Developer's Guide to Accounting API Integration

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. 

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However, the true value of accounting applications can only be unleashed when they can seamlessly integrate and communicate with other applications used by an organization. The connection can be internal, where companies integrate their accounting applications with other tools they use like CRM, ERP, Marketing, etc. At the same time, companies may leverage customer-facing or external integrations to connect their product or give their product the ability to read and write data from the accounting applications their customers use. Let’s look at a few examples for greater understanding:

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Internal accounting API integration: Integrating CRM and accounting software for accurate and accelerated invoicing and revenue realization

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By connecting the CRM and accounting software, companies can ensure that as soon as an opportunity status is updated as closed or won in the CRM, a new account gets created in the accounting software. All relevant details captured in the CRM are automatically updated in the accounting software, including the billing details, amount, etc. to ensure that the invoices are sent and payment is collected in a timely manner with accurate billing. 

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Customer-facing accounting API integration: Expense management companies can leverage accounting API integration to facilitate bi-directional sync of expenses 

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Companies that offer expense management services can connect with their customer’s accounting software via accounting API integration. This integration allows for seamless, bi-directional synchronization of expense data, ensuring that all expenses submitted on the expense management platform are automatically reflected in the customer's accounting system. Additionally, any updates or comments made by relevant stakeholders on the accounting software are captured and mirrored in the expense management platform, enabling efficient data flow and streamlined operations.

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Hence, accounting API integration can have a direct impact on a company’s profitability, customer success and much more. However, if not managed effectively, it can also lead to productivity loss and poor employee experience. Thus, selecting the right integration methodology is integral.

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Read more: 14 Best SaaS Integration Platforms - 2024

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This article aims to equip developers with a thorough understanding of the critical role accounting API integration plays in business. It covers the essentials of building and managing these integrations, explores common challenges, and offers best practices. Additionally, it provides valuable tips for enhancing security, troubleshooting errors, and more, all designed to accelerate your accounting API integration journey.

Benefits of Accounting API Integration

Let’s start with decoding some of the top benefits of using accounting API integration and the reasons why most organizations are consolidating their efforts towards building or adopting them:

Ensure accuracy in financial data exchange

Maintaining accuracy in financial data is crucial for ensuring that all accounting-related tasks are executed flawlessly. By integrating accounting software with other tools that generate financial data, organizations can eliminate the risk of manual errors. For example, a minor mistake like a misplaced decimal in a billing amount or an incorrect email address for invoice delivery can lead to significant financial losses, potentially costing millions. Accounting API integration mitigates these risks, ensuring that financial workflows are precise and free from human error.

Automate financial workflows for faster cash realization

Beyond accuracy, accounting API integration streamlines and automates financial processes, speeding up revenue realization. By automating the exchange of data across stakeholders—such as in billing, invoicing, and transaction updates—the integration reduces the time required for these tasks. This near real-time synchronization accelerates the entire financial workflow, leading to quicker cash flow and improved operational efficiency.

Accelerate customer closure and retention rates

For customer-facing businesses, offering accounting API integrations can be a game-changer. Today’s customers expect seamless connectivity between the various applications they use and often expect the vendors or product providers to take the onus of making it happen. Providing robust API integrations can set your product apart from competitors, helping you close deals faster. Additionally, once customers experience the convenience of automated data exchange between your product and the integrated accounting software, they’re more likely to renew contracts and become loyal, long-term users, boosting customer retention rates.

Expand product use cases

Accounting API integration also broadens your product’s applicability across different market segments. Companies of varying sizes, sectors, and needs often use different accounting software. By offering integrations with a wide range of accounting applications, you can expand your product’s use cases and appeal to a broader audience. This approach not only simplifies market penetration but also accelerates growth across diverse market segments.

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Read more: What is API integration? (The Complete Guide)

Accounting API Data Models Explained

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. 

Read more: Accounting Data Models

Learn more about accounting data models here. 

References

These include any accounts, contacts or items that are involved in an accounting transaction, to clarify who is selling, who is buying and the product that is being bought or sold. 

Items

Items refer to the goods that are involved in a transaction. An item can be a product or a service, depending on the company offering the same, and includes information on its price, along with details on the purchase account as well as the sales account. 

