EDI Costs - Hard vs Soft Costs
When problems arise with your EDI, it’s not only the compliance charges from your trading partner that ends up costing you money.
EDI is supposed to streamline your business by enabling documents to flow from your trading partners across the internet or a private network to your system and vice versa, without human intervention. When this doesn’t happen … there are costs.
Hard EDI Costs
Hard EDI costs, which have an immediate impact to your bottom line, can come in the form of compliance charges if the problem you’re having means your outbound documents aren’t meeting your trading partners’ requirements. Often charged per document, these can add up quickly if the problem is a systemic one that isn’t caught, and the mapping process that translates data from your ERP, Accounting or other business system into the EDI document that is sent is not corrected. Seemingly one-off problems can be easily caught by a conformance checking process, if that’s something your EDI system enables.
Other hard costs can arise as a result of either missed orders that get lost in ‘the cloud’, or invoices that are never delivered to your customers. Missed orders may not only mean that you miss out on that specific revenue, but can also aggressively sour your customer relationship, which in turn can contribute to declining sales. Invoices that don’t make it to your customers on time can have a serious impact on your cash flow, as payments become delayed.
Soft EDI Costs
Soft EDI costs are those that you don’t see on your monthly expense reports, but chew up your resources, distracting them from contributing to your business growth. These costs result from problems that take employee time to identify, work around, and/or resolve, such as performing track-and-trace with your provider or VAN, manually matching functional acknowledgments (aka 997s), and manual steps involved in ‘doing EDI’ if your system isn’t fully automated. These issues are tedious and time-consuming for employees, meaning that energy is misallocated here opposed to being spent on building customer relationships, processing orders and other functions that ultimately helps the business thrive.
These types of EDI problems aren’t just an inconvenience – they also impact your businesses earning potential immensely – and if you are experiencing these issues, it’s likely a sign that your EDI ‘solution’ isn’t doing its job. An EDI solution should be reliable. Documents should not go missing or be delivered late. Outbound documents should be validated, and you should be confident that you won’t receive rejection notices or compliance charges from your trading partners. A service provider should be ready and willing to answer questions quickly and clearly, and should understand how ‘EDI problems’ translate into real-world business problems.
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