API in Treasury: definition and advantages for your business

API in Treasury

Last modified on May 24th, 2024

APIs are omnipresent today: we use them without knowing to pay with our phones through a digital wallet, check our bank accounts in one app, and reconcile payments easily. The rise of API in treasury and banking APIs has allowed faster and smoother payments, benefiting both consumers and businesses. Keep reading to learn how APIs work and their advantages for businesses.

Trustpair offers an API to connect to business tools and prevent vendor fraud through ongoing account validation. It’s one of the many advantages of APIs in treasury. Request a demo to learn more!

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What does API stand for?

API stands for Application Programming Interface. Put simply, it’s a program created by one application so others can connect with it.

Let’s take a closer look:

  • Application relates to the software used.
  • Programming is what’s done by developers to make the application connect.
  • Interface is the connection between two or more applications (software).

For example, Stripe connects with many software solutions to offer their users a streamlined experience with personalized features.

In brief, API is what enables software applications to exchange information automatically. It’s useful for payments — and we’ll see examples of API in treasury later — but also for various B2B and B2C industries.

We use API to:

  • Connect to websites using Facebook, Google, or X.
  • Book trips through travel platforms, which use API to aggregate flights.
  • Stream services on Spotify, Netflix, and the like.
  • Track packages and keep a note of products in the retail industry.
  • Accept multi-currency payments through Stripe or PayPal.
  • Improve your Customer Relationship Management through Salesforce.
  • Keep an eye on your cash flow and fiscal requirements through TMS.
    And many more!

While they’re relatively recent, APIs are now omnipresent in our daily lives. Using this system makes digital communications safer and more efficient.

Even the United States government works with APIs, providing a library of open-source apps to deliver standardized financial data to the public. Numbers are all in the same format, making it easier to aggregate and use in various systems across the country.

 

How does an API work?

APIs are created by one organization so other organizations can connect to it automatically, regardless of their country, time zone, or processes.

This means endless possibilities of data-sharing for software applications that work with APIs — and most do nowadays.

Kyriba and Stripe are good examples of software that have thrived with APIs, offering streamlined features as primary endpoints.

Concretely, here is how an API works:

Step 1 Step 2 Step 3 Step 4 Step 5
A user using the app (A) sends a request 

Eg: logs in to their bank account

The request is sent to the API. The API sends a query to the database (app B) The database from the app (B) sends a response back to the API. 

Eg: the data with the latest financial info 

The API sends back the answer to the user through the app (A) 

Eg: displays the data on the user’s dashboard

All the users will be aware of is that:

  • They log in to their account (step 1)
  • They automatically see their financial data on their app’s dashboard (step 5).

That’s because the rest of the steps are automated and taken care of by the API. Because it’s so quick, the delay in carrying out the action and displaying the data in return is null.

And that’s why API in treasury works so well! It allows users to access their financial data and take action seamlessly and in real time.

 

What are the advantages of APIs in treasury?

Today, many financial software services use APIs to offer a seamless experience to their users. It makes treasurers’s lives easier, so they can focus on the real challenges of treasury management!

The benefits APIs treasury include:

Access to real time data

Through APIs, data can be exchanged in real time across a country (or countries!). While information exchange used to require manual or scheduled action, APIs have made information sharing instantaneous and without intervention.

This is made easier with the decline of cash and the rise of electronic payment, as this type of payment can be tracked more effectively.

For example, treasury reporting rates can be accessed in real-time through TMS such as Oracle or Kyriba, which work with the US government’s (or another country’s) public data.

Real time visibility means real time treasury. Through real time connectivity, treasurers have access to:

  • Real time valuation, reporting rates exchange, and trading data.
  • Updates on their banking transactions so they can track their cash flows at a glance, without needing to log in to their individual bank accounts.

The purpose of treasury department is to manage the company’s working capital as efficiently as possible, and APIs can be leveraged to achieve this by providing treasury reporting rates and other parameters in real time.

It’s also easier to share this data, using secure URL and dashboards to send it to relevant stakeholders. API in treasury offers professionals the most relevant data, so they can make the best decisions for the organization.

