Flat-File vs API Integration for Accounts Payable: Benefits, Use Cases, and Key Differences

As financial technology evolves, it drives the need for more data sharing across verticals, channels, and programs. Automated AP software is often designed for seamless and flexible integration with your ERP through two integrations: flat-file and API. 

APIs have seen substantial growth, with successful API calls increasing from 795 million in 2021 to over 1.13 billion in 2023. This trend demonstrates the growing preference for APIs in financial data integration.

Here, we explain the difference between flat-file and API data integration for accounts payable through the lens of use cases, examples, and general comparison. Our analysis includes the strengths and weaknesses of each integration method, where the strongest applications lie, and how both can best benefit your business!

What is the Difference Between Flat-File Integration and API? 

A flat-file architecture transfers sets of data (for a selected date range or number of records) via a CSV file or other flat-file format. Flat-file integration works well to transfer batch files for payment processing using SFTP (secure file transfer protocol). 

API integration transmits data via an online API feed. An API connection shares information between two software systems in real-time, but it must be supported by all platforms in operation. In flat-file integrations, all that is required is the correct file format.

For many companies, flat-file and API integration are complementary solutions that are used in conjunction, depending on specific needs. Flat-file works best for smaller data sets in bulk, whereas API can handle larger sets individually. When implemented correctly, both methods allow for seamless data transfer to your ERP.

What is a Flat-File?

In order to understand how flat-file integration works, you should have general knowledge of a flat file. A flat-file database stores data in a simple manner. Each line of the text file holds one record. Fields are separated by delimiters, like commas or tabs. Most database programs, like Microsoft Access and FileMaker Pro, can import flat-file databases and use them in a larger relational database.

Example: Flat-File in CSV Format

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CustomerID,Name,Email,Country 1001,Jane Smith,jane@example.com,USA 1002,John Doe,john@example.com,Canada 1003,Emily Chen,emily@example.com,UK

Each row represents a single data record. There is no hierarchy or relational data—hence the term “flat.” These files are standard in data exchanges.

File Transfer Protocol

This is the method for moving flat-file data from one location to another. Think of it as a tunnel where data can be transferred between two systems. FTP works by uploading a file onto a server, then later downloading it from the same server. You receive an email notification when the file is ready to download. FTP is quite convenient for processing multiple files quickly in one pass. It’s also the go-to delivery option for offline data usage.

The FTP method is used to transfer different file types, such as:

• XML
• CSV
• Other flat-files

FTP alone is not highly secure, so companies will add an extra layer of encryption. 

Secure File Transfer Protocol

This additional form of encryption is called Secure File Transfer Protocol (SFTP). It facilitates data access and transfer across a secure shell data stream to protect all financial documents. 

Flat-File Transfer

In a flat-file transfer, requested and specified data files are imported from an accounting (or other) software program as a CSV file. The tab-separated file is another type of flat file that can be used. Other file formats include XML, JSON, and HTML. 

You may need to convert some of these file formats to CSV with a complex file reader. The brand (with which developers are integrating) decides which file formats to accept for their software system.

CSV Files

CSV (comma-separated values) files are text-based data files in which a comma separates data from each field. You can choose to save them as Microsoft Excel spreadsheets or Google Sheets. NetSuite is one program that allows users to make flat-file CSV transfers using either SFTP (secure file transfer protocol) or FTP (file transfer protocol). Software developers integrating their products through flat-file integration can also use these methods.

What is Flat-File Integration?

Flat-file integration works exceptionally well for bulk data transfers and is typically the only method available for older accounting systems. Flat-file transfers require verification to ensure the data transfer worked properly, the data is complete, and the information is accurate.  

Data files transferred using flat-file integration are only problematic if errors occur during data transmission. Therefore, you need to be sure there is a validation process for the data received or transferred via flat-file integration. Are the records transferred wholly and accurately using the file system? Flat-file integration works well for customization and meeting specific data needs. 

