When it comes to accounting software, the allure of integration is tempting. With so many platforms offering integration solutions that promise to streamline processes and enhance efficiency, it’s easy to think that more is always better.
Unfortunately, that’s not always the case. Integrations can inadvertently create significant problems with your accounting system, leading to “financial horror stories” that no company ever wants to deal with. Imagine your new “AI-based” integration writing over hundreds of records in your system, all of which have to be manually rewritten. That’s just one example—but the challenges of integrations are more common than you may think.
At Compass East, we’ve seen firsthand the problems that software integrations can create—and we know how much of a headache it can be for a company to untangle those issues. That’s why we take a more discerning approach to accounting software integration. As a company that provides tech-enabled financial solutions, we are strong advocates for using technology to optimize business operations. But we also believe that technology should serve its intended purpose—not complicate matters further.
While integrations can be beneficial, they can also be risky. Data can become entangled, systems can become overly complex, and the initial promise of simplicity can quickly become a headache.
That’s why sometimes, it’s better to keep your accounting software “on an island,” free from unnecessary connections that might do more harm than good.
Accounting Software Integration Expectations vs. Reality
Adding integrations to accounting software, such as QuickBooks, Xero, or NetSuite, is often marketed as the ultimate solution for businesses looking to streamline operations. The promise of automation is the big selling point—saving time, increasing efficiency, and simplifying complex processes.
With integrations, critical tasks are ostensibly done for you. The assumption is that financial and non-financial information will seamlessly pull in from various sources, giving you a consistent, accurate, comprehensive view of all the data you could possibly need at your fingertips.
But reality often falls short of these promises. Instead of consistent, accurate data, businesses frequently encounter mismatches between systems. Reporting from one system may not align with your accounting software, leading to discrepancies that require time-consuming reconciliations.
Rather than focusing on your core accounting functions, you’re forced to become a software expert, navigating the intricacies of how different technologies interact rather than managing your financial information.
Data Integrity Considerations
When considering whether to integrate accounting software with other systems, data integrity is a critical factor. Many assume that once an integration is set up, everything will work flawlessly, with data flowing smoothly and accurately between systems. But there are some challenges that often arise during this process:
The systems don’t speak the same language: When two systems are integrated, they often don’t handle data in the same way, or “speak the same language.” For example, the accounting software might expect data in a specific format that the other platform doesn’t provide. To make the data usable, it needs to be standardized so the accounting software can process it correctly. Although this process is often described as automated, manual intervention is typically required to reconcile the differences and ensure the systems can communicate and share data properly.
Garbage in, garbage out: Another major concern is the quality of the data itself. If the information in your other systems isn’t accurate to begin with, integrating it into your accounting software only compounds the problem. Poor-quality data will lead to flawed and unreliable outputs, so it’s critical to have a strong data validation process in place before integration. Data that can’t be fully verified and kept “squeaky clean” shouldn’t be incorporated into your accounting software.
Non-essential information can clutter the accounting system: Integrating non-essential information can clutter your accounting system. For instance, bringing in excessive data from platforms like Shopify—such as every single transaction—can overwhelm your accounting software, making it harder to manage the core financial information that truly matters. Instead of enhancing efficiency, these unnecessary data points can bog down the system, leading to more complexity rather than clarity.
Minimize integrations for better data integrity
So, how do you maintain data integrity? By keeping software integrations for your accounting system to a minimum. Create a structured process to selectively bring information into the accounting system under careful review and control. Instead of relying on automation, use a more manual approach to bring in only the most relevant data. While this option may seem less efficient, it actually promotes more human oversight. Opting not to integrate doesn’t mean losing access to key data; instead, it helps you implement safeguards to ensure that only accurate, essential information enters your accounting system.
Accounting as the “source of truth”
And you want that accounting system to be under lock and key. By keeping the accounting system as the “source of truth” and integrating it minimally with other systems, you reduce the risk of errors and ensure that financial records remain reliable.
Accounting departments inherently focus on maintaining data accuracy and compliance through robust checks and balances. Other departments, such as operations or sales, may not prioritize these factors as strictly.
