Business Terms Dictionary

Electronic Data Interchange (EDI)

Electronic Data Interchange (EDI) is the electronic exchange of business documents between companies in a standardized format. It replaces traditional paper-based documents such as purchase orders, invoices, shipping notices, and payment confirmations with digital equivalents, enabling automated processing and reducing manual intervention.

Key Benefits of EDI


  1. Speed – Transactions are processed much faster compared to manual methods.
  2. Accuracy – Reduces human errors like data entry mistakes.
  3. Cost Savings – Eliminates expenses related to paper, printing, and manual handling.
  4. Efficiency – Automates workflows, improving supply chain operations.
  5. Security – Data exchanges are encrypted and standardized.


How EDI Works


EDI uses standardized formats such as EDIFACT, X12, XML, or CSV to structure data for seamless exchange. The process generally follows these steps:

  1. Data Extraction and translation – A business system (e.g., ERP like ForgeFlow Cloud ERP) generates structured data and converts it into a standardized EDI format.
  2. Transmission – The document is sent via EDI communication protocols (e.g., AS2, FTP, VAN, Peppol).
  3. Receiving & Processing – The recipient’s system translates and integrates the data.


What EDI standards are typically used?


The EDI standards that are most popular nowadays are EDIFACT and UBL (Universal Business Language), 


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ForgeFlow Cloud supports, out of the box, the generation and receiving of electronic invoices (e-invoices) using the UBL standard. We support the integration using third party EDI providers such as Sproom or Maventa. It is possible to implement, on demand, other UBL messages like purchase orders, sales orders, etc.