Consult one source of truth

Because all the data is constantly up-to-date, treasurers have access to the right information. With APIs, there is no need to switch between different applications, email with confusing objects, and spreadsheets: it’s all there, and it’s all up-to-date.

Gone is the very heavy, complex but static Excel that no one can keep up to date. Having a centralized hub where all the information is gathered and updated in real time is a game changer for treasury financial professionals.

That’s why solutions like Kyriba and Trustpair are on the rise: using them saves time and means corporate treasurers can focus on their responsibilities efficiently.

Establish safer data exchange

For them to work, API connections need to be secure — that’s especially true when it comes to API in treasury.

Depending on the exact security needs, there are different types of APIs (public or private), meaning only a certain amount of data can be accessed in a certain way.

One of the advantages of APIs is their robustness: they present fewer vulnerabilities than traditional file exchanges for example.

APIs have to comply with strict security guidelines internationally, similar to the security protocols used for all Internet communications. In the EU, APIs fall under the PSD2 regulations: they must meet specific criteria.

This guarantees adoption by companies (ie makes IT departments happy) while ensuring a smooth and safe exchange of information for treasurers and beyond.

Get ready for the future

API in treasury (and in other industries) is here to stay. It’s one of the core innovations in Treasury, which develops more every day. It is what’s made open banking possible, and software services connect without human intervention.

Thanks to API, organizations can create the Treasury Management System they need for their day-to-day operations and growth. This open ecosystem makes every compatible app a plug-and-play service that will easily connect with the rest of the puzzle.

In short, APIs are indispensable for treasury finance, making sure your business will be future-ready.

 

What are examples of APIs treasury management?

Here are a few examples of APIs treasury:

Payments

Some software services can help you centralize your payment system using APIs.

Modern Treasury for example is a platform that will congregate your payment methods into one easy-to-use hub. With it, you can:

  • Centralize your various payment methods, like FedNow, instant payment methods, and wire transfers.
  • Accept and send payments in various currencies.
  • Access all your bank connected accounts (regular, virtual, FBO, money market funds, etc.).

While this is connected to many services, you can access all this data in real-time through one platform.

Accounting

Today, the majority of accounting software has an API: it connects with your business bank accounts and automatically recognizes your transactions.

Some even use machine learning to do real time reconciliation, freeing up your accountants’ time. This is one of the many applications of AI in treasury.

Sage, NetSuite, and Quickbooks Online all have a library of APIs at their users’ disposal, so they can tailor their technology to their exact needs.

Accounting software can also link up with your payment processor (like Stripe or PayPal), your fiscal service software, or your stock inventory software.

Anti-fraud

Anti-fraud software connects with your payment processor and other treasury applications to ensure you don’t fall victim to financial fraud.

In 2023, 96% of US businesses were targeted by at least one fraud attempt. With fraud on the rise, ensuring your payment chain is secure is more important than ever.

Anti-fraud software like Trustpair helps you secure your B2B payments automatically. We connect with your already-existing software using an API to protect your payment chain from end to end.

Trustpair secures your third-party transactions by using ongoing account validation. If our software detects any suspicious activity, the payment is blocked before being sent — preventing the risk of financial fraud.

Learn more about the future of Treasury in our dedicated white paper!

future of treasury in the digital age white paper

Key Takeaways:

APIs are what make software connect together to provide users with a seamless and secure experience. In Treasury, that means your accounting, financial, and anti-fraud software exchange information in real time, making treasurers’ jobs more efficient. Use Trustpair to optimize and secure your B2B payments to your suppliers.

FAQ

API stands for Application Programming Interface. It’s the technology that makes different software services (or apps) communicate together in real time. It’s useful for businesses to have all their apps synchronizing and displaying data instantaneously and securely.

API in Treasury and finance is about providing a seamless and secure experience over financial apps. It’s what makes open banking possible, with treasury software linking in with financial dashboards, your financial accounts, your accounting and CRM software… It’s widely used now and developing more every day.

Manage the risks related to corporate treasury.

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