Purchase Order

A purchase order (PO) is a formal record of request for a particular product or a service between a seller and a buyer. POs are generally generated for bulk orders and contain information about the item and details about the seller and buyer accounts. A PO precedes the invoicing stage and is issued by a customer sharing the details of the intended purchase and the price specifications. Based on the PO and the final negotiations, the seller disburses the final invoice for payment. In addition to basic details, it contains more information on the item under consideration as well as the status. While an important document, it doesn’t impact the accounting ledger of a company, which is usually dependent on the invoice. See docs

Credit Notes

Credit notes are an accounts payable transaction. It is issued by the seller as a refund or credit to the customer and contains details about how the credit is owed. In addition to the amount owed, the note also contains description of the item that is owed, details of the customer and the account and the status. It is generally used as a means to rectify errors, returns, or overpayments for any sales transaction. This credit note can be used by customers against any future invoice to reduce the overall due amount. 

Vendor Credit

It is similar to a credit note, but is generated and placed with the customer, making it an accounts receivable transaction. Containing similar information as the credit note, it is held by customers and contains details about how much credit is owed to the customer, the vendor who owes the credit and the account. 

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

Bill

A bill contains the same information as the invoice, but is a document that is used on the customer side. It is a request for payment and is used when a customer owes money to a business for a product or service as a part of a transaction. 

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. 

Balance Sheets

Balance sheets form a part of the accounting reports that all companies are required to maintain. It generally captures the assets, liabilities and equity for a company, where assets are equal to the liabilities and equity. It is meant to capture and communicate the financial health and growth of the company from time to time. For each asset, liability and equity, a balance sheet captures the date on which the same was recorded, in addition to the value in local currency or dollar terms. 

Income Statement

Also known as profit and loss statements, these capture the total income for a company as well as the total expenses, including cost of sales, operating and other non-operating expenses. Based on these core values, the income statement also carries key fields like gross profit (total income-cost of sales), net income (gross profit-total expenses), net operating income (total income-operating expenses). 

Cash Flow Statement

A cash flow statement maintains the records of the business critical activities, including operating activities (cash generated from products or services offered), investing activities (cash generated from investments, asset transactions and loans) and financing activities (cost of debt, equity and dividends). A cash flow statement captures the value of cash (in local currency/ dollar value) at the beginning as well as at the end of the reporting period. 

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. 

Accounting API Integration Best Practices for Developers

With a solid understanding of the benefits and data models associated with accounting API integration, it’s essential to delve into some best practices that developers can employ to streamline the integration process and optimize efficiency.

Adopt a scoring framework for Accounting API prioritization

Prioritizing which accounting APIs to integrate first is crucial, especially when the integration process is being managed in-house with limited engineering resources. To effectively prioritize, developers should implement a scoring framework that evaluates and ranks accounting APIs based on various criteria.

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The most critical factor in this framework is the internal or customer-facing demands, as these directly impact the business's operational efficiency and customer satisfaction. Accounting APIs that fulfill immediate business needs should naturally take precedence. Within those integrations which have  high demand, choose those which are demanded by a higher number of customers, especially those which are in the mid to large scale business size. However, beyond just the demand, several other factors should be considered:

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• Public API Availability: Prioritize APIs which have publicly available endpoints and are widely used, as these are likely to have robust support, frequent updates, and a larger community for troubleshooting.
• Ease of Documentation: APIs with comprehensive, well-organized documentation should be prioritized to minimize the learning curve and integration time. Clear documentation also facilitates smoother knowledge transfer among team members.
• Preferred API Format: Consider APIs that use the preferred data formats (e.g., JSON, XML) and communication protocols (e.g., REST, SOAP) that align with your existing infrastructure, as this can reduce the need for additional data transformation processes.
• Authentication Methodologies: Prioritize APIs with secure, industry-standard authentication methods (e.g., OAuth2, API keys), which are already understood by developers in-house and ensure the safety of your data and comply with regulatory requirements.

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By scoring and prioritizing APIs based on these criteria, developers can create a more organized and efficient integration roadmap, where the most critical and beneficial integrations are completed first, driving value for the business and its customers.

Explore all alternatives for building and maintaining Accounting API integrations

While traditionally, organizations have preferred to manage accounting API integrations in-house to maintain control over source code and customization, the growing complexity and scale of integrations require developers to consider alternative approaches. Before committing to a do-it-yourself (DIY) approach, it's crucial to explore other tools and solutions that can simplify and accelerate the integration process.

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For internal integrations, where the goal is to connect accounting software with other business tools like CRM systems, using an Integration Platform as a Service (iPaaS) or workflow automation tool can be highly effective. These platforms offer pre-built connectors and workflows, reducing the need for custom development and enabling quicker deployment.

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Read more: Unified API vs Workflow Automation: Which One Should You Choose?

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For customer-facing integrations, businesses can leverage embedded iPaaS or unified API solutions. Embedded iPaaS provides no-code or low-code options that allow companies to build and maintain integrations with minimal coding effort. Unified APIs, on the other hand, are gaining popularity due to their ability to manage integrations within a specific category at scale. These solutions offer a single API that can connect to multiple services, simplifying the integration process and providing a more scalable approach to managing multiple connections.

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Read more: What Should You Look For in A Unified API Platform?

Leverage automated testing

Testing is a critical component of building and managing accounting API integrations, and it must be a continuous process rather than a one-time effort. As API providers release new versions or updates, or as your application evolves, these changes can impact the integration workflow, consistency, and quality.

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To maintain the reliability and integrity of these integrations, developers should embrace automated testing. Automation not only reduces the burden on engineering teams but also enables regular, scheduled tests that can proactively catch issues before they escalate. Automated tests can be configured to run at specific intervals or triggered by events like code changes, ensuring that any potential problems are identified and addressed promptly.

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Developers can also utilize sandboxes and dedicated API test environments essential for simulating real-world scenarios without affecting production systems. These environments allow developers to experiment with new integrations, validate updates, and conduct thorough testing in a controlled setting. This approach helps in identifying potential issues early, reducing the risk of disruptions in live environments.

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In addition to automated testing, implementing robust monitoring and logging mechanisms is crucial. Real-time monitoring can detect anomalies or errors as they occur, providing immediate alerts to developers. Comprehensive logging captures detailed information about the system's behavior, enabling developers to diagnose and fix issues quickly. This proactive approach ensures that the integration remains stable and performance over time.

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Testing isn't just about identifying integration errors or mitigating failures. It's also about ensuring consistent performance over time. Developers must continuously track critical metrics such as latency, response time, availability, and API consumption. These metrics are vital indicators of the system's health and can reveal underlying issues that may not manifest as traditional failures. For instance, a gradual increase in response time might not cause an immediate failure, but it could degrade the user experience over time.

Create a robust GTM strategy for customer facing integrations

When offering accounting API integrations as part of a customer-facing product or service, developing a well-thought-out go-to-market (GTM) strategy is crucial for success. This strategy should encompass everything from pricing models to marketing efforts, ensuring that the integration is both attractive to customers and profitable for the business.

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The first step in your GTM plan is to establish a clear monetization or pricing strategy for your integration. You need to decide how the integration will be offered to your customers. Consider factors such as the perceived value of the integration, the competitive landscape, and your overall business goals when deciding the pricing. Some potential models include:

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• Premium Plan Add-On: Offer the integration as an exclusive feature available to customers who subscribe to a higher-tier plan. This can drive upgrades and increase overall revenue.
• Freemium Model: Provide basic integration features for free while charging for advanced functionalities. This approach can attract a broad user base while still monetizing through premium features.
• Standalone Paid Integration: Offer the integration as an additional service at a separate cost, allowing customers to purchase it as needed. This model is particularly effective if the integration provides significant value or if it's not essential for all users.

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Once the pricing strategy is established, it's vital to create comprehensive collateral and documentation to help customers make the most of the integration. Detailed self-service user guides, FAQs, and troubleshooting resources should be readily available to ensure a smooth onboarding process. Additionally, consider offering video tutorials or webinars to demonstrate the integration's capabilities and answer common questions.

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Marketing the integration you are offering effectively is another critical component of your GTM strategy. Develop targeted marketing collateral that highlights the unique benefits of your integration and how it can solve specific pain points for your customers. This could include case studies, white papers, and customer testimonials that showcase the real-world impact of the integration. In addition to creating content, plan and execute marketing campaigns to promote the integration. 

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Finally, ensure that your sales teams are well-equipped to sell the integration. This includes training them on the integration's features, benefits, and pricing, as well as how to effectively incorporate it into their sales pitches. Provide them with demo environments where they can showcase the integration in action, allowing potential customers to see the value firsthand.

Types of 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. 

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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.  

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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. 

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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. 

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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. 

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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. 

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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. 

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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. 

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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. 

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Their main objective is to help gauge the company's financial performance and map it against the goals set initially. 

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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. 

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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. 

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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. 

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Top tax calculation APIs: Avalara API, TaxJar API, Stripe API

Accounting API Use Cases: Real-World Examples

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. 

Common Accounting API Integration Challenges 

Accounting API integration offers numerous benefits and use cases for organizations. However, it also presents a unique set of challenges that developers and customer success teams must navigate. Here’s a closer look at some of the most significant challenges.

