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2021 presents an opportunity for financial pros to take a fresh look at the most important trends in the industry. One trend to track will be the growing use of application programming interfaces widely known as accounting “APIs.”
Used in finance and many other industries, these software interfaces help unlock data within software-based computer applications. They facilitate data transfers, connectivity and integration between software, applications and computer systems. They make it possible for software-based technologies to “talk” to each other.
APIs can help convert your accounting system into a higher-performing financial management platform and help your business grow.
Because they’re the connective tissues that can help drive productivity, deliver faster payments and improve customer experiences.
What are accounting APIs and how do they work?
Think of an API as like a plug you insert in your wall at home to turn on a light. When you insert the plug, you’re empowered.
You don’t know what occurs inside the wall and you don’t have to. It’s taken care of behind the scenes. An API is like that plug. It turns the connectivity on without you having to know how it’s done.
Or imagine you’re at a restaurant and a waiter comes to your table and takes your order. The waiter goes back to the kitchen, communicates the order and delivers you what you asked for on time.
An API is like the waiter. It takes orders and then delivers what you requested without you having to see what happened in the kitchen or how the dinner got to your table.
How do APIs work with accounts payable software?
APIs play a central role in connecting and enabling faster and more secure data transfers between AP software and accounting software.
In one scenario, perhaps your company wants to automate its invoices and payments. To send and receive data from your accounting system, you need an API that plugs your AP software into the accounting software.
Why? Because data in both systems can be sent and the capabilities of the two softwares can “talk” with each other smoothly.
Without that API “plug,” the data can’t be sent and the AP and accounting systems can’t operate with each other.
How do APIs generate value?
To learn how businesses address their software and system integration challenges, Capgemini surveyed 818 senior IT executives in 10 different industries. The survey found APIs have become “indispensable” to companies and can help drive growth. Not only do they connect data, applications, systems and algorithms. They also help create products, services and new business models.
The Capgemini survey also polled business leaders about what their companies had achieved in the past year mainly because they used APIs. Among banking respondents:
- 44 percent said APIs trimmed the time to upgrade one or more existing products by 50 percent or more; and
- 35 percent indicated they improved customer experiences and satisfaction.
Among high-tech respondents:
- 40 percent said they cut the time to introduce one of their new products by 50 percent or more; and
- 39 percent said APIs reduced the time to upgrade one of their existing products by at least 50 percent.
To learn more about APIs and how to use them to your advantage, download our exclusive eBook below:
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