Manual data entry might seem straightforward, but for many accounts receivable teams, it’s a time-consuming task that opens the door to human error, straining customer relationships.
To solve this, many teams use invoice APIs to automate data entry into accounting or ERP systems. This article explains what an invoice API is, how it works, where it’s typically used, and why it’s a smarter alternative to manual invoice processing.
What is invoice API?
An invoicing API is a software tool that helps businesses automate tasks like creating, sending, tracking, and reconciling invoices. It also connects with systems like CRMs and accounting software to simplify and streamline the entire invoicing process.
The invoice API is part of the financial APIs ecosystem, which also includes:
- Payment APIs
- Expenses management APIs
- Bank feed integrations
All of these APIs enable real-time data exchange between financial platforms and internal systems, streamlining processes and driving operational efficiency.
A well-designed invoice API typically includes the following components:
- Create invoice: Allows systems to generate new invoices with fields such as customer details, line items, taxes, and payment terms.
- Retrieve invoice: Fetches invoice records for review, reporting, or syncing with other tools.
- Update invoice: Modifies an existing invoice to reflect necessary changes, such as updated due dates or corrected amounts.
- Send invoice: Triggers invoice delivery to a customer via email or a connected invoicing platform.
- Status tracking: Returns real-time information about the invoice’s state (e.g., sent, viewed, paid, overdue, etc.)
How do invoice APIs work
Invoice APIs act as a bridge between financial systems, like ERPs, accounting software, or billing platforms, and the applications that need to interact with them.
They expose endpoints (you can think of these like tunnel openings) that allow developers to connect with the financial system on the other end to push and pull invoice data securely and in real time.
Technical functionality and data flow
The core invoicing API workflow usually follows this sequence:
- Data input: A front-end system (like a CRM or e-commerce platform) captures invoice data, such as customer info, line items, tax rates, and due dates, and sends it to the API via a structured request.
- API request: This data is transmitted as a JSON or XML payload in an HTTP request (commonly POST for creation, GET for retrieval, PUT/PATCH for updates, DELETE for removals).
- Processing and validation: The API receives the request, validates the data (e.g., checking for required fields or correct formats), and passes it to the backend invoice engine or accounting system.
- Response and sync: Once processed, the API returns a response, such as a unique invoice ID, status confirmation, or error message. This response can be used to update UI displays or trigger follow-up workflows like email notifications or payment tracking.
Invoice APIs rely on a few important protocols and standards, allowing various systems and platforms to communicate easily and accurately. These include:
- RESTful architecture using HTTP methods (GET, POST, PUT, DELETE)
- JSON as the primary data format due to its readability and wide support
- OAuth 2.0 for secure, token-based authentication and authorization
- Webhooks to notify systems of real-time events like invoice status changes
Some enterprise APIs may also support SOAP or GraphQL, depending on the system’s complexity and legacy requirements.
Why use invoice APIs?
Invoice APIs are widely adopted across a range of industries. Wherever speed, accuracy, and automated billing are essential, you’ll find invoicing APIs used.
Common industries that benefit from using an invoice API include:
E-commerce brands and marketplaces
These companies automate invoicing for every order placed, send payment status updates in real-time, and sync data across accounting tools using invoice APIs.
For example, a retail marketplace might use an API to bulk-generate invoices for thousands of vendors daily and deliver them through a branded customer portal.
Logistics and transportation
Businesses in these industries generate and dispatch invoices upon shipment or delivery confirmation, tying billing directly to operational events.
Professional services
Firms in consulting, marketing, or legal services use invoice APIs to generate invoices directly from timesheets or project milestones.
For instance, a consulting agency could integrate its time-tracking software with an invoice API to turn approved timesheets into ready-to-send invoices with one click.
Healthcare and insurance
These companies can simplify invoicing for repeat services, co-payments, and claims by integrating APIs with patient management systems.
SaaS and subscription businesses
These companies automatically issue invoices based on billing cycles or usage data, using invoice APIs to minimize billing errors and improve cash flow visibility.
For example, a SaaS company may connect its subscription management tool to an invoice API to automatically generate and send invoices when a customer upgrades their plan.
Benefits of using an invoice API
Using an invoice API unlocks a number of important operational and financial benefits.
By automating how your business manages billing and receivables, it shifts invoicing from an error-prone manual task to an automated process that is faster, much more accurate, and easier to scale as your business grows.
These are the benefits your company could see from leveraging invoice APIs.
Time saved
Invoice APIs eliminate a lot of manual data entry and repetitive admin work. Business can:
- Automatically create and send invoices as part of existing workflows
- Trigger invoices based on key actions (e.g., order placed, milestone reached, usage threshold hit)
- Sync invoice data across platforms, saving time during reconciliation, audits, and month-end close
This means AR teams spend less time each month on manual processes and have more resources available for strategic efforts like process reviews or chasing down late payers.
Improved accuracy
AR teams are made up of humans, and as strong as our processes may be, humans make mistakes.
When invoicing is managed manually, mistakes happen, from incorrect amounts and missing fields to invoices simply being sent late, harming cash flow.
With an AI-driven system, data is pulled directly from source systems, reducing the chance of a typo or omission.
You can also use validation rules to catch errors before invoices are sent, and maintain consistency across formats, line items, and customer records, making bookkeeping and auditing easier.
Improve cash flow management
By speeding up invoice generation and delivery, invoice APIs help businesses get paid faster.
They give you strong visibility into receivables, and enable real-time updates on:
- Sent and viewed status
- Payment confirmations
- Overdue reminders or dunning triggers
This allows finance teams to act quickly on delays, forecast incoming payments more accurately, and maintain healthier cash flow.
Integrations with invoice API
Invoice APIs allow real-time data exchange between your invoicing system and key platforms such as:
- Accounting software (like QuickBooks, Netsuite, and Xero): You can automatically push invoice records, update payment statuses, and reconcile transactions without manual entry.
- ERP systems (like SAP, Oracle, and Microsoft Dynamics): You can sync invoices with procurement, project costing, and financial reporting modules to ensure accurate records across departments.
- CRMs and customer data platforms (like Salesforce and HubSpot): You can trigger invoice creation based on closed deals and display billing history directly in the customer record.
- Payment gateways (like Stripe, PayPal, and Square): You can link invoices to payment processors to enable faster collection and real-time payment updates.
- Expense and procurement platforms : You can align invoicing with purchase orders, approvals, and budgets to ensure spending is tracked and compliant.
Integration processes
The exact process you’ll need to follow to integrate an invoice API with your existing systems depends both on the API in question and the platforms you wish to connect with.
For many widely used solutions, a direct integration is available. For example, if you’re using BILL as your financial operations platform, you’ll be able to easily sync with accounting tools like Xero.
In other cases, you’ll need to directly connect the API offered by the invoicing platform to another tool. For instance, BILL offers an API that developers can use to integrate payments, real-time data, and spend management information into customer internal tools.
Your third option is to use a middleware platform like Zapier or Workato for more complex workflows or where direct APIs are unavailable.
BILL’s invoice API
Want to connect BILL with your existing financial tech stack?
Our APIs support:
- Accounts payable tasks like retrieving vendor invoices, initiating approval workflows, and scheduling payments
- Accounts receivable tasks like generating customer invoices, tracking invoice statuses, and connecting to payment methods like ACH
- Webhook support for invoice updates
