In this digital era where every process is getting paperless how can invoices remain untouched? Business professionals can opt for EDI invoices, an electronic invoicing solution for efficient billing. This system has gained great popularity, especially in B2B businesses.
This new trend is benefiting businesses by offering automation, accuracy, and better insight into an organization. Thus, professionals can save time, avail timely payments, and make better decisions ahead.
What Is EDI Invoicing?
EDI is a completely electronic form of invoicing and electronic data interchange for business documents. The seller issues an invoice and sends it to the buyer for payment requesting against the purchased products. A complete computer-to-computer exchange of business documents takes place between the parties.
Several codes are associated with EDI in the suffix form like EDI 850, EDI 855, and EDI 810. These suffix codes represent the business document.
Buyer receives a well-structured format that commits to accuracy and professionalism. Often, people consider EDI invoices as PDF invoices, but both are not the same. PDF invoices are more prone to paper rather than digital concept.
Now, after unlocking the EDI invoice meaning, we now disclose further information for better insight.
What Is EDI 810 Invoice?
An EDI 810 invoice is a kind of documentation that vendors share with the client/customer for payment requests.
It contains all the invoice details in favor of the invoice transaction action between buyer and seller. It includes details of services and their associated agreed charges.
Apart from EDI 810, there are other invoices like EDI 880, EDI 210 and EDI 894 invoices.
The use of these electronic invoices is subject to the specific needs as follows.
- EDI 210 is useful for Motor Carrier Freight Details and Invoice
- EDI 880 is useful for Grocery Products Invoice
- EDI 894 is useful for delivery and return-based records
- EDI 810 is highly useful for numerous order types and is very versatile to use.
What Information to Include in the EDI Invoice?
In addition to EDI billing meaning, you must know what information you must include in an EDI invoice. The following data should be there on an invoice.
- Invoice issue date
- Invoice number (unique for each)
- Details of buyers and seller
- Full details of the product or service with the proper cost breakdown
- Additional charges and discount
- Total due amount
- Payment methods accepted
- Payment terms
- Applicable tax details
- Signature of the authorized person
What Is an EDI Invoice Number?
EDI Invoice number is a unique number, assigned to an electronic invoice that the seller sends to the buyer. This set of numbers is very useful when companies perform EDI invoicing. This number holds a valuable place and serves the following purposes:
- Tracking: EDI invoice number helps track and monitor the invoice status and its processing.
- Uniqueness: This kind of number is unique for every single invoice. It keeps one invoice different from the other and makes invoice tracking easy.
- Compliance: The invoice number always enhances electronic transactions because it complies with industry standards.
- Error Reduction: The EDI invoice number is a standardized identifier that keeps the risk of errors at a minimal level.
How Does EDI Invoice Work?
In the USA, the American National Standards Institute (ANSI) created the x12 standard and also manages EDI documents. EDI invoices follow this numbering system.
The ERP system or sales department of the supplier company issues an invoice. It is then converted into an EDI message and then forwarded to the customer or its EDI provider.
The customer’s EDI solution then extracts the invoice data from the message and then integrates it into the management system. After that, customers establish P2P (Purchase to Pay) for reconciling the invoice data. The invoice message is then saved in an SAE (Système d’Archivage Electronique). This guarantees its integrity for 10 years of legal period.
This is the core and technical process of EDI invoice working. Creating and sending EDI invoices is completely electronic based. This is where you need software like Moon Invoice that provides invoice templates, tracking, and other EDI automation for efficient invoicing.
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Benefits of Using EDI Invoice
After unlocking the answer to what is EDI invoicing? Let’s move ahead to understand its benefits. EDI invoices are suitable for leveling up the billing process. Here are several reasons to choose it.
1. Higher Speed
EDI invoices commit to speeding up the invoicing process as compared to paper invoices. The process that takes several days in traditional invoicing, EDI accomplishes it within an hour. Thanks to its digital concept it makes operation quick.
2. Cost Effective
EDI invoicing lowers the invoicing process as compared to traditional invoicing. The reason behind it is low paper use, less manual data entry, and low postage costs.
3. Upgrade Accuracy
EDI enhances accuracy and benefits the business by availing of an error-free billing process. EDI includes automation, standardization, and confirmation. Due to less human interaction, EDI offers high accuracy.
4. Offer Feasibility
Switching to EDI is an eco-friendly step that everyone should follow. Paper invoice approaches need a good amount of tree sacrifice. So why be an enemy of nature with paper-based invoicing?
5. Standardize the Business Language
EDI standards are identical for every company that uses this invoicing. The electronic language is uniform at every place where EDI is useful. Overall, it makes data transfer simple.
6. Real-Time Visibility
Business professionals can view the business transaction status in real-time. This leads to many benefits for businesses. From decision making to viewing the issues and finding the appropriate solution. That’s where EDI benefits the business through real-time visibility.
How Can I Make an Invoice With EDI?
There are data elements and segments in every EDI 810 invoice. Professionals can arrange this data according to ASCI’s EDI 810 specifications.
When a buyer receives EDI 850, he makes an urge for the products or services to be dispatched. The seller again sends back an EDI 810. The invoice is generally taken as a payment request, once the goods and services are delivered.
There are three other EDI documents and buyers can send any one of these, once receiving an EDI 810.
- EDI 864 – It is a text message that presents business violations.
- EDI 997 – Functional acknowledgment that provides confirmation of EDI 810 receipt.
- EDI 820 – Remittance Advice is useful for details of an invoice payment.
To create the perfect EDI invoice, it is always good to use EDI-specific software. It offers well-defined templates and enables professionals to fill in the details properly. Moreover, it also helps in transmitting common file formats to EDI standards.
EDI invoicing vs E-invoicing
Are EDI invoicing and e-invoicing confusing terms for you? Here we clear it. The core purpose of both is the same i.e. streamline the business billing. Still, both terms are poles alike in the following way.
| EDI Invoicing | E-Invoicing |
|---|---|
| Electronic data interchange of the business document. | A digital invoice that business owners issue and share it with clients as a payment request. |
| It encompasses a broad array of business documents, such as electronic invoices, delivery slips, and purchase orders. | E-invoicing solely focuses on an invoice. |
| The creation of an EDI invoice is complex and needs special software. | Creating an e-invoice is simple as compared to EDI invoicing. It can be developed using cloud platforms. |
| This type of invoicing tends to be secure. | There are in-built security protocols that may vary as per the platform and provider. |
| High level of investment that leads to higher costs due to specialist infrastructure. | A low level of investment as a general web platform is needed. |
Verdict
An EDI invoice can be a boon for your business. Beyond the EDI payment meaning, it enhances the transaction process while incorporating speed and accuracy. It saves costs, enhances sustainability, and speeds up the process. However, you should use a specific format and standard. Moreover, choosing the right invoicing tool like Moon Invoice is another cherry on the cake. Initiate your invoicing with us today!
Frequently Asked Questions
Jayanti Katariya is the founder & CEO of Moon Invoice, with over a decade of experience in developing SaaS products and the fintech industry. He holds a degree in engineering. Since 2011, Jayanti's expertise has helped thousands of businesses, from small startups to large enterprises, streamline invoicing, estimation, and accounting operations. His vision is to deliver top-tier financial solutions globally, ensuring efficient financial management for all business owners.
