EDI and e-invoices: Apples and Oranges

E-invoicing, eFlow, News

EDI and e-invoices: Apples and Oranges

Do EDI invoices differ from e-invoices? Depends on how we define them. For example, we might say that e-invoice is an invoice that is expensed directly in the buyer’s accounting system. EDI invoice, on the other hand, is used to send data about products into the buyer’s warehouse system (usually for reselling purposes). In this case, yes, they do differ. 

Let’s explain this via a sample invoice for two sorts of apples and two sorts of oranges. From the viewpoint of the seller, an electronic invoice is an electronic invoice. But it gets more complicated on the buyer side. 

  1. Our first buyer is an office manager with the aim to cheer up the employees. In this case, the invoice gets expensed directly to office expenses, usually as lump sum. Perhaps the cost gets allocated between various departments. 
  2. Our second buyer is a retailer who intends to sell those fruits to the end consumers. In this case, data about these products needs to be booked to the retailer’s warehouse system. 

EDI invoices have more detail than simple e-invoices

The purpose of an invoice is quite different in those two cases. In the first case, it is quite enough to know the seller, the due date and the amount. A simple e-invoice is sufficient. 

In the second case, that is often not enough. Data needs to be entered into the warehouse system row-by-row. On each EDI invoice row there can be a lot of important data for each product (GTIN code, quantities, list price, final price, best-before-date, batch number for the lot, etc). This is especially true in case the invoice is used as invoice-despatch advice.

So the first important difference is the level of detail. The simple e-invoice format does not accommodate all the data that needs to be exchanged about products in trade and commerce. A single row on an EDI invoice can contain 100x more structured data than an entire simple e-invoice.

EDI invoices can be addressed on a business unit level

Another important difference is the addressing. Simple e-invoices can be addressed only at company level (eg, Selver AS), and for the expense invoices this is enough. However, EDI invoices can be addressed on a business unit level (eg., Järve Selver or Pirita Selver), making it clear into which warehouse the data about products should be imported.  

EDI and e-invoices are both “fruit”

To summarise, both e-invoice and EDI invoice are “fruit” – they are electronic invoices by the generic definition: machine-readable invoices that can be processed without human intervention. The two main differences are 1) the level of detail on invoice rows is much higher for EDI invoices and 2) only EDI invoices enable addressing on business-unit level. 

So, do not compare them like you wouldn’t compare apples and oranges. As expense invoices, e-invoices are usually enough. However, for companies in commerce and/or production, where purchase invoice data should be imported to the warehouse module, one should consider implementing EDI invoices.