cycle.