Accounting technology / Glossary / Model Context Protocol (MCP)

What is the Model Context Protocol (MCP)?

Definition

The Model Context Protocol (MCP) is an open standard for connecting AI assistants to other software and data. A system publishes an MCP server describing what an assistant may read or do, such as listing unpaid invoices or running a report, and compatible assistants use it within the permissions the user grants. Anthropic introduced it in November 2024.

Also calledMCPMCP server

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Type: Open standard
Introduced: November 2024
Connects: AI assistants to business software

How the Model Context Protocol works

Before MCP, each AI tool needed its own integration with each system. With MCP, the system builds one server that exposes tools, such as fetching contacts, creating a draft invoice or pulling a profit and loss report, and any assistant that supports the protocol can use them. The user connects the assistant to the system through the system's normal sign-in and permissions, and the assistant calls the tools when a request needs them. For finance teams the questions are the same as for any integration: what the server can read and change, whether write actions need approval, how access is revoked and what is logged. Xero and QuickBooks publish MCP servers for their accounting data, and NetSuite offers an AI connector service built on MCP.

Common questions

What is an MCP server?+

A connector that a software product publishes so AI assistants can use its data and actions through the Model Context Protocol, within the permissions the user grants.

How is MCP different from an API?+

An MCP server usually sits on top of a product's API. The API is built for developers to program against; MCP describes the same capabilities in a form an AI assistant can discover and call.

Is it safe to connect an accounting system to an AI assistant through MCP?+

It depends on the permissions granted. Read-only access is lower risk; for actions that change records, require approval, limit scopes and review the activity log.