APIs are an important part of accounting. They enable integration between software systems, automating data exchange and reducing the need for manual input.
Using accounting APIs in your organization can help your finance and accounting teams work more efficiently, improve accuracy, and enable better reporting and record-keeping.
This post will share more information about APIs and how to apply them in your accounting department.
What is an API?
API stands for application programming interface. According to Amazon Web Services, “APIs are mechanisms that enable two software components to communicate with each other using a set of definitions and protocols.” APIs are essentially intermediaries, enabling systems to request and exchange data or functionality.
Accounting APIs connect your accounting software or enterprise resource planning (ERP) system with other software used within your organization. For example, you may be able to use an API to connect your procurement system and your accounts payable (AP) software to enable purchase order and invoice matching. An API might also connect your payment software with your accounting system for simplified reconciliation.
Why Use Accounting APIs?
Without APIs, it may be difficult to use some of your accounting tools to their full potential. Implementing APIs can have many benefits within your finance and accounting department.
Less Development Time and Resources
You can connect accounting software and ERPs to other systems without using APIs, but it involves writing code from scratch. This may take months as your developers write potentially thousands of lines of code.
APIs are designed to connect your systems faster, with 10 or fewer lines of code required in many cases. This is because the API already includes the code that connects the two systems. As a result, your systems can connect and share data much faster and at lower costs to your organization.
Better Collaboration
An IBM article notes that without APIs, data silos might exist between departments. With API integration, “Companies can automate workflows and improve workplace collaboration. Without APIs, many enterprises would lack connectivity, causing information silos that compromise productivity and performance,” according to the article.
Improved Efficiency
With APIs, accounting and finance teams can automate tasks such as data entry and bank reconciliations, saving time and reducing the manual workload. APIs are designed to reduce the need to toggle between systems and cut and paste information between them, which can also boost accuracy and reduce the time spent on fixing mistakes.
Enhanced Visibility
With timely access to financial data, APIs can help teams better monitor cash flow, revenue, and expenses. This can help businesses make faster, more informed decisions. For example, an API between your AP software and accounting system may allow your team to see pending invoices and project monthly spending more accurately.
More Precise Reporting
APIs help automate data transfer between systems, which minimizes the opportunity for human error that may occur with manual input. As a result, data will likely be more consistent across systems, helping improve the reliability of financial reporting.
Reduced Costs
By automating manual, repetitive tasks like entering data across multiple systems, businesses can save on labor costs within their finance and accounting teams. Additionally, APIs help minimize IT-related costs, as APIs reduce the need for costly, complex software upgrades or custom development by helping existing tools work together.
Optimized Supplier Relationships
Accounting APIs can facilitate more streamlined invoice approvals and payments, which can boost supplier satisfaction and potentially enable opportunities for discounts. Additionally, they can allow more efficient invoice and payment status tracking, helping your team keep suppliers informed.
Tips to Apply Accounting APIs in Your Department
Accounting APIs can bring significant benefits to your finance and accounting teams. Consider these practical tips to apply them effectively in your department.
Focus on the Benefits
Take the time to learn how accounting APIs function and what efficiency and integration advantages they can deliver, including reduced expenses, faster payment and invoice processing, and fewer mistakes. Consider how your team can use APIs to handle routine tasks like reconciliations, data entry, and report creation, freeing up time for strategic activities.
Collaborate with IT
Partner with your IT team to integrate APIs effectively and ensure proper implementation and troubleshooting. Prioritize security, using APIs with strong encryption and authentication methods. Make sure your APIs meet regulatory requirements that help protect sensitive financial data.
Explore Integrations
Find out which software companies have APIs that integrate with your accounting software and/or enterprise resource planning (ERP) system. This may help you discover the potential functionalities you can add with an API.
Incorporate AI and Analytics
Consider using APIs to connect your systems with artificial intelligence (AI) tools that are designed to analyze financial data and identify trends. These tools can help your organization optimize decision-making with better insights on forecasting, budgeting, and resource allocation.
Transform Your Department with Accounting APIs
Accounting APIs can help streamline processes, enhance data accuracy, and enable system integrations within your finance and accounting department. By automating tasks, providing timely insights, and fostering collaboration, APIs can empower accounting teams to work more efficiently and strategically.
AvidXchange offers accounts payable (AP) automation integration with more than 240 accounting systems. Learn more by speaking with one of our experts today.
The information presented on this page is based on research and intended for educational purposes only. Anyone seeking to follow the information contained herein should consult their own advisors and conduct their own research prior to doing so. AvidXchange, Inc. and its affiliates disclaim any and all liability resulting from reliance on the information contained herein.