Any company that undertakes financial data keeping and transactions relies on accounting software to prevent inaccuracies, facilitate automation and overall streamline all aspects of the financial ecosystem. Research shows that 58% of businesses used accounting software to meet the needs of their clients.
In this article, we will uncover how SaaS providers can easily integrate with different accounting APIs along with key accounting concepts that developers must know to work with accounting data fields.
What are accounting APIs?
Different accounting functions like payroll, reimbursements, payments, expense/ invoice management, etc. have different software for businesses to use. Each of these accounting software comes with an API, what is collectively called accounting APIs.
Essentially, accounting APIs help companies integrate different accounting software with their systems of function to ensure smooth transfer of data from one application to the other.
Accounting APIs facilitate a great degree of automation when it comes to financial operations and help companies with informed decision making.
Types if accounting APIs
Based on different financial functions, there are different accounting APIs that companies use. Each accounting API seeks to address specific needs and functionalities.
1. General ledger APIs
As the name suggests, general ledger APIs provide all encompassing financial functionalities to companies. They help companies consolidate all financial data about income, expenses, liabilities, assets, etc. in one place.
Overall, with general ledger APIs, companies can get a macro view of their financial health and make decisions accordingly. General ledger APIs tend to provide users with very granular information.
Top general ledger APIs: QuickBooks API, Xero API, Sage Intacct API
2. Invoice and billing APIs
Invoicing and billing APIs take care of the payments side of the accounting APIs. For any company, there are a plethora of invoices that are received and need to be processed. There are almost an equal or maybe more volume of bills which are sent.
Invoicing and billing APIs can help companies create, send and track invoices by automating a lot of functions in the way. They enable users to leverage API calls to carry out different functions associated with invoicing and billing.
Top invoicing and billing APIs: FreshBooks API, QuickBooks Online Invoicing API, Xero Invoicing API, ZohoBooks API
3. Payroll APIs
This type of accounting APIs enable companies to seamlessly manage employee payrolls and ensure that their employees are paid on time, correctly. They integrate with payroll systems and automate a series of tasks associated with salary disbursement.
Integration with payroll APIs can enable users to seamlessly get employee information from different company used software, create payroll for the month, manage deductions, based on contract and even create payslips.
Top payroll APIs: ZohoPeople API, RazorpayX API, UKG Pro API, BambooHR API
4. Expense management APIs
Each business has a set of expenses that are carried out on a regular basis. As the company scales, the expenses and the management for the same balloons up. Expense management APIs seek to automate the process of recording, tracking, categorizing expenses.
Furthermore, they integrate all expense related data with other accounting APIs to facilitate smooth transactions. Such tools are especially important from a reimbursement tracking perspective as well.
Top expense management APIs: Zoho Expense API, SAP Concur API, Quickbooks Online API
5. Reporting and analytics APIs
These APIs integrate with different accounting software to create customized and logic driven reports of financial accounts and provide insights based on the data captured.
Their main objective is to help gauge the company's financial performance and map it against the goals set initially.
Top reporting and analytics APIs: QuickBooks Online Reports API, Xero Reports API
6. Payment gateway APIs
Another set of accounting APIs are payment gateway APIs. These APIs help companies integrate different APIs in their applications, website or accounting systems for payment related functionalities.
Payment gateway APIs are extremely important to manage online transactions and allow companies to accept payment from customers/ others via different payment methods including credit/ debit cards, netbanking, UPI, etc.
Top payment gateway APIs: PayPal API, PayU API, Stripe API
7. Tax calculation APIs
Since businesses are bound by their local tax regimes, tax calculation APIs make the entire process more streamlined. They integrate with the company’s accounting software and help with calculating tax rates, provide calculation logic and automate various tax-related processes.
Top tax calculation APIs: Avalara API, TaxJar API, Stripe API
Accounting API key concepts
When using accounting APIs, it is important for developers to understand some of the key concepts or data schemas that you will be using. Knowledge of these concepts will help you make the right API calls and ensure seamless access and exchange of data.
Learn more about accounting data models here.
Account
Essentially, each accounting system has different accounts associated with it. These can be expense accounts, payments accounts, bank accounts, etc. Important data or information related to each account includes a unique identifier, name of the account, type or categorization, balance, transaction model, etc. See docs
Journal Entry
Whenever you record any information in the accounting system, it is referred to as an entry. Each entry is generally associated with an account. An entry includes the entry ID, date, detailed description and line items to support the same. See docs
Invoice
An invoice is a document which records details about a service provided or received by a company. It includes information about the invoice ID, invoice number (in case a sequential number is provided), customer details, line items in the invoice, total payable amount, taxes, discounts, issue date, due date, quantity, etc. See docs
Payment
Related to invoice is the payment which focuses on the monetary transaction following an invoice generation. This data schema contains information like payment ID, payment date, payment method, payment amount, related invoice ID, etc. See docs
Contact
This refers to an individual or organization that is associated with the accounting system, usually a customer or a vendor. The data carried here contains contact ID, address and contact details, billing address, payment terms and conditions, etc. See docs
Report
A financial report as a key data concept consolidates all data about the financial performance of the company. Key data schemas within the same include report ID, report date, account balances, time period, data metrics, etc.
