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What is EDI?

EDI, Electronic Data Interchange, has existed since the 1970s and fundamentally functions as a way for organizations to send electronic documents to each other. Furthermore, it is often used to manage invoices, orders, and order confirmations in a more structured and automated way.

The idea behind EDI was to replace paper documents with digital formats according to a common standard. The goal was to make administration faster, simpler, and less dependent on manual work. A good idea – but what was the outcome? Not quite as simple.

In practice, EDI developed differently than initially intended. The standards never became fully standardized, as different systems interpreted them in their own ways. Because of that, companies have constantly had to make adaptations, and what was meant to reduce manual work has instead led to more consulting efforts, more difficult monitoring, and greater sensitivity to changes. It’s perhaps not surprising that many sigh when EDI is mentioned.

At the same time, EDI continues to play a central role in how companies and organizations exchange information. The need for clear and structured digital flows has not decreased – rather the opposite.

This raises the question: what exactly is EDI today? And more importantly, where is the technology headed and how can we expect EDI to function in the future?

What does EDI stand for?

EDI stands for Electronic Data Interchange and means that companies exchange information in a standardized electronic format. This can include, for example:

That means that the whole point of EDI is that information only needs to be registered once, to then be automatically transferred without being re-entered by the recipient.

Hur fungerar EDI idag?

Fundamentally, EDI works by one system sending a file to another system via a transport exchange (VAN operator). The file follows an agreed standard, which theoretically allows the receiving system to easily read it. But in practice, several problems arise, including that:

This, in turn, has meant that EDI projects often become both more expensive and more time-consuming than initially anticipated.

Vad är skillnaden på EDI och e-faktura?

A common question is what the difference is between EDI invoices and e-invoices.

An EDI invoice is a structured file sent directly from system to system. An e-invoice, on the other hand, is an electronic document – often in the Peppol BIS Billing format – that various business systems can interpret and process.

In practice, many companies use both invoice types, and since that: systems need to support them in parallel. This is where Prosmart comes in as a good example. The system sends EDI invoices via Crediflow, which acts as a VAN operator and ensures that invoices reach the recipient in the correct format. At the same time, Prosmart also handles modern e-invoices via Peppol, making it easy to work with both traditional and new standards.

Because of that, you don’t need to choose a single path. Instead, you can work with the invoice format preferred by the recipient – and let the system handle the rest.

Peppol is an important part of the development

Peppol BIS Billing is a European standardized framework for electronic documents, and it is increasingly used to send:

Since Peppol creates a more uniform standard, the need for customer-specific special solutions decreases. It also makes the path towards future full automation significantly simpler. At the same time, Peppol is only one part of the whole – many companies still need to manage multiple formats and flows in parallel.

Trend spotting: EDI is about to become something completely different

Even though EDI technology is over 50 years old, we are in the midst of a major change. We are at the beginning of a shift where classic EDI is no longer sufficient and where systems are becoming increasingly smart.

Here are three trends that have already started to emerge:

  1. From file formats to intelligent messages
    Historically, it has been like this:
    EDI = a file is sent – the recipient interprets the file – something is created (a Customer Order is created, an incoming invoice is registered, etc.)

    Moving forward:
    Systems are becoming smart enough to automatically identify and interpret what kind of message it is. Is it an order or a receipt or perhaps a delivery notification or something completely different? When systems interpret this, EDI becomes less cumbersome to work with and more of a support in daily administrative tasks.
  2. A single point of contact instead of 100 different integrations
    Today, every customer, supplier, bank, and public entity often requires a separate system solution. Moving forward, however, we see a completely different model. Instead, the business has a single incoming information flow, to which all electronic messages arrive. When the system receives a message, AI automatically interprets the content and places the information directly into the correct part of the business.

    Detta oavsett om det kommer från:
    – Kund
    – Leverantör
    – Bank
    – Skatteverket
    – Annan offentlig sektor
    – Annat internt system
    Det spelar ingen roll var filen kommer ifrån, systemet förstår ändå vad filen är.
  3. EDI becomes a hub, not a side process
    As systems become smarter, EDI no longer functions “just” as a transport mechanism. Instead, it evolves into a hub that connects multiple data flows. It is in this context that a manufacturing company’s business system, such as Prosmart, plays a central role. Here, the system acts not as a traditional EDI provider, but as an intelligent receiver of many different types of messages. This becomes possible because the system does not need to determine whether the information comes from a classic EDI order or from a more dynamic data stream. The crucial aspect is instead that the system receives the information, sorts it correctly, and converts it into direct value in the process.

Så, vart är vi egentligen på väg?

EDI, as the somewhat consultant-heavy system with difficult-to-interpret standards, will remain for quite some time. At the same time, the development is clear – it points towards something both bigger and simpler for those of us who use the technology.
We see that the future entails:

At the same time, we are still at the beginning of this journey. In time, we will no longer think “EDI”, but rather “automated information exchange”. Then we will know that we are no longer bound to a certain standard, a specific format, a sender, or a technical solution. Instead, information flows freely and creates value directly in the process.

EDI blir allt viktigare i takt med EU-krav

The EU’s ViDA (VAT in the Digital Age) initiative means that digital reporting and structured e-invoicing will gradually play a larger role in trade between businesses within the EU.

From 2030, new requirements will be introduced for cross-border B2B transactions. Electronic invoices and digital reporting will become a central part of VAT management.

At the same time, developments indicate a desire to establish common standards for how business documents are exchanged between systems. Here, Peppol has established itself as an important infrastructure for e-invoicing and digital business communication. Peppol is currently used by a great many companies and also public sector organizations. The ViDA development and other ongoing initiatives within the EU are based on precisely the same principles and standardized and automated information transfer.

For companies, this means that investments in digital information flows, e-invoicing, and EDI can not only streamline operations here and now: you can also future-proof your processes for upcoming requirements already today.

Do you want to know more about EDI?

If you want to take the next step, we are happy to help you find the right solution – contact Prosmart today!

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