Difficulty in building partnership with each Accounting API

One of the primary challenges is gaining access to accounting APIs. Not all accounting software offers open or publicly available APIs. While some may have limited access, the general requirement involves establishing one-on-one partnerships with API providers. This process can be fraught with obstacles, such as extensive security checks, lengthy onboarding procedures, and highly technical NDAs. Some providers may offer integration support only once, without ongoing assistance, or attach a significant cost to access, which may escalate with each additional customer. Additionally, forming and maintaining partnerships with multiple API providers can become operationally burdensome and unsustainable over time.

Heavy engineering investment and poor developer experience

Developing, maintaining, and managing accounting API integrations is a resource-intensive endeavor that demands significant engineering investment. Developers may find themselves dedicating considerable time and effort to tasks that do not directly contribute to the product lifecycle. For example, creating each integration can take an average of four weeks and cost around $10,000. This repetitive work can lead to frustration, resulting in a poor developer experience, as it often fails to leverage their technical expertise effectively. Moreover, if developers lack the specific skills needed for integration, the process can become sluggish, leading to delays in go-to-market timelines.

Limited scope for scalability

Scalability is a significant concern, particularly when building one-on-one integrations, whether in-house or using an integration tool. With the number of accounting software options exceeding triple digits, each customer may use a different platform, requiring developers to create integrations for each one. The time and financial investment needed to achieve this level of integration raises questions about the overall scalability of the approach. Furthermore, with multiple competing priorities, accounting API integrations may be deprioritized, further hindering scalability.

Poor data sync frequency and integration quality

Maintaining consistent integration performance is a major challenge for many developers. Factors such as data sync frequency, the ability to handle large data loads, and latency all influence integration performance and user experience. Ensuring real-time data sync and reliable scalability, regardless of data load, demands substantial time, investment, and testing infrastructure—resources that are often in short supply.

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Read more: How to ensure guaranteed scalability in data sync

Hard to access and understand Accounting API documentation

Even after securing API partnerships and convincing engineering teams of the importance of integrations, API documentation remains a core challenge. Not all APIs offer easily accessible or publicly available documentation. When documentation is available, it is often difficult to understand, written in technical language that may not align with developers’ expertise, or outdated, failing to reflect recent updates or API versions. This makes it extremely difficult for developers to effectively utilize the documentation, which is essential for successful integration.

Changing API versions and backward compatibility

Like other software, accounting applications undergo regular updates, resulting in multiple API versions. While these updates aim to enhance performance and user experience, they can disrupt the integration landscape. If developers do not keep pace with changing API versions, it can lead to degraded integration performance or even complete failure in extreme cases. These issues can also negatively impact the performance of your application. Consequently, maintaining backward compatibility becomes a significant challenge for developers, requiring constant vigilance and adaptation.

Building Your First Accounting Integration with Knit: Step-by-Step Guide

Knit provides a unified Accounting API that streamlines the integration of Accounting solutions. Instead of connecting directly with multiple Accounting APIs, Knit allows you to connect with top providers like ClearBooks, Dynamic 365 Accounting, Freshbooks, Netsuite Accounting, Quickbooks, Workday Accounting API and many others through a single integration.

Learn more about the benefits of using a unified API.

Getting started with Knit is simple. In just 5 steps, you can embed multiple Accounting integrations into your App.

Steps Overview:

1. Create a Knit Account: Sign up for Knit to get started with their unified API. You will be taken through a getting started flow.
2. Select Category: Select Accounting from the list of available option on the Knit dashboard
3. Register Webhook: Since one of the use cases of Accounting integrations is to sync data at frequent intervals, Knit supports scheduled data syncs for this category. Knit operates on a push based sync model, i.e. it reads data from the source system and pushes it to you over a webhook, so you don’t have to maintain a polling infrastructure at your end. In this step, Knit expects you to tell us the webhook over which it needs to push the source data.
4. Set up Knit UI to start integrating with APPs: In this step you get your API key and integrate with the Accounting APP of your choice from the frontend.
5. Fetch data and make API calls: That’s it! It’s time to start syncing data and making API calls and take advantage of Knit unified APIs and its data models. 

For detailed integration steps with the unified Accounting API, visit:

• Getting started with Knit

Knit's Accounting API vs. Direct Connector APIs: A Comparison

Presenting below a detailed comparison of building and managing integrations following two alternative approaches, i.e. in-house using direct connector APIs or by leveraging Knit’s unified accounting API.  

