Automate and Streamline Your Company’s Billing Systems by Processing an EDI Invoice

The process of receiving, executing, and sending customer invoices using electronic data interchange (EDI) is known as EDI invoicing. Electronic data interchange is the exchange of vital business documents and information in a standard format between companies using computers. The individual corporate enterprises installing and operating the software platform are called trading partners. However, the companies first need to agree on using a specific EDI messaging standard for initiating information exchange. It can be UN/EDIFACT, ANSI X12, GS1, TRADACOMS, or ODETTE, depending on which industrial sector they operate their businesses. Above all, the companies even need to decide on the secure communication network to adopt.

Steps involved in the EDI invoice processing

Companies process their customers’ sales bills using an EDI invoicing system when adopting the ANSI X12 standard as follows:

  1. The corporate enterprises’ EDI software platform receives 850 purchase order from a customer,
  2. The purchase order contains the description of products the customer wants, the quantity and the transaction date,
  3. The EDI software platform’s mapping application creates data file from vital details of the purchase order,
  4. The EDI data file is sent and integrates easily with the companies’ enterprise resource (ERP) planning software system,
  5. The enterprise resource planning (ERP) system validates the information on the purchase order with other similar e-documents,
  6. The ERP system then checks its inventory module for the availability of products the purchase order specifies,
  7. If the products are available, the ERP system generates a dispatch order via warehousing module,
  8. The ERP system finally generates a customer invoice once the products are sent to customers,
  9. The EDI software platform takes the ERP customer invoice and generates its EDI equivalent (EDI 810),
  10. The EDI software platform transmits the 810 EDI invoice to the customers’ computer systems to complete the billing transaction, and
  11. Finally, the customers’ computer systems validate the 810 EDI invoice and generate a payment order via EDI 820.

How is EDI invoicing better than a manual billing system?  

EDI invoicing allows companies of all sizes to revamp, automate and streamline their entire billing system automatically. The software platform enables corporate enterprises to eradicate the inefficiencies they associate with a manual billing procedure. These include:

  • Information not being readily available to employees to prepare the customer invoices,
  • The considerable amount of time it takes to prepare and dispatch the invoices,
  • Unintentional clerical errors the employees make when preparing customer invoices,
  • The huge costs the companies incur on paper and envelopes to dispatch the customer invoices,
  • Loss of revenue resulting from frauds, data theft, or having to issue duplicate customer invoices, and
  • Delays in receiving payments from customers because of pending disputes on their invoices.

Using a suitable EDI software platform to process an EDI invoice enables companies like retail and eCommerce especially to automate their billing systems. This enables these corporate enterprises to reduce costs, improve internal efficiency and do away with a paper trail. The companies will also be doing their bit to promote a greener planet with eco-friendly business operations. However, the EDI software platform they choose should be user-friendly to operate and integrate into their IT infrastructure without hassles, and it must be within their budgets.