Whether you’re on the retailer or supplier side, manually handling invoices — whether sending or receiving — is a headache and a half. The faster your supply chain moves, the harder it is for manual invoice processing to keep up. The time, money, and workforce costs of keeping up can severely limit your organization’s ability to grow and expand your business.
For retailers struggling with the heavy burdens of manually processing the invoices they receive from suppliers and other trading partners, touchless invoicing and automated three-way matching can help. What options do suppliers have for saving time and energy sending and processing invoices on the other side of the equation, though?
This is where EDI comes in. EDI makes dealing with invoices easy for suppliers. In fact, using EDI can even take the headaches out of invoicing for retailers and your other supply chain trading partners as well.
At GraceBlood, we’re all about EDI made easy. Let’s take a look at the advantages EDI has over touchless invoice processing to make your workforce’s lives easier.
What is touchless invoice processing?
For retailers who deal with a heavy volume of incoming invoices from their trading partners, they have the not ideal option of touchless invoicing, which digitizes and automates the invoicing process. This process works by using technologies like Optical Character Recognition (OCR), Machine Learning (ML), and Artificial Intelligence (AI) to extract information from paper and PDF invoices, perform three-way matching, process data transfers, and more. However, most retailers would prefer to have their invoices sent via EDI (more on this below) which standardizes and automates their procure-to-pay process.
By using these technologies, retailers eliminate waste, eliminate human error in document processing, reduce average payment cycle times, and reap other benefits to help them grow their business.
For suppliers, using EDI instead of manual invoicing processes is critical to both their customer relationships and the order-to-cash process.
What is EDI?
EDI (Electronic Data Exchange) is a trusted solution for replacing paper-based business document exchanges with a standard for electronic computer-to-computer exchange of business documents. Like touchless invoicing, EDI eliminates the need for manual data entry, speeds up invoice processing, and eliminates the likelihood of manual errors.
EDI is what we do here at GraceBlood. If you’d like to dive deeper into what EDI is and how it works, check out our blog post, “What Is EDI?”
For now, though, we’re going to focus on what EDI does better than touchless invoicing and why it is often a better choice for both retailers and suppliers alike.
What makes EDI better than touchless invoice processing?
When handled manually, invoice processing can cost up to $21 per invoice, on average, so it’s no surprise that automated invoicing solutions are highly sought-after! Let’s look at what makes EDI great for invoice processing compared to touchless invoicing.
EDI Is Established Technology
While retailers and other partners on the receiving end can use high-tech solutions like OCR, ML, and AI to automate invoices, suppliers have EDI — a trusty old technological standard first introduced to US army supply chains in the 60s and adopted by businesses over the next four decades. Today, EDI has become a ubiquitous standard for digitally exchanging business documents.
EDI’s longevity is one of its many strengths over newer and flashier technologies. Implementing and maintaining touchless invoicing takes significant expertise in higher-tech solutions that might not be a core competency of your business, while EDI is much more widespread. When it comes to EDI, there is a much larger pool of experts who can help with implementation, maintenance, and support compared to touchless invoicing.
EDI Handles More Complex Invoices
Complex EDI processing is another advantage of EDI over touchless invoicing. While touchless invoicing uses very powerful, cutting-edge technologies, its best use case is for processing relatively standardized invoices with predictable formats.
Touchless invoicing may prove less effective if the invoices you send to retailers and other supply chain partners have more complex or variable formats. On the other hand, EDI handles various document types and formats since it’s been around for so long and is so widely used.
These factors give complex EDI processing a powerful advantage over touchless invoicing technologies, making it a more flexible solution for many suppliers.
EDI Is More Cost-Effective
The cost of setting up and maintaining EDI often ends up lower than the cost of implementing touchless invoice processing. Touchless invoicing systems often require significant investments in not only hardware and software but also technical expertise. These investments can make touchless invoicing difficult for many businesses to adopt.
