EDI COMPLIANCE AND ITS IMPORTANCE – Cogentialit

Prior to software unfortunately, these methods leave organizations open to the risk of theft, loss, tampering and even fraudulent data. Not to mention that these traditional forms of communication are ineffective, require a large workforce and increase paper waste.

Over the past two decades, new technology has entered the workspace and made data sharing easier and more secure. Electronic data communication (EDI) simplifies communication between partner companies using software.

EDI transacts all information in a standard format and it is handled automatically as soon as the receiving system receives the documents. EDI system provides a secure and smooth way to transfer documents between business partners while removing the complications that comes with manual data consolidation.

What is the EDI solution?

Electronic data Interchange (EDI) is a digital way of exchange of business-related documents between business partners.  It allows businesses to send documents digitally without wasting paper and time.

Digital documentation also allows partners to set up a standardized format for sequential document filling. By creating an EDI routing system, organizations can completely replace traditional mail, fax.

What are Edi transactions?

An EDI transaction and another way to refer to business documents transferred between partner organizations. In the ED EDI system, documentation is standardized and automated to simplify common forms, such as

  • invoice
  • Order
  • purchase change the order
  • purchase
  • Payment
  • Monitoring information
  • Data report
  • Criterion

The minimum amount of data must be present in the document before an EDI transaction occurs. Documents that do not comply with the established rules are not transmitted because the information is not complete. These limitations allow the EDI system to classify and store documents based on their data to create a well-organized database. Depending on the data type, each document is assigned a transaction number or code, making it easier to identify and search for information.

Companies can implement EDI processes by integrating existing B2B (Business-to-business) systems. Advanced solutions can connect outside companies, protecting sensitive data so partners can establish transparency and an open line of communication.

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What is the EDI electronic standard?

An EDI standard is a format requirement that defines how a business document must be compiled so that it can transmit it through the system. According to these standards, automated systems can indicate where to look for EDI documents.

Each transaction consists of three parts.

Element

Elements are considered to be the smallest entity of EDI standard. The data refers to the lines of information contained in the EDI document. For example, an invoice contains data items, including payment details, supplier, buyer, and prices.

Segment

these are groups of items that appear as sections in an EDI document. In the invoice example, the segments will include detailed sections of the supplier and buyer.

Series of transactions

A series of transactions are also called EDI-messaging and transactions, because after collection and publication in a standard format segment created final document of the transaction.

How they work

Edi solutions for sending Edi documents to companies must follow three consecutive steps.

1. Prepare

before processing documents, managers need to collect, consolidate and organize their data in the appropriate format. For example, users enter purchase order information in standardized software.

Companies can use a variety of methods to prepare their Edi documents.

  • Manual data entry
  • Exporting spreadsheets from databases
  • Reformat reports into data files
  • Update installed applications to view files ready for translation
  • Installation of software
  • Document

2. Translation of documents

Firstly, the data is translated and further converted in a standardized EDI format to process. However, developers may need to step in to map the software. There are several translators that can meet the needs of small and large enterprises. Therefore, owners should try to determine which system integrators are most understandable.

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Some EDI service providers offer their translation options at competitive prices. In this case, companies send their data to the provider, facilitating translation and formatting. However, this can be a problem because there must be designated employees who collect and submit the data manually.      

3. Transfer of documents

Finally, companies must send their EDI documents to the interested partners. However, there are several ways to connect organizations with each other.

  • Connection via application 2 (AS2)
  • Connecting Edi networks
  • Creating a secure network of EDI providers
  • Combination of the above methods

Regardless of the transfer method, by creating a direct path between partners, companies can simplify data sharing.

EDI integration terms to know

While many Moderna companies recognize the value of EDI technology, some companies are still not aware of its importance. Therefore, owners should spend time exploring EDI terms and how these tools can improve data sharing and storage.

Acknowledgment

The acknowledgment refers to the response team sent by software and EDI to the sender of the document, to confirm that the information has been obtained. There are several EDI confirmations that depend on the type of EDI response and the software.

Underlying link level status report message

As described above, this alert notifies the sender that the document has been successfully sent to the recipient. At this point, information can be sent via spreadsheets, text files, or EDI data fields since they are at the lowest level of communication. This type of recognition is used by every EDI tool, from basic to advanced software.

Location notification

MDN messages (message location Notification) is a warning used in AS2 programs that places Edi documents in a secondary folder to allow secure transfer over the Internet. This process involves an additional step to decrypt the additional folder and recover the data. After the information is successfully retrieved, the sender receives a warning indicating that the message has arrived and has been decoded.

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Functional confirmation of the document

Functional confirmation (FA) acts as a digital receipt sent by the recipient’s translator to the sender’s solution. This document confirms that the message has been received and read. In other words, due to the correct format of the data, the decision maker was able to extract the information without errors.

Company level recognition

at the enterprise level, it goes a step further by alerting the sender that the recipient is not only reading the document, but is also taking appropriate action. For example, if a company receives and starts paying an invoice, the supplier receives a notification that someone fulfils the outstanding balance.

Shipping notice

Advance delivery notice (ASN) and total Edi transaction notifying companies of pending delivery and all delivery related details. Typical information found in ASN includes the following. Typical information found in ASNs includes the following.

  • Purchase order number
  • Ship notice ID
  • Recipient’s address
  • Price
  • Estimated delivery date

Invoice

Unlike the traditional invoice, the EDI invoice is digital and standardized. It is a document which is sent from the supplier to the purchaser containing the details of the order shipped. For the validity of the document, it follows a simple rule. The document should match the original purchase order approved and sent by the buyer.

Invoices will detail the following.

  • Order specification
  • Payment terms
  • Recipient’s Information
  • Supplier’s information
  • Shipping details

Commonly used EDI transaction codes:

  • 830 Planning Schedule w/ Release Capability
  • 832 Sales Catalog
  • 840 Request for Quotation
  • 841 Technical Information
  • EDI Order 850
  • EDI Invoice 810
  • EDI ASN 856
  • 993 Secured Receipt
  • 997 Functional Acknowledgement
  • 999 Implementation Acknowledge

For any EDI related queries call us at + 1.877.840.6546. The Technical expert at Cogential IT is available round the clock to provide all sort of information.

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