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Read more: Build vs Buy: The Best Approach to SaaS Integrations

Security Considerations for Accounting API Integrations

Accounting platforms handle critical financial data, making them prime targets for security breaches. Consequently, businesses must prioritize robust security measures when developing and managing accounting API integrations. Below is an overview of key security risks associated with accounting API integrations:

• Unauthorized Access: Without proper authentication and authorization mechanisms, accounting APIs are susceptible to malicious access, potentially leading to significant system disruptions.
• Broken Authentication Tokens: If authentication tokens are not securely generated, stored, and transmitted, attackers may hijack user sessions, gaining unauthorized control over active sessions.
• Injection Attacks: Techniques like SQL injection and cross-site scripting (XSS) allow attackers to manipulate input data, executing malicious code in database queries and accessing or modifying sensitive information.
• Data Exposure: Insecure transmission protocols, unencrypted data, inadequate data masking, and validation can result in data leaks and unauthorized access.
• Rate Limiting and Denial of Service (DoS) Attacks: Excessive requests can overwhelm the system, leading to service disruptions and reduced availability.
• Third-Party Dependencies: APIs from third-party vendors with weak security postures can introduce vulnerabilities, affecting the entire system.
• Human Error: Misconfigurations or accidental exposure of API keys by humans can lead to serious security breaches.

Understanding these risks is essential for developers and business leaders to implement effective security measures, such as:

Robust Accounting API authentication methods

Authentication and authorization are crucial for safeguarding accounting APIs. Authentication verifies a user’s identity, while authorization determines their access level. Depending on specific use cases, developers can choose from various authentication methods:

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• OAuth: Securely authorizes third-party access
• Bearer tokens: Provides time-bound access
• API key: Utilizes static, long-lived secret keys
• Basic Auth: Combines username and password
• JWT: Uses self-contained access tokens

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Choosing the appropriate authentication method is fundamental to maintaining the security and integrity of data exchanged between systems.

Secure transmission with HTTPS and encryption

Securing data transmission is just as important as secure access. Developers should employ techniques like HTTPS, which uses Transport Layer Security (TLS) or its predecessor, Secure Sockets Layer (SSL), to encrypt data before transmission. This ensures that only the intended recipient can decrypt the data.

Input validation 

Input validation is critical to protect accounting API integration against injection attacks mentioned in the preceding section. This involves thoroughly monitoring and cleaning any incoming data, i.e. sanitizing the inputs to remove potentially harmful scripts or queries. 

Monitoring and logging of Accounting API traffic

Monitoring API traffic enables real-time detection of anomalous activities, such as sudden spikes in traffic or unusual access patterns. Logging all API interactions is equally important for forensic analysis, compliance, and auditing. Combined, these practices support real-time alerts when security thresholds are breached and provide mitigation strategies based on historical records.

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Read more: API Monitoring and Logging

Accounting API integration decommissioning 

Security doesn’t end with active use; it extends to the decommissioning of APIs. Ensuring that APIs are retired when deprecated, implementing version control, and enforcing deprecation policies help mitigate security risks. Regularly audit and monitor API usage and access controls to stay ahead of potential threats.

Regular audits and testing

Conducting regular security audits and penetration testing is essential. Audits help review API design, architecture, and implementation for security weaknesses and best practice violations. Penetration testing simulates cyberattacks to identify vulnerabilities and potential entry points, ensuring that your accounting API integrations remain secure.

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By understanding and addressing these security considerations, organizations can significantly reduce the risk of breaches, ensuring that their accounting APIs are both secure and reliable.

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Read more: API Security 101: Best Practices, How-to Guides, Checklist, FAQs

TL:DR

As the need for seamless financial data exchange across software platforms grows, accounting API integration has become vital for organizations. These integrations offer enhanced accuracy, productivity, automation of financial workflows, and broader market reach, making them increasingly desirable. From cash flow management to budgeting, forecasting, timely invoicing, and vendor management, numerous use cases are driving companies to adopt accounting APIs for both internal operations and customer-facing integrations.

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However, the integration process is often challenging, making the development and maintenance of these integrations a daunting task for developers. They require significant engineering resources, and a DIY approach with connectors can be difficult to scale, maintain, and can also be costly. To address these challenges, companies are turning to unified APIs like Knit’s accounting API. Knit’s Unified Accounting API is designed to ensure the highest level of data protection during the transfer of sensitive financial information. It also features a no-polling, webhooks-driven architecture that enables real-time data transfer. Additionally, Knit simplifies development with consistent authentication, pagination, rate limiting, and automated issue detection.

Connect with one of our experts to discover how Knit’s accounting API can be tailored to your specific needs.

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