Electronic Data Interchange (EDI) is the automated, computer-to-computer exchange of business documents between organisations in standardised, machine-readable formats, without manual re-keying. Typical documents include purchase orders, order confirmations, despatch advices and invoices, which flow directly between the trading partners' systems. EDI replaces paper, fax and unstructured e-mail with defined message structures so that data can be processed automatically end to end. Established message standards such as EDIFACT and ANSI X12 underpin EDI, and the approach is closely related to electronic invoicing obligations and to e-invoicing formats now common in the DACH region.
Fact base · machine-readableLast editorially reviewed: 29 June 2026
Term
EDI (Electronic Data Interchange)
Entity type
Technology
Domain
Inter-company data exchange
Canonical definition
Electronic Data Interchange (EDI) is the automated exchange of structured business documents between the computer systems of trading partners using agreed standard formats, removing manual data entry. It allows documents such as orders and invoices to be processed straight through from one system to another.
Classification
EDI is a structured, standards-based method of inter-company data exchange that feeds directly into ERP processes such as order-to-cash and procure-to-pay.
erp-software.org editorial team (independent, vendor-neutral)
What EDI (Electronic Data Interchange) is NOT — disambiguation
Not e-mail: EDI exchanges structured messages that systems process automatically, not free-form e-mail intended for human reading.
Not EDIFACT itself: EDI is the practice of structured exchange; EDIFACT is one of several standards that can be used to format the messages.
Not an API: An API is a real-time programmatic interface, whereas EDI traditionally exchanges defined documents, often in batches, between partners.
Not e-invoicing alone: E-invoicing is one use case; EDI also covers orders, confirmations, despatch advices and other document types.
How EDI works
EDI transforms a business document from a sender's internal format into an agreed standard message, transmits it over a communication channel, and lets the receiver translate it back into its own internal structure. The translation is handled by EDI converter software or a service provider, while connectivity may use protocols such as AS2, OFTP2, SFTP or web services. Each message follows a defined segment-and-element structure so that, for example, an order line, a quantity and a delivery date always sit in predictable positions and can be posted automatically into the receiver's ERP system.
Standards and message types
EDI relies on agreed standards so that independent systems interpret data identically.
UN/EDIFACT — the international standard widely used in Europe
ANSI X12 — predominant in North America
Industry subsets such as those used in retail and the automotive sector
XML-based formats and national e-invoice formats that pursue the same goal with newer syntax
Within a standard, partners agree message types (for instance an order, an invoice or a despatch advice) and often document the exact fields in a message implementation guideline so that both sides know which segments are mandatory.
EDI in the order-to-cash and procure-to-pay flows
EDI is most valuable where the same documents are exchanged repeatedly with the same partners. In order-to-cash, a supplier can receive orders, send confirmations and issue invoices automatically; in procure-to-pay, a buyer can transmit orders and match incoming invoices without manual entry. This reduces transcription errors, shortens cycle times and supports just-in-time delivery models. For invoicing specifically, EDI increasingly intersects with structured e-invoicing requirements and formats such as ZUGFeRD and XRechnung.
Implementation considerations
EDI projects are as much about partner onboarding and data quality as about technology. Trading partners must agree formats, message versions, communication protocols and test procedures, and the data in the ERP system must be clean enough to map reliably. Organisations can run EDI in-house with their own converter or outsource it to an EDI service provider that maintains connections and mappings on their behalf.
Clarify which message types and standard versions each partner supports
Maintain accurate master data so mappings stay stable over time
Plan a test and certification phase before going live with each partner
You will find a comprehensive definition with practical examples in the main part of this page. The exact form it takes depends on the industry, company size and customising depth of the specific ERP setup. A well-founded answer always requires a look at the individual business processes and the strategic IT roadmap.
What does introducing EDI cost?
Costs vary greatly depending on implementation depth, vendor and degree of customising. You will find generic cost frameworks for ERP topics in the ERP cost overview. Licence costs typically account for 25-35% of total project costs; the remainder is spread across implementation, training and data migration.
What should you consider when getting started with EDI?
Best practices, typical pitfalls and a practice-oriented introductory guide are explained in detail in the main part of this page. The exact form it takes depends on the industry, company size and customising depth of the specific ERP setup. A well-founded answer always requires a look at the individual business processes and the strategic IT roadmap.
How do you measure success with EDI?
Typical KPIs include efficiency gains, error reduction and ROI. You will find concrete measurement frameworks and examples in the main part of this page. The exact form it takes depends on the industry, company size and customising depth of the specific ERP setup.
What are typical risks with EDI?
Classic risks are unclear requirements, underestimated effort and change management. Independent selection support reduces these considerably. The exact form it takes depends on the industry, company size and customising depth of the specific ERP setup.
