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by Stanley Weiner
Conceptually, EDI is nothing more than a means of communicating between companies. All Specific transactions are known as "transaction sets." Multiple transaction sets sent in the same transmission go into a "transaction envelope." Different types of transactions can go into the same transaction envelope. To maximize efficiency, companies generally utilize a translation program that interfaces between their application software and the sending and receipt of the transaction set. For example, this would allow a sender to prepare a purchase order utilizing its standard accounting programs. The translation program will convert the purchase order to a message in standard ANSI format. The receiving company will utilize its translation program to convert the ANSI message into a format that is compatible with its automated accounting system. The benefit of translation programs are that:
- They reduce the need for multiple keying of messages; hence a labor savings in the need for clerical personnel.
- The accuracy of data is increased. The reduction in the re-keying of information ensures a message will be received as sent.
Companies doing business with each other are called trading partners. As a normal practice, to maintain internal systems security, trading partners do not provide direct access to their data processing systems. In the transmission process, an electronic mailbox is used. This is normally provided by a Value-Added Network (VAN). The VAN acts as a buffer and provides a mailbox for individual trading partners where transaction sets can be delivered and received. VANs are a normal commercial service provided by companies such as AT&T, General Electric, CompuServe or Western Union. There are many more VANs and individual companies, such as retailers, have their own proprietary VANs.
Stanley Weiner, CFE, CPA, is a partner at Cornick, Garber & Sandler, LLP, New York, NY.
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