Pros of Flat-File Integration

• Easy to implement with no complex setup.
• Systems can export/import CSV or TXT files.
• No need for middleware or connectors.
• Files can be shared via email or uploaded manually.

Cons of Flat-File Integration

• Data is often outdated between each batch.
• Manual formatting can introduce errors.
• Not ideal for large or frequently changing datasets.
• Requires custom logic to check for quality of data

What is API Integration?

An API (application programming interface) provides a real-time and secure data connection from one Internet-based software system to another using cloud applications. Different systems, including accounting programs like web-based NetSuite and Salesforce, offer an API integration with add-in apps. 

These companies provide app developers instructions for connecting through an API to their specific software product using code. Some companies, like Salesforce, limit the number of daily API calls per user per day and on a maximum basis for different plans.

Modern APIs use REST (representational state transfer) API rules. REST API provides communications between Internet-based cloud software and a cloud (Internet-based) app or software program. REST APIs reside on the server and talk to the client. 

An API is a type of web service. When it uses REST API software architecture, the web service is called a RESTful web service. Google Cloud APIs in the Google Cloud Platform, use a JSON REST API interface or a gRPC interface to make API calls. You can also use HTML commands in a REST API.

API integration is a good substitute for EDI, which is an old standard that works with specific parties established through agreements. While legacy systems may continue to use EDI, newer companies will benefit from lower-cost API that allows them to share data in real-time. 

How APIs Enable Real-Time Two-Way Data Exchange

• Request/Response: One system sends a request; the other responds with data or an action result.
• Authentication: APIs typically require secure keys or tokens to verify the system’s identity.
• Endpoints: APIs expose specific “endpoints” that represent data or functions, like /getInvoice /updatePaymentStatus.
• Data Format: JSON and XML are used to structure the data.
• Webhooks (Optional): Some APIs use webhooks to push updates to another system when a certain event occurs.

What is the Difference Between Flat-File Integration and API?

How does Accounts Payable Automation Software use API or Flat-File Integration?

Accounts payable automation software leverages electronic data interchange (EDI) to streamline financial systems by digitizing documents such as purchase orders and vendor invoices. 

Designed to handle both large batch and individual supplier payments, these platforms help teams reduce manual work and increase efficiency.

API-Based Integration

With an API integration, users log in to their system to access the extended functionality of AP tools. The dashboard looks like your familiar accounting platform, but with more advanced automation features, like:

• Immediate exception handling
• Real-time syncing of invoice and payment data
• Enhanced vendor onboarding and API compliance workflows
• Creating audit trail visibility

This type of setup is ideal for instant access to the latest records, such as real-time expense tracking or cash forecasting.

Flat-File Integration

Flat-File integration is typically better for businesses processing bulk payments or periodic batches. 

Solutions like Tipalti support this integration by enabling users to upload flat-format files where required fields are pre-mapped. The process is straightforward:

1. Upload a data file with payment details.
2. Select a scheduled date.
3. Tipalti executes the payment batch accordingly.

This method automates recurring workflows and reduces the need for constant data syncing. It is well-suited for companies operating on scheduled remittance cycles or for better cash flow management by avoiding immediate invoice payments.

Flat-File vs. API: When to Use Each

The key difference between the two is real-time vs. scheduled updates. 

While APIs offer real-time data exchange, this may not always be necessary for AP teams. For example, processing payments when an invoice is received can negatively impact cash flow. Many businesses prefer a turnaround window to review, approve, and time transactions. In these cases, flat-file integration has greater flexibility and control.

Use Flat-File Integration When:

• You process large volumes of data in scheduled batches (e.g., bulk payments or monthly reporting).
  
• Your systems don’t require real-time updates and can work with periodic syncing.
  
• You need custom file formats or work with partners/vendors who expect flat files like CSV or XML.
  
• You’re integrating with legacy systems that don’t support APIs or cloud-based workflows.
  
• You want more control over payment timing to better manage cash flow (e.g., delaying invoice payment to avoid premature disbursements).
  
• You’re operating on fixed remittance schedules or have low-frequency data changes.

Use API Integration When:

• You need real-time or near real-time data sync, such as syncing invoice statuses, payment approvals, or cash forecasting.
  
• You want to enable dynamic workflows, like immediate exception handling or instant status updates across systems.
  
• Your organization prioritizes automation, scalability, and minimal manual intervention.
  
• You’re using modern cloud-based systems like NetSuite, QuickBooks Online, or Salesforce that offer robust API connectivity.
  
• You need tighter security controls, such as token-based authentication and encrypted data exchanges.
  
• You want to support complex features like OCR, automated compliance checks, or advanced analytics dashboards.

Hybrid Integration  

Modern AP automation platforms (like Tipalti) offer flat-file and API integration to support diverse needs. Hybrid integration enables companies to:

• Use flat-files for large, scheduled batch processing
• Use APIs for real-time tasks ( like approvals or data sync)
• Align automation with cash management strategies

Tipalti Integration Examples

Tipalti offers seamless integration with top ERP and accounting systems, including:

• NetSuite (API and flat-file support)
• QuickBooks Online (API)
• Xero (API)
• Microsoft Dynamics 365 Business Central (flat-file and API via middleware)
• Sage Intacct (API and custom field support)

These integrations allow the AP department to maintain consistent workflows while scaling its operations globally.

When to Integrate via API and When to Use Flat-File

Various companies from all industries find great value in using flat-file and API integration. Take Vericred, for example. Vericred, a healthcare and benefits data provider, makes a case for using a hybrid API and flat-file integration system, depending on the fit with your business system, tasks to be accomplished, and the database size.  

Even though API is touted as “the modern way,” there are instances in which it functions less effectively than flat-file integration. 

Here are a few considerations to keep in mind when choosing what type of integration works best:

Usage of Data

Are you using the data to build a product feature or power a platform? This speaks to the flexibility customers will need. For example, questions like “How does this scan invoices?” lend themselves nicely to an API endpoint. This is considered a product feature because it solves a particular user need.

In contrast, if a customer wants to review the past 6 months of vendor payments, this request lends itself well to a bulk data transfer process. In this case, flat-file steals the show.

Volume and Frequency of Updates

How often do you need your AP data updated? The cost of pulling large datasets into a database can be considerable if updates are frequent. In this case, an API solution would suit a business better. However, flat files work best if you have smaller datasets with less frequent updates.

Relationship Between Entities in Data

A key design principle of a REST API is that it is entity-based. While this makes it easy to predict the location of each entity, it makes it harder to string together related entities. In this case, the customer must make additional API requests to gather all the information needed.

When the object graph is rather large and the user needs to access it all at once, flat files tend to be an easier choice.

File Format Requirements

When customers have vastly different schemata, it’s often wise to customize formats to reduce friction and increase data platform adoption. Maintaining multiple formats in a single API is complex. It usually accrues technical debt in a codebase.

In this case, a hybrid system will use the API to generate a standard set of flat files that can be customized post-process. This enables a business to build out features in the core API while still meeting customers’ needs with specific format requirements.

Your Path to Smarter AP Integration

Choosing flat-file and API integration for your accounts payable automation depends on meeting specific business needs. 

APIs are ideal for real-time, streamlined data exchanges that leverage dynamic workflows, while flat-file integration excels in managing bulk, scheduled data transfers with higher customization options. 

A hybrid approach that uses both methods allows companies to optimize for real-time and batch processing tasks.

By understanding the size, frequency, and format of the information you’re working with, you can align your integration strategy to enhance efficiency, improve cash flow management, and simplify processes. 

Explore Tipalti’s AP automation solution, which is designed to help support your integration goals with its hybrid integration capabilities.