These transaction sets replace paper documents such as purchase orders, invoices, and bills of lading. Financial Electronic Data Interchange, or Financial EDI, is defined as A The electronic transmission of funds and related data through the banking system, using standard formats. Benefits of EDI Cost savings are reductions in expenditures, cash outlays or losses that result from changing a current process or program.
Benefits are advantages gained as a result of changes to the current process or program.
History of EDI Public and private sector organizations have traditionally conducted business on paper, often using preprinted forms to exchange information with each other. EDI emerged in the late 1960's when industry groups such as railroads, airlines, motor carriers, and shipping companies realized that processing the large volume of paper documentation accompanying the shipment of goods resulted in significant delays in settlement and product deliveries. While this was a step in the right direction, the end result was that organizations needed to maintain a different set of standards for each of their trading partners. This additional effort mitigated some of the benefits gained by conducting business electronically, and led to an agreement to jointly develop standards for EDI messages. Since then, companies in industries of all kinds have found that EDI makes economic sense.