Electronic Data Interchange (EDI) is the process of sending documents (e.g. purchase orders, invoices, etc.) from one company to another in a predetermined format that allows it to be automatically entered into the company recipient to be processed. This process minimizes human errors and thus makes both companies more efficient while reducing costs. Both companies will need to use EDI translation software, communications software and hardware for data transfer (VAN, dedicated line or EDI over the Internet), as well as a legal agreement between the two companies on how to resolve the problems. The sending company will use the EDI translator to convert their document (e.g. purchase order) into EDI compatible data, then use communications software to send it to the receiving company via VAN, direct line or EDI via the Internet. The receiving company will then receive the data through the communications software, send it through the EDI translator and then it will be in the company's data format to create the order. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get an Original Essay There are many benefits to businesses implementing EDI in their businesses. Some of these benefits include accuracy, better customer service, improved inventory management, lower costs, and better cash flow (faster payments). Businesses will have more accurate accounting records because clerical errors will be reduced. Businesses will get around the human error factor by transferring data directly from one business to another. Another benefit will be improved customer service, as businesses will be able to fulfill orders faster. Additionally, businesses will be able to better manage their inventory. Time will be reduced to store inventory, businesses will be able to minimize inventory. There are many benefits to businesses using EDI, but some challenges are created with the ability of the business to audit and control data integrity. I believe with each of these challenges there are controls to ensure data integrity while still having the ability to verify the information. Businesses typically have human signatures on business contracts, purchase orders, receiving documents, etc., but with EDI there were no longer human signatures to verify that transactions took place . Therefore, there must be a way to verify that the identity of the data being sent is authentic and authorized. The control measure involves identifying the machines that send the data (digital certificates) and non-repudiation, which verifies that the document was sent or received by the intended user. There may also be a notification when an unauthorized machine attempts to access the data. The second difficulty I would like to address is related to data integrity and confidentiality. Companies must be assured that the quality of data cannot be altered during transmission and that unauthorized users cannot access it. Mechanisms to control this issue rely on the use of encryption and the use of passwords/IDS for users. The last issue I would like to address related to data processing difficulties in EDI is auditability. Traditionally in accounting we use an audit trail which is simply a written trail of documents that allows us to track transaction activities. When businesses use EDI, there is no.