What is EDI? Electronic Data Interchange explained

EDI is the standard companies use to exchange purchase orders, despatch advices and invoices automatically between their systems. Learn how it works, which formats exist and how to get started.

By Vincent Rosenkranz, Sales & Marketing Manager at BESITEC · Updated 9 Nov 2026

In short. EDI stands for Electronic Data Interchange. It is the automated exchange of structured business documents such as purchase orders and invoices between the IT systems of two companies. The data travels in an agreed standard such as EDIFACT, straight from the sender’s ERP into the recipient’s ERP, with no paper and no retyping.

How EDI works

Every company stores data in its own format. Your ERP may write XML while your customer’s system expects CSV. Electronic data interchange puts a common language in between. A converter translates your data into the agreed standard and back again on the partner’s side.

Your ERPcreates the document
Conversioninto the standard
Standarde.g. EDIFACT
Conversioninto the partner format
Partner’s ERPposts it automatically

It works in both directions. Transmission runs via AS2, SFTP, X.400 or a network such as Peppol.

Three things make it work.

Agreement

Both partners define the standard, message types and content, often in a customer implementation guide.

Converter

Software or a service provider translates between your in-house format and the standard.

Transport

A secure channel such as AS2 or SFTP carries the message and confirms receipt.

Standards and formats

Which standard applies usually depends on your partner’s industry and region.

Standard	Where it is used
`UN/EDIFACT`	International United Nations standard, the most widely used in Europe. Industry variants include EANCOM in retail and ODETTE in automotive.
`ANSI X12`	Standard in North America
`VDA`	Legacy formats of the German automotive industry, gradually being replaced by EDIFACT
`XML`	Flexible and readable, the basis of many modern formats including XRechnung and Peppol BIS
`CSV and in-house formats`	Simple ERP exports, often the starting point before conversion

Typical messages

Each business transaction has its own message type. The names come from EDIFACT.

Message	Meaning	From → to
`PRICAT`	Price catalogue, product master data	Supplier → buyer
`ORDERS`	Purchase order	Buyer → supplier
`ORDRSP`	Order response	Supplier → buyer
`DESADV`	Despatch advice	Supplier → buyer
`RECADV`	Receiving advice	Buyer → supplier
`INVOIC`	Invoice	Supplier → buyer

Benefits of EDI

Fewer errors. Nobody retypes data, so transposed digits and missing lines disappear.
Faster processes. An order reaches the supplier’s system in minutes instead of days.
Less effort. No printing, scanning or chasing. Your team handles exceptions instead of routine.
Meet large customers’ requirements. Many retailers and manufacturers only work with suppliers connected electronically.
Traceability. Every message is logged, so you always see what arrived when.

EDI, e-invoicing and Peppol

The terms are often mixed up. EDI is the umbrella term for automated data exchange across all documents. An e-invoice is a single document in structured form, in Germany for example XRechnung or ZUGFeRD. Peppol is a network that delivers such documents securely.

Since 1 January 2025, businesses in Germany must be able to receive e-invoices. An EDIFACT invoice remains permitted if it contains the mandatory details and can be converted correctly into a format compliant with EN 16931. If you already use EDIFACT, a good part of the work is done.

Getting started with EDI

There are two ways to start, depending on how many documents you exchange.

WebEDI

You create and receive documents in the browser, without your own interface. Suits a few partners and low volumes.

Full integration

Your ERP is connected directly and documents flow without manual work. Suits medium volumes and up, or when customers require it.

With b.edi, BESITEC handles conversion, partner onboarding and operations as a service, with web.edi for partners without their own interface. Learn more about the service

EDI FAQ

What does EDI stand for?

The abbreviation stands for Electronic Data Interchange, the automated exchange of business documents between IT systems.

Is an email with a PDF already EDI?

No. A PDF has to be read by a person or extracted by software. With electronic data interchange, the data is structured from the start and processed without an intermediate step.

What is the difference between EDI and EDIFACT?

EDI is the method, EDIFACT is one of its standards. EDIFACT is mainly used in Europe.

How much does EDI cost?

It depends on the number of partners, message types and volume. As a service, there is usually a setup fee per partner and a monthly fee, with no servers or software of your own.

How long does it take to connect a partner?

With standard messages and a clear partner guide, often a few weeks. Most of the time goes into testing with the partner.