You may have seen the term API when looking at accounting software, an online store, a payment service or a customer management system. The name sounds technical, but the idea is straightforward. An API allows one software system to send information to another in an organised way.
For a business, this can mean that a confirmed online order is sent to the accounting system, or that a payment result is updated without someone copying the details by hand. The API provides the method for the systems to communicate. The integration is the working connection built using that method.
What an API means in simple terms
API stands for application programming interface. It is a set of instructions that tells one software system what it may request from another system, how to make the request and what information will be returned.
A simple comparison is a standard order form. The form shows what information can be requested and how the request must be submitted. The API performs a similar job for software. It gives both systems an agreed format, so they do not need access to each other’s internal workings.
The difference between an API and an integration
The two terms are related, but they do not mean exactly the same thing.
| Term | What it means |
|---|---|
| API | The rules and access points that allow software systems to communicate. |
| Integration | The completed connection and workflow that uses an API or another method to move information between systems. |
This distinction matters when buying software. A product may offer an API, but that does not always mean it already has a ready-to-use connection with your other system. Someone may still need to configure a connector or build the integration.
Common examples in an SME
Most businesses already use integrations, even if staff never see the API behind them. Common examples include:
- An online store sends confirmed orders and customer details to accounting software.
- A payment service updates an invoice after the customer pays.
- A customer relationship management system sends an approved quotation to the finance team for invoicing.
- Inventory software receives sales information and adjusts available stock.
- A payroll system sends approved payroll figures to the general ledger.
For example, Xero’s Accounting API supports functions such as creating invoices and credit notes and retrieving accounting data. Payment providers also use APIs to accept payments and manage billing. The exact information available depends on each product and the permissions given to the connection.
Why integration can be useful
Integration is most helpful when the same information is being entered into two or more systems. Removing that repeated step can save time and reduce differences between records. It can also help staff see updated information sooner.
Consider a company that receives orders through an online store. Without an integration, someone may export the sales list, check it and enter it into the accounting system. With a suitable connection, the approved order data can move automatically according to agreed rules. The accountant can then focus on reviewing exceptions instead of retyping routine entries.
Integration is not required for every business. If transaction volume is low and the current process is quick and reliable, a manual step may still be reasonable. It becomes worth considering when repeated entry takes too much time, information is often delayed, or staff regularly need to reconcile differences between systems.
What to check before connecting your software
Start with the business process, not the technology. Choose one repeated task and decide what information should move, where it should go and when it should move.
- Is there a ready-made integration, or does it need custom work?
- Which records will move, and will the data move in one direction or both?
- Will updates happen immediately, at scheduled times or only when someone starts a sync?
- How will failed or duplicate records be identified and corrected?
- Who will maintain the connection when either software product changes?
- Are there setup fees, monthly fees or limits on the number of requests?
Run a small test before moving all records. Check several normal transactions and a few unusual ones, such as refunds, discounts, foreign currency sales or cancelled orders. Finance users should confirm that account codes, taxes, dates and totals arrive correctly.
A practical next step
You do not need to connect every system at once. Begin with one task that causes repeated work, then confirm the expected time saving and the records that need to move. A clear process makes it easier to choose between a ready-made connector and a custom integration.
Need help reviewing how your accounting and business software should connect? Contact 361 Degree Consultancy at 6515 7906 or enquiry@361dc.com for a practical discussion about your current workflow.
Frequently asked questions
Usually, no. Many business applications provide ready-made integrations that can be set up through menus and permissions. Custom requirements may need help from a software consultant or developer.
No. An API makes communication possible. The integration decides what data moves, how often it moves and what happens when there is an error.
Often, yes. Available connections depend on the exact product, plan, country and other software involved. Check the vendor's current app marketplace or integration documentation before deciding.
Not necessarily. Some connections send only selected records, and some work in one direction. Agree on which system is the main record for customers, products, invoices and payments.
A ready-made option is usually quicker to set up and easier to maintain. Custom work may suit a special workflow, but the business should understand the ongoing support and cost.
Consider it when staff repeatedly enter the same information, updates are delayed, transaction volume is growing or mismatched records take too much time to correct.
