EDI

Short for Electronic Data Interchange.

Even before the age of the Internet, companies needed to exchange information with one another. EDI is an electronic way of doing this.

For example Company A might supply steel to Company B. Company B would raise and order for the steel by sending an electronic order. Company A would then send the steel and also an electronic invoice for payment.

There are any number of ways for data to be exchanged - for example Company A and B could have talked to one another and agree on what an electronic invoice looks like and what an electronic order looks like. But this is very limiting, as Company A might want to send steel to hundreds of clients. They can't have a different method of exchanging information with all of them!

This is where EDI comes in. It is a set of standards describing the format of common pieces of information such as an invoice. If a company sticks to the EDI standards then there is a good chance they can exchange information with another company that also follow the EDI standards.

2020-10