Write short descriptive notes on Electronic Data Interchange

CPA-Quantitative-Analysis-Section-4 BLOCK RELEASE

a) Electronic Data Interchange (EDI)
This refers to a form of computer to computer data interchange through agreed standards all parties. The concept of one computer communicating to another can be faced with major difficulties such as: –
i) Each business organisation wants to produce documents to its own individual requirements and structure.
ii) Different makes of computers cannot easily communicate to each other due to compatibility problems.
iii) Businesses may be working at different time schedules especially when engaged in international trade.

Thus, to ensure electronic communication is possible, agreed formats for these electronic documents recognisable all parties to the transactions are agreed upon.

The advantages of EDI are:
1. If an organisation is decentralised, EDI can expedite internal billing
2. If an organisationā€˜s paperwork is intricate and complex, EDI can speed it up.

The disadvantages are:
1. Joining EDI network is quite expensive
2. There may be problems with deciding which categories of information are to be sent or received.
3. Problem in adapting internal systems so that they match up with EDI translation software.

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