While retailers usually find that implementing touchless invoicing more than pays for itself in the long run, there’s no denying that it can cost a pretty penny upfront, especially for large businesses. EDI setup costs, on the other hand, are comparatively low—especially for smaller businesses—because EDI is a long-lived, well-understood, and proven solution.
EDI requires far less upfront investment in new hardware and software, making the cost of EDI infrastructure and support often cheaper than touchless invoicing infrastructure. These cost savings often make EDI a better solution for retailers and suppliers alike.
In fact, by reducing or eliminating the expenses of paper, printing, reproduction, storage, filing, and document retrieval, EDI cost savings for transactions can total at least 35%.
EDI Is Easier
EDI is not only often more cost-effective in terms of money but in terms of labor as well. While EDI isn’t always easy, the upfront demand for labor to support EDI implementation is usually less than what touchless invoicing demands.
Compared to touchless invoice processing, EDI setup costs are often lower — yet another benefit that comes from EDI being a well-established technology with over six decades of history and over three decades of widespread use. Many standard EDI formats are already supported by your software systems, whether or not you’re using EDI, because t systems were invented when EDI was already a household name!
EDI Is More Flexible
Touchless invoicing is good for invoices, but the systems and software designed to process invoices excel at just that — processing invoices. Compared to touchless invoicing, EDI can handle more complex types of invoices and a wider variety of business documents aside from invoices.
EDI is for more than just exchanging invoices. It also smoothly and seamlessly exchanges purchase orders, payment documents, bills of lading, inventory and customs documents, ship notices, and more. While EDI’s most common use case is for purchase orders and invoices, its versatility enables it to handle many more diverse types of business documents than touchless invoicing can.
In addition, as you know, plenty of trading partners up and down the supply chain mandate EDI compliance already, with some demanding strict compliance with their specific partner requirements. Touchless invoicing is ill-suited to meet these compliance demands since it isn’t built on globally standardized data formats.
EDI Makes Touchless Invoicing Redundant
Last but not least, EDI makes touchless invoicing for your supply chain and retailer partners redundant.
Think about it — Retailers need touchless invoicing because manually processing incoming invoices in the form of paper documents and PDFs is a costly and error-prone waste of time, but it’s a solution they need because they are receiving their invoices as paper and PDF documents in the first place!
In other words, as a supplier, touchless invoicing is a solution to a problem you, as your retail partner’s supply partner, can make sure never exists in the first place — and don’t you want to make your retailer partners’ lives easier, too?
As a retailer, having EDI implemented in your business processes eliminates the need for touchless invoicing and gives you a leg up on growing your partner network by enabling you to satisfy potential partners’ EDI compliance requirements.
While touchless invoicing is a digital solution for retailers and other elements of their supply chain that regularly receive invoicing, EDI is a solution for both sides of the equation.
What advantages does touchless invoicing have over EDI?
For retailers and other organizations that do more receiving than sending, touchless automation does, in fact, outperform EDI in some areas. Touchless invoice processing typically requires even less manual input than EDI and often boasts faster processing times.
However, implementing and maintaining touchless invoicing is often more complex and costly than EDI implementation and often has a steeper learning curve.
Ultimately, touchless invoicing and EDI’s unique advantages will depend heavily on your business’s unique position and needs.
Get Started With EDI
While EDI may be easier and less costly to implement for your business, more flexible, and more well-established, EDI implementation itself isn’t always a walk in the park.
No matter the size of your business, whether you opt for an in-house EDI solution or a managed EDI provider, EDI implementation can prove a significant challenge.
That’s why we’re here. Our managed services provide EDI made easy for organizations like yours.
At GraceBlood, we’re focused on finding EDI solutions that turn your business’s cumbersome, slow manual data handling processes into lightning-fast automated processes. We use a proven, proprietary methodology (GADGET) to implement supply chain processes that fit your business’s unique situation and needs like a glove for headache-free touchless invoicing and beyond.
To get started and make your manual document processing headaches disappear, contact us today to schedule a free EDI assessment.