Your business’s accounting and financial security can only be as strong as the systems you use to protect its most sensitive data.
Estimated reading time: 6 minutes
You wouldn’t leave your office unlocked at night or use business computers without the appropriate antivirus software installed for obvious reasons. Your business and its assets need to be closely protected, and this goes for your accounting practices too.
Online hacks and cybercriminal data breaches are becoming more and more commonplace as businesses shift their operations into the digital space. Many businesses are wary of using cloud-based accounting tools and programs because of this. But you can rest assured that trusted cloud-based accounting services are just as secure, if not more so, than other traditional options.
Let’s delve into the benefits of cloud accounting and why you and your business should make the switch.
Understanding the Security Behind Cloud Accounting
On-premise computers like the ones in your office are never completely safe. Even your own personal computer is prone to data breaches, which does not make it an ideal place to store valuable business-related information. This is especially true if you aren’t in the habit of regularly making external backups of your data.
There are two main issues associated with local storage methods:
- Local storage lacