Integrations: the Marriage of your ERP and E-Invoicing Software

Integrations: 

In today’s digital landscape, invoice data exchange and communication between systems are crucial for businesses. When implementing an e-invoicing, e-reporting or other structured data solution, one of the most important considerations is the method of integration between the accounting or ERP system and the solution. There are a multitude of integration options for receiving electronic invoice data, but we’ll focus on two common methods for integrating to EDI or e-invoice systems being API (Application Programming Interface) and FTP (File Transfer Protocol), as well as manual input options. Each have their distinct purposes and advantages, but choosing the right one depends on each company’s unique use case and e-invoicing solution. 

What is an API? 

An API is a set of rules and protocols that allows different software applications to communicate with each other. APIs define how requests are made, what responses should look like, and how data is exchanged.  

Types of APIs: 

There are a number of differing types of APIs such as: 

• REST (Representational State Transfer): A web-based API that uses standard HTTP methods (GET, POST, PUT, DELETE) to interact with data. 
• SOAP (Simple Object Access Protocol): A protocol that uses XML for message formatting and relies on various transport protocols. 
• GraphQL: A query language that allows clients to request only the data they need. 
• Webhooks: APIs that push data in real-time rather than requiring continuous polling. 

Benefits of API Integrations: 

• Automation: enable seamless automation of processes and workflows between different applications, such as supply chain and e-invoicing processes, and tend to be more automatable than other integration methods. 
• Scalability: allow businesses to scale seamlessly by integrating new services and handling large amounts of invoice data easily. 
• Real-time data exchange: facilitate instant data retrieval and updates. 
• Security: Modern integrations use authentication methods like OAuth, API keys, and JWT for secure data access. 
• Error handling: allow for automatic status updates and error handling with detail. 

What is FTP? 

FTP is a standard network protocol used to transfer files between a client and a server over the internet. It allows users to upload, download, and manage files in bulk. It is user friendly and, in the front-end, is represented simply by in and out folders in an FTP client. 

Types of FTP 

There are a variety of type of FTP, mainly relating to their security level, with FTP being the basic form without encryption, SFTP (Secure File Transfer Protocol) encrypting data using SSH (Secure Shell) and FTPS (FTP Secure) which uses SSL/TLS encryption for security. 

Benefits of FTP Integrations 

• Large file transfers: FTP is well-suited for bulk file transfers and large invoice data exchanges. 
• Scheduled automation: Businesses can set up automated file transfers at predefined intervals. This usually requires an additional automation application if the native system doesn’t support this automation. 
• Cross-platform compatibility: FTP is supported across different operating systems and platforms. 
• Reliability: FTP ensures stable file transfers, even for large invoice datasets, provided there are no integration errors. 
• Low-code to no-code: FTP solutions often require very little to no coding to set up and use. Less technical resources can often manage these solutions easily.  

API vs. FTP: Key Differences 

When to Use API vs. FTP 

Choose API when: 

• You need real-time invoice data updates. 
• You require seamless integration with e-invoicing systems at scale. 
• Security and access control are priorities. 
• You need automation based on event triggers. 

Choose FTP when: 

• You need to transfer large volumes of invoice data. 
• The process does not require real-time updates. 
• You are dealing with legacy systems that support FTP. 
• You need a cost-effective and quick-to-build solution for batch processing. 

Implementing API and FTP Integrations 

Best Practices for API Integration 

1. Use Authentication & Authorization: Implement OAuth, API keys, or JWT to secure API requests. 
2. Optimize Requests: Reduce latency by using pagination, caching, and efficient data retrieval techniques. 
3. Handle Errors Gracefully: Use standardized error codes and messages to improve debugging. 
4. Monitor Performance: Track response times, uptime, and error rates for optimization. 
5. Ensure Data Security: Use encryption (HTTPS) and validate input to prevent security threats. 

Best Practices for FTP Integration 

1. Use Secure Protocols: Prefer SFTP or FTPS over standard FTP to enhance security. 
2. Automate File Transfers: Use cron jobs or scheduling tools to streamline FTP file transfers. 
3. Monitor Transfers: Set up alerts and logs to track failed or incomplete file transfers. 
4. Implement Error Handling: Use checksum validation to ensure data integrity during transfers. 
5. Manage File Permissions: Restrict access to sensitive directories and files. 

Other Approaches: Manual Inputs of Invoice Data 

In some scenarios, building an extensive integration to transmit between systems is not efficient for the use case in terms of cost or time. In these cases, more manual options can be better solutions. Examples of these would be manual file drops of standardised input files or manual data entry on a front-end portal.  

Benefits of Manual Data Entry 

• Cost Effective: manual solutions are low cost in terms of setup and provide cheap, compliant solutions. 
• Quick: using an effective manual solution can be quick and easy to set up and use, provided that the solution is user-friendly and well built. 
• Low Touch: manual solutions should require very little monitoring, provided that the resources involved are accurate and efficient. 

Conclusion 

Both API and FTP integrations play vital roles in system communication and data transfer. APIs excel in real-time, secure, and scalable interactions, while FTP is ideal for large file transfers and scheduled batch processing. The choice between API and FTP depends on the business needs, cost, data volume, security requirements, integration complexity, technical resource availability and compliance deadlines. For low-volumes of e-invoices and low-cost requirements, manual data transmission may be the most effective solution if the application/s have been built well to accommodate these.  

At eezi-Powered by VAT IT, we support many integration options to suit your needs, including API, SFTP and manual inputs. Chat to one of our consultants so we can assist in implementing the best solution for your use-case.