Transaction
A transaction is a key concept which records any transfer of money in the form of debit or credit. It contains data schemas like transaction ID, transaction date, value of transaction, type (debit or credit), description, etc. For most organizations, transaction details are included in the Entry / Journal Entry data schema.
While these key concepts and data schemas are more generic in nature, each type of accounting API discussed above will have its own sets of data concepts associated with it, like (illustrative and non exhaustive):
Payroll API key concepts
- Employee with information like employee ID, name, contact details, employment status, pay rate, tax withholding information, and other relevant employee details
- Payroll run focused on payroll run ID, start date, end date, payroll adjustments or special considerations
- Paycheck with paycheck ID, employee details, payment amount, payment date, tax deductions, net pay, etc.
- Time and attendance with date, employee ID, hours worked, leave type, and any associated calculations or rules, etc.
See our developer documentation for more details on payroll APIs
Expense management API key concepts
- Expense report with report ID, submitter details, submission date, status, and associated expenses.
- Expense category with data schemas on category ID, name, etc.
- Expense item with item ID, expense date, amount, currency, vendor details, expense description, supporting documentation
- Receipt with fields like receipt ID, file attachments, etc.
Use Cases of Accounting APIs
Data inputs and functionalities from accounting APIs can help businesses automate many financial tasks and facilitate greater efficiency across the spectrum.
1. Cash flow management
With data from accounting APIs, companies can easily keep real time track of expenses and potential incomes to manage their cash flows better. Real time visibility into projected expenses and cash shortages can help prevent overspending and facilitate better cash management.
This way businesses can ensure sufficient working capital in the bank and maintain liquidity, while managing investments and other liabilities and assets.
For instance, healthcare companies can use accounting APIs to automate tracking of healthcare supplies and medicines and create projected expenses to fulfill inventory.
2. Budgeting and forecasting
Data from accounting APIs can help companies predict spending and expense patterns to create accurate and realistic budgets and financial forecasting for subsequent years. Historical data can enable companies to better optimize expenses and allocate greater budgets to revenue generating areas.
3. Regulatory compliances
Any company that operates under any law is likely to undergo financial audits from time to time. Accounting APIs ensures that companies have structured and accurate data on their financial health in real time.
This helps track all financial transactions and be prepared for any audit/ generate audit trails seamlessly. Invariably, accounting APIs, thus, help businesses adhere to regulatory compliances and facilitate transparency and accountability.
For instance, non profit organizations can use accounting APIs to manage their grants and donations and adhere to the local compliances, promote transparency and prevent any regulatory challenges.
4. Integration with third party applications
Accounting APIs can help businesses integrate their accounting software with other applications they use including CRM, ERP, etc. This can automate and facilitate multiple processes without the need for manual data entry.
For instance, companies can integrate accounting APIs with their HRMS platform for easy information transfer on payslips and payroll updates. Similarly, manufacturing companies can integrate their accounting APIs with ERP and procurement systems for automated invoice processing, payments, etc.
5. Timely invoicing and payments
Accounting APIs can help companies send automated invoices to customers on a timely basis and integration with payment gateway APIs can enable seamless and faster transactions. Especially, when it comes to subscription based services, accounting APIs can facilitate accurate calculation of recurring billing.
Most subscription based companies can leverage accounting APIs to predict future revenues and integrate with other applications to handle subscription upgrades and downgrades, which can be automatically captured in subsequent billings.
6. Vendor and supplier management
A major part of accurate accounting is managing vendors and suppliers. With accounting APIs, companies can easily integrate their procurement systems to automate recording of vendor invoices, track expenses, facilitate timely payments, etc.
Furthermore, they can be integrated into the enterprise workflow for approval mechanisms, communication and payment scheduling.
Challenges with Accounting API integration
Undoubtedly, there are several ways in which accounting API integration can help power high levels of efficiency and automation for companies. However, there are a few challenges and risks that can make accounting API integration overwhelming for developers.
Data security and privacy
Accounting applications carry sensitive financial information and are prone to hacking/ unauthorized access during transfer by threats like man in the middle attacks. A key challenge with accounting API integration is to ensure encryption and authentication.
At the same time, even within the organization, not everyone needs access to all financial information, thus, adding a layer of authorization is important, which can be challenging.
Note: If you are looking for a secure way to scale your accounting integrations, check our Security page to see how Knit is emerging as the most secure unified API platform available in the market today
Data mapping
With different accounting APIs in the market for different functionalities, chances are that fields across the applications are diverse. In such a situation, mapping data for transfer becomes difficult. Inaccurate data mapping can lead to loss of critical financial information during transfer, leading to monetary losses.
