Notes and Study Materials

Electronic Data Interchange

 

 

EDI is defined as a set of standards for configuring the information in a standardized form that can be easily exchanged between and within businesses, organizations and government entities!) Common business papers—such as invoices, selling-purchasing orders and other financial bills, which are sent from one computer to another— represent standard EDI messages. By specifying the characteristics and the order in which the data is sent and received during the transactions, standard EDI messages reduce the manual work and enable the computers to perform the required functions.

 

Advantages of EDI:

EDI and similar technologies save company money by replacing information flows that require a great deal of human interaction such as e-mail, paper documents and faxes. Paper documents, such as shipping bills, are maintained simultaneously with EDI and reduce the handling costs of sorting, distributing, organizing and searching paper documents. The benefits of using EDI are as follows:

 

Improved reporting performance:

 

Electronic submission is a much more efficient way to transmit legal required information Administrators can electronically send required acknowledgement without generating a paper copy that would need to be sent through the traditional mail system. The electronically submitted EDI data will be received, processed and acknowledged within hours of submission rather than the multiple days that it would take through the postal system. EDI allows the department's trading partners to meet their reporting deadlines in a timely manner.

 

 

Time saving:

 

EDI acknowledgement provides an efficient means of getting the correct information to the department as quickly as possible. EDI saves time by eliminating the overhead of paper handling that is required and is otherwise necessary for both the trading partners and the department. The use of EDI for claim submission also streamlines the process of error reporting by eliminating the phone calls that might otherwise be necessary to ensure that accurate information is being reported.

 

Cost saving:

 

Although there are initial costs involved in designing, developing and implementing a new EDI system, these costs can be recovered when the system starts earning profits from efficient use of EDI. The cost of mailing and handling paper documents is completely avoided when the documents are sent electronically. Personnel both the ends of the electronic transaction, who would otherwise be involved in the handling of the paper-generated claim information, can be redeployed to some other tasks. Fewer people are required to monitor and administer the EDI system than are necessary to process paper documents.

 

•Improved accuracy:

 

There is an increase in the efficiency and accuracy of the electronic acknowledgment process that allows the sender's transactions to be verified and validated immediately upon the receipt of acknowledgement. The acknowledgment process allows a trading partner to submit more timely and accurate information, while at the same time reducing the amount of time that it takes to correct invalid or inaccurate claim information.

 

 

Enhanced flexibility:

 

Electronic data can be sent during day or night to ensure that the most accurate and timely information is delivered in an efficient manner. The EDI submission of the first report transactions can be scheduled to run when the computing resources are at a lower demand.

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