Maybe you don’t see the necessity of an EDI invoicing system for your company. That is, until you start using one. Once you add an EDI invoicing system to help with company billing into the mix, there’s no going back. Your life won’t be the same without out, and neither will your business. Before we can get into the basics of using an invoicing system for your company’s billing needs, let’s cover the basics of EDI.
Electronic data interchange got its start back in the 50s, and that’s when B2B communication changed forever. Instead of going through a lengthy communication process to achieve basic business operations, companies all over the world started to use more automated EDI. EDI allows companies to send and receive important business-related documents, but not in the traditional sense.
With EDI, all documents are converted into a standard format before being sent or received. The software is responsible for everything; all you need to do is upload the document and that’s about it. This helps all business operations to run smoothly, especially when it comes to sending invoices and handling company billing needs.
How Does EDI Billing Work?
To put things as simple as possible, EDI billing is the practice of sending invoices. If you’re having trouble finding an EDI billing solution, you might also try using the phrase EDI invoicing system since they are essentially the same things. The EDI experts also refer to this process as 810; 810 is the transaction code that an EDI software uses for all invoices.
If you want to know how it all works, you must first consider the basic steps involved in a traditional invoicing system:
- A company owner obtains a printed (or digital) purchase order from a client or customer
- The requested products are delivered to the customer or client and an invoice is printed
- The customer receives the invoice through the mail
Although there are only 3 steps listed, using the traditional invoicing system involves many moving parts, not to mention it’s extremely time-consuming. A great deal of time is lost while the customer waits for the invoice in the mail, and you must rely on the mail carrier to get it to the customer in the first place. Now, let’s take a look at the steps involved in invoicing, only this time the process uses an EDI billing software.
- A customer uses the EDI software to send a purchase request order (this form is called an EDI 850)
- The EDI software automatically sends the EDI 850 form to your company’s ERP system so that the order can begin to be processed instantly
- The products are shipped and the invoice is generated
- The EDI billing software sends this invoice directly to your customer
The steps mentioned above are done entirely without the need of human intervention. This means a customer/client’s order can be processed and fulfilled, and you won’t have to lift a finger. The only time it’s necessary for you to intervene is if a customer has made a mistake when placing an order. All in all, investing in an EDI invoicing system cuts back on your workload by about 90%.