API updates and maintenance
Accounting APIs undergo several changes as new features are added and older ones become irrelevant. There can be changes in endpoints, API versions, etc. which require constant monitoring and updating to keep the API working properly.
At the same time, there can be deprecated features which are not removed, which adds to security challenges. Thus, accounting API maintenance can be a challenge for companies that don’t have large in-house engineering teams or don’t want to spend a lot on API management.
Legacy system challenges
Most accounting information currently is stored in legacy systems for companies. The new-age accounting APIs differ in data formats, schemas, etc. This can lead to compatibility issues.
Most legacy systems don’t have APIs and may require additional coding to be integrated with the new accounting APIs.
Error handling and data consistency
As mentioned, errors in financial data transfer, which is the main objective of using accounting APIs, can lead to heavy financial losses for companies. Thus, constant monitoring, logging and real time error resolution is a challenge that comes with accounting API management and scalability.
At the same time, as the volume of accounting requests increases, implementing practices like rate limiting and throttle can be challenging if accounting APIs are managed in-house.
Limited technical knowledge
If you are building and managing your accounting API integration in-house, you will need comprehensive knowledge of different financial concepts, tax knowledge, local compliances, etc. Limited technical knowledge is, thus, another challenge that comes along with accounting APIs.
At the same time, accounting API integration and transfer of financial data requires adherence of GDPR, GAAS and other regulatory laws, any breach of which can lead to legal repercussions.
Unified Accounting API: Way Forward
While there might be roadblocks on the way, it is safe to say that accounting APIs have significant use cases across industries. Thus, their implementation and use cannot be negated.
Unified Accounting APIs help businesses connect with multiple accounting software in one go using just one API. Thus, reducing integration shipping time by as much as 80%.
However, there are some questions you must consider while choosing the right unified accounting API provider for your company.
Q1. What are the considerations for data privacy and security?
As mentioned, when it comes to accounting APIs, data privacy and security is of utmost importance. Having a safe way to integrate and sync data with accounting software can lead to gaining customer confidence and higher retention rates.
Since most of the numbers are confidential, it is important that your unified API provider doesn’t access or store a copy of the data.
In this case, choosing a unified API which has security embedded in the platform infrastructure can be beneficial. An events driven architecture ensures that the unified API doesn’t store a copy of your data, facilitating data privacy and security.
Such unified API platforms work only with webhooks and the initial and delta data syncs are delivered via events, preventing the possibility of data storage. Learn more
Q2. Is data sync automatic?
A critical part of using APIs is data sync. When choosing a unified accounting API, you need to gauge whether data sync is automatic or needs an additional push.
If you look closely, there are two types of unified APIs to choose from based on their architecture. Pull based APIs which need an additional polling infrastructure to make constant requests for data sync.
On the other hand, there are Push based APIs which are events driven with webhooks. Put simply, you need to configure events that will trigger data sync and there will be data flow whenever the event occurs, without any additional push.
A webhooks driven architecture without any polling infrastructure is definitely easier to maintain and leverage, and facilitate data sync in almost real time.
Q3. What are the customization functionalities?
When you use a unified API, you want the look and interface feel to be as close as possible to your application. Irrespective of whether it is for internal or external use, interface familiarity leads to a better user experience, be it your end customers or internal employees.
Thus, you need to check the auth component that is powering the unified API you choose and explore the degree of flexibility and customization it offers in terms of design and styling.
Javascript SDK as the auth component generally offers greater flexibility and can ensure that your customers feel no friction of a different interface of design while using the unified API within your application.
Q4. Does it support rate limiting?
Financial data transfer and accounting APIs are vulnerable to brute force attacks like DDoS. To prevent falling prey to such threats, it is important for the unified API to support robust rate limiting.
Essentially, rate limiting restricts the number of API calls that can be made in a given time duration. Quotas and throttling are two key ways of achieving rate limiting. To prevent attacks, you must choose a unified API which facilitates rate limiting.
Q5. Does it take care of integration management?
Finally, managing and maintaining integrations can be a challenge and your unified API provider must offer support to take care of the same. Here functionalities like deep RCA and resolution are important to not only identify which accounts were synced, but to also rerun syncs if needed.
The idea is that your unified API should be able to identify and address integration issues on its own.
This will empower your CX team to troubleshoot errors by themselves and allow your engineering teams to focus more on enhancing product features and functionalities, rather than spending time on maintaining integrations.
Get started with accounting APIs
Knit Unified Accounting API is built to ensure maximum level of data protection while transferring sensitive financial data. Knit also provides a no-polling, webhooks-driven architecture to facilitate data transfer in real time.
Talk to one of our experts to see how Knit fits into your specific use case. You can also reach out to us with a specific accounting API request. We are always looking to expand our API catalog.
Or if you are ready to try it yourself, you can get your Knit Accounting API key today. Getting started is completely free
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