Abstract: Flat file formats are used widely in Enterprise Application Integration (EAI) and Business to Business (B2B) solutions. The formats describe the layout of the meaningful information within the data stream in such a way so that the parsing of that stream and extraction of the information can be automated. An example of a flat file format is a Comma Separated Values (CSV) format, where units of data are delimited between each other by using comma character. Another example is a positional format where the units of data occupy certain positions relative to each other within the data stream. The common task that is performed very often is conversion of the documents from various flat file formats into an XML representations and vise versa. The algorithm of iterative definition of the flat file structure from document instance described herein simplifies the process of defining the conversion rules for the flat file formats.