For example, suppose you own a dermatology clinic that also sells aesthetic products. You use an inventory management system to track your products, but the record-keeping might not be rigorous or fully up-to-date in real time. If that system feeds into your accounting software, it might be providing inaccurate information—which is then used to generate inaccurate reporting, and inaccurate forecasting—leading to making inaccurate decisions.
The same principle applies in service-based businesses. Automating a task such as generating invoices via integration with time-tracking software may seem appealing. But time-tracking data is rarely perfect. Inaccuracies, such as missing or incorrect entries, can lead to underbilling or overcharging. Without careful review, these errors could cascade, creating significant problems. To maintain the accounting system’s role as the “source of truth,” it’s essential to manually review time logs before invoicing.
When to Integrate—and When Not To Integrate
So, how do you know when to integrate and when not to? At Compass East, we’ve found that the key is to focus on integrations that are owned by the accounting function and provide clear, relevant value.
When to integrate
Integration is a viable option when the incoming data is tightly controlled and fully compatible with the accounting system.
Payroll integrations generally prove to be effective when set up correctly. Platforms like Gusto, Justworks, and BILL integrate seamlessly with accounting systems because they are owned by the accounting department and are directly related to key financial processes such as payroll and accounts payable/receivable (AP/AR).
Beyond payroll, financial reporting systems, Fathom and Jirav, can also integrate effectively, although data typically flows out from the accounting system rather than into it.
When not to integrate
It’s important to recognize the scenarios where integration might do more harm than good. CRM platforms, inventory management software, and point-of-sale (POS) systems are common examples of integrations to avoid—or, at a minimum, be cautious of the review process and reconciliations associated with integrating these tools.
Here are some red flags to watch out for:
Cross-departmental integrations: Anytime an integration involves another department, the potential for problems is high. The person managing the integration may not fully understand the ramifications of pushing data into the accounting system, which can lead to errors and complications.
Questionable data: Avoid integrating data that is not directly relevant to accounting, is of questionable quality, or is difficult to sync with your accounting system. Additionally, if the data volume is high, it can bog down the system and be more overwhelming than useful.
Critical dependencies: If a broken integration would prevent you from running your business, that’s a major red flag. Relying too heavily on an integration for essential operations can be risky. If the integration fails, it could disrupt your entire workflow, leaving you unable to manage essential business functions.
The Importance of Ongoing Maintenance and Monitoring
Once an integration is in place, the work doesn’t stop there. Ongoing maintenance and monitoring are crucial to ensure the integration continues functioning as expected. Having a robust process in place for regular checks is vital.
Plan to validate and verify the data being processed each time the integration runs. Even with a well-implemented integration, there’s always a chance that something changes—whether due to software updates, adjustments in data structure, or other unforeseen factors. Schedule a comprehensive monthly review to catch any issues that may have gone undetected.
To further safeguard your system, get in the habit of locking your books after you have closed them each month. This practice will flag any integrations attempting to post data that shouldn’t be there, preventing unauthorized or erroneous entries from affecting your financial records.
The Future of Accounting Software Integration
As technology evolves, choosing which systems to integrate and how to do it will become increasingly important. With the advancement of no-code and low-code platforms, businesses will have more flexibility to create their own accounting software integrations. However, all the current considerations—like data integrity and the need for human oversight—will still apply.
Despite the promise of automation, there will always be a need for accounting experts to verify and maintain data accuracy.
Is Integration Really Saving You Time?
At the end of the day, the goal of accounting software integration should be to save time and improve efficiency, but the reality is often much different. There’s no true time savings with poorly managed or unnecessary integrations. As advocates for automation and efficiency, Compass East believes technology should simplify processes, not complicate them.
Think about it this way: A 30-minute structured data entry each month, where you have full control over the information being transferred, is far more manageable than a three-hour software troubleshooting session at an inopportune time.
The latter scenario is exactly what we want our clients to avoid.
If you’re looking to optimize your accounting processes while maintaining data integrity, Compass East is here to help. Contact us today to schedule a free consultation.