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How Small Businesses Benefit from EDI

EDI DiagramElectronic data interchange, or EDI, can trace its beginning to the 1960s. However, it was not until the 1990s that it increased in popularity, thanks to big-box retailers, such as Walmart, mandating EDI to suppliers wishing to do business with them. Today, more and more small and midsize businesses are implementing EDI. While it may seem like an intimidating process, implementing EDI for small businesses is quite simple. Here is how small businesses benefit from EDI:

When a small business implements EDI, they receive the benefit of improved accuracy. Because EDI transmits documents electronically, the chances of rekeying errors are eliminated. As a result, small businesses will save costs because their orders are accurate; reducing costly returns from lost or incorrect orders. EDI also saves costs by eliminating the need for paper and postage. With the electronic transmission, order documents (purchase orders, invoices) will not need to be mailed to trading partners.

Implementing EDI gives small businesses the opportunity to work with big box retailers to bring in additional revenues. EDI has been mandated with large retail chains, such as Walmart, and all of their trading partners must adapt the format. Small businesses with EDI have the opportunity to trade with Walmart and establish credibility due to the improved accuracy associated with EDI. Even if the small business does not trade with big-box retailers, EDI still opens the door to other trading partners.

EDI services are configurable based individual business needs. For some, operating in real time is a necessity in order to keep up with supply and demand. Without the automation of EDI, operating in real time would be virtually impossible. Inventory updates can be sent, received, and uploaded in minutes due to the speed and accuracy of EDI.

With EDI, the order to cash cycle is shortened. Invoices can be delivered directly into accounting software, allowing payments to occur at a quicker rate.

All of these benefits lead to scalability for the small business.  EDI enables business to grow while remaining lean. As business increases, EDI can handle the increased order volume, rather than hiring additional workers to manually input data all day. With the elimination of manual data entry, time is saved and errors are eliminated. For the small business looking to grow, EDI is a worthwhile investment that will grow along with you.