Many businesses use Electronic Data Interchange (EDI) to share information from documents like invoices, purchase orders, and shipping details in a standardized format. But before companies can send that data to their partners, they need to convert it from various internal formats into a common language — a process called EDI translation.
This guide will explain what EDI translation is, its benefits, important factors to consider when implementing an EDI solution, and how to set your business up for a smooth rollout.
What’s EDI Translation?
Companies use various formats for B2B transactions, which can lead to communication issues when trading partners use incompatible formats.
For example, let’s say you’re a retailer working with multiple suppliers. Imagine how challenging it would be if your purchase orders and each supplier’s invoices contained data in completely different formats that didn’t map to your systems. These mismatches require a lot of manual intervention — and increase the risk of major errors or delays.
EDI translation solves this problem by converting data into a standard format that works across the entire supply chain. It allows your systems to map and interpret data, no matter what system your partners use — improving accuracy, speed, and efficiency.
In short, EDI translation means taking data from one format and transforming it into another that meets EDI standards, helping you avoid costly mistakes and keep operations running smoothly.
How EDI Translation Works
EDI translation involves a series of steps that take your internal data and prepare it for secure, standardized exchange with your trading partners. Here’s how the process works from start to finish:
Data Identification
Start by determining which data fields you need for the document you’re preparing. For example, an invoice usually includes item descriptions, quantities, unit prices, totals, and delivery or billing dates.
Data Extraction
Once you’ve identified the necessary fields, your EDI system retrieves the data from internal applications — such as inventory management, order processing, or enterprise resource planning (ERP) systems — using database queries, APIs, or built-in export functions. In many setups, integration tools or middleware connected to your EDI platform handle this automatically, either on a schedule or in response to business events like order completion.
Data Organization and Conversion
Next, the EDI translation software structures the extracted data according to the recipient’s expected layout and formatting. It then converts this data into a standardized EDI format, such as XML, ANSI X12, or EDIFACT.
Message Generation
After formatting and conversion, your system compiles the information into a complete outbound EDI message that meets the transaction’s requirements.
Transmission
Finally, your system securely transmits the finalized EDI message to your trading partner using a communication protocol you've both agreed on — such as AS2, SFTP, or a value-added network (VAN).
4 Key Benefits of EDI Translation
Beyond simplifying data exchange, EDI translation offers businesses multiple benefits. Here are four that stand out:
Reduced Data Exchange Complexity
EDI translation automates data conversion and mapping, simplifying the exchange of business documents between trading partners. Without standardization, multiple data formats can complicate transactions and often require human intervention, creating room for errors.
Decreased Overhead Costs and Chargebacks
Automated EDI translation services reduce the time your team spends manually reviewing and correcting documents, allowing you to focus on core operations. Data errors — like incorrect quantities or missed shipping deadlines — can lead to chargebacks from retailers or partners. Accurate EDI transmissions help avoid these penalties and reduce operational costs.
Faster Transactions
Thanks to automation, EDI translation speeds up processing cycles. Transactions that once took days or weeks now happen in minutes.
Increased Data Exchange Security
EDI translation keeps data secure. It uses encryption to scramble sensitive information during transmission, making it unreadable to unauthorized parties, and applies authentication protocols to restrict access to approved systems and personnel. This is especially important in industries with strict compliance requirements, such as healthcare.
8 Key Considerations When Choosing an
Before selecting an EDI translator software, it's important to evaluate how well it aligns with your specific needs. Here are some key factors to consider:
Business Needs and Requirements
Start by assessing your core business functions and the types of documents you exchange regularly — such as invoices, purchase orders, and shipping labels. Also consider the volume of transmissions you expect to process and any industry-specific requirements.
EDI Standards and Protocols Support
If your business and trading partners already use specific EDI standards like EDIFACT or X12, make sure the online EDI translator you choose supports these formats and communication protocols.
Automation and Integration Capabilities
Check if the EDI translator you’re considering supports your internal systems, including your ERP, customer relationship management (CRM) platform, accounting software, and inventory management tools. If you’re not sure, talk to an EDI expert or vendor to confirm compatibility.
Scalability Features
Choose a platform that can grow with your business. It should be able to handle increasing transaction volumes and make it easy to add new trading partners as needed.
Trading Partner Network
Your EDI translator should support connections with your current and potential trading partners. Ask your provider about pre-built connections or onboarding tools for the partners you work with most frequently.
Security Measures
Verify that the EDI translator uses strong encryption, secure transmission protocols, and access controls to protect sensitive data and maintain compliance with industry standards.
Cost and ROI
Consider both upfront and ongoing costs against the benefits — like fewer errors, faster processing, and reduced chargebacks.
Customer Support and Expertise
Look for a provider with a solid track record in client support — especially one that offers guidance through setup, troubleshooting, and ongoing system management.
Talk to an EDI Expert
For companies that want to transmit data accurately and efficiently, an effective approach to EDI translation is a must. If you're still spending time and resources on chargebacks, data breaches, or manually processing documents, it's harder to compete — and even harder to scale.
If faster EDI transactions and built-in compliance sound like a win-win, connect with an EDI expert to find the right solution for your business — so you can stay focused on growth and operations.
EDI Translation FAQs
How Long Does It Take to Implement an EDI Translator?
EDI implementation isn’t a one-size-fits-all approach. The time it takes to implement your system depends on several factors, like the complexity of your internal systems, your industry, and the number of trading partners you need to onboard. A simple setup might only take a few weeks, but integrating with systems like warehouse management, accounting systems, or ERP software could take longer. Regardless of the system you choose, be sure to allow time for thorough testing once your initial setup is configured.
Can the EDI Translator Integrate with My E-Commerce Platform?
Yes — many EDI software solutions integrate with popular e-commerce platforms like Shopify, Amazon, or Walmart Marketplace. They automate transactions between your online store, suppliers, and fulfillment centers. Before choosing an EDI solution, check whether it offers a pre-built connection to your platform or if you’ll need custom API connectors.
Are EDI Translators Compliant with HIPAA and Other Healthcare Industry Regulations?
Yes — EDI translator software that supports healthcare use cases must comply with Health Insurance Portability and Accountability Act (HIPAA) regulations in the United States and General Data Protection Regulation (GDPR) guidelines in the European Union. Many healthcare transactions contain sensitive personal information and require secure transmission and data encryption. Some platforms also include additional compliance monitoring to ensure EDI transactions meet industry regulations.
Do EDI Translators Support Hybrid Models?
If your business uses a hybrid IT setup with both on-premise and cloud-based systems, look for an EDI translator that supports both types of data processing. Some EDI solutions let you store certain data on-premise (such as proprietary or sensitive information) while using the cloud for system updates and lower in-house IT overhead. If you’re planning to shift to a cloud-based system in the future, choose a scalable solution to avoid expensive migrations down the line.