EDI (Electronic Data Interchange)
Definition
The standard electronic format big retailers use to exchange purchase orders, shipping notices and invoices with suppliers.
Want a deeper explanation?
Most large retailers require EDI before they will buy from you. Errors in EDI documents are a leading cause of retailer chargebacks.
Your EDI provider should connect to your accounting or ERP system so invoices and payments match. Watch for: retailer deductions that nobody reconciles against EDI records, which become silent revenue loss.
Example
A national retailer sends a purchase order by EDI (an 850), you confirm the shipment with an advance ship notice (856) and bill with an EDI invoice (810).