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Accounting Best Practices, Fifth Edition by Steven M. Bragg Englewood, Colorado

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3–16. Shift Incoming Billings to an EDI Data-Entry Supplier

A company may have the best intentions for improving its accounts payable process, but cannot shift to a fully automated system because its suppliers refuse to send invoices in EDI format. Consequently, the company has no opportunity to automatically shift incoming EDI messages into the accounts payable system, automatically process them, and automatically send out an automated clearinghouse payment. In short, the company is stuck with a manual data entry front end to the accounts payable process. This is a particular problem when a company is so small that its suppliers see no reason to shift over to EDI transactions just for its benefit. This issue can be surmounted by sending the incoming invoices to an EDI supplier that is willing to keypunch the invoices into an EDI format.

To do so, a company can either have suppliers mail all invoices to a lockbox that is accessed by the EDI supplier, or it can remail the invoices to the EDI supplier. This supplier (really just a “body shop” that keypunches data) will reenter the invoice information into an EDI format and transmit it to the company, which can then process the invoices in a highly automated manner. Though this may seem like an expensive way to handle invoice processing, it will allow an accounts payable department to eliminate virtually all of its data-entry positions. The disadvantages to this approach are a slight increase in costs over what it would take to process ...

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