Flat-File Integration vs. API for Accounts Payable
State-of-the-art, online automated AP software apps are often designed with a seamlessly integrated API (application programming interface) for cloud ERP accounting software systems. Flat-file integration works well to transfer batch files for payment processing using SFTP (secure file transfer protocol). This article explains the differences between flat-file integration and API and their usefulness in automated accounts payable and payment processing.
We explain the difference between flat-file data integration and API data integration for both accounts payable and general software through the lens of a few use cases. Our analysis includes the strengths and weaknesses of each integration method.
What is the Difference Between Flat-File Integration and API?
A flat-file transfer is an older technology for transferring sets of data from a software program for a selected date range or a number of records via a flat CSV file or another allowable file format. Two software programs don’t communicate in real-time, as happens with API integration.
Flat-file integration works exceptionally well for periodic bulk data transfers. Flat-file integration may be the only method available for some older accounting systems. Flat-file transfers require more verification to be sure that the data transfer worked properly, the data is complete, and the information is accurate. Security may not be as strong as API security. But you can use SFTP for better flat-file security than older FTP. You can think of your choice as using a batch file vs. API or API vs. CSV.
Flat-file integration works with smaller data sets. API works with both small and large data sets.
API, with its software system to software system Internet communication, is the preferable approach when you need real-time shared data through an API file feed. But an API connection must be supported by your software vendor. API integration is easy to implement. API is seamless integration with your existing software systems. The user experience is outstanding.
Dun & Bradstreet (D&B) offers a database with customer credit scoring reports and summarized company financial statements. D&B presents a use case, favoring API vs. file based integration. In this PDF, “ From Flat Files to Data-as-a-Service,” D&B describes flat files vs. API integration and states the strengths and weaknesses of each.
What is API Integration with Cloud Applications?
An API (application programming interface) provides a real-time and secure data connection from one Internet-based software system to another cloud software system. Different systems, including accounting systems like web-based NetSuite and Salesforce CRM for customer resource management, 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. (Salesforce limits the number of daily API calls per user per day and on a maximum basis for Salesforce Professional and Salesforce Enterprise plans, although the Salesforce Unlimited plan has no total maximum on API calls.)
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. This Oracle (owner of NetSuite) web document, “What are RESTful Web Services?” from The Java EE 6 Tutorial, explains the concept in more detail. Google Cloud APIs in Google Cloud Platform, use a JSON REST API interface or a gRPC interface to make API calls. You can 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. EDI works with flat files. EDI implementation is complex. API integration is easy.
What is a Flat-File Transfer?
In a flat-file transfer, requested and specified data files are imported from the accounting (or other) software program as a CSV file or another allowable data file format. CSV is a comma-separated values file because a comma separates data from each field. The tab-separated file is another type of flat-file. 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 software company (with which developers are integrating) decides which file formats to accept for their software system.
CSV files are text-based data files. You can choose to save them as Microsoft Excel spreadsheets or Google Sheets.
NetSuite 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.
Data files transferred using flat-file integration can be 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 accurately and completely using the file system? Flat-file integration works for small rather than large data sets, for which API is the better solution.
Vericred, a healthcare and benefits data provider, makes a case for using a hybrid system of both API and flat-file integration, depending on the fit with your business system, each task to be accomplished, and the size of the database. As stated in the Difference section, flat-file integration works with smaller data sets. API works with both small and large data sets.
How Does Accounts Payable Automation Software use API or Flat-file Integration?
AP automation software is an add-in SaaS app provided through API integration for popular accounting software programs and ERP systems. Accounts payable automation software uses EDI (electronic data interchange), which is the use of electronic documents, including purchase orders and vendor invoices, to automate the accounts payable process. AP automation software is designed for large batch payments to vendors and individual “bill pay” to suppliers when needed.
With a real-time API connection, users log in to their accounting software system and get the expanded features of accounts payable automation. The user interface looks like the regular accounting software or ERP (enterprise resource planning) system. For some accounting software packages that don’t include API integration paths, an AP automation vendor may offer flat-file integration. Tipalti’s AP automation software, which provides accounts payable automation software primarily through API, also offers flat-file integration for some other accounting software programs.
Flat files work well for mass batch processing of accounts payable payments (using bulk data transfers). The software developer can map the required fields. You, the user, can select the payment date. In accounts payable processing, there are configurable workflows. Flat-file integration automates these selections to the extent possible for future payment processing.
Flat-file integration doesn’t provide syncing to the latest records in real-time. But that’s acceptable for use cases like batch processing of accounts payable payments. To balance the timing of cash inflows and outflows, you don’t want to pay your suppliers on the day that they issue an invoice. So you don’t need to access the latest real-time accounts payable invoices for payment batch processing. Flat-file integration may not be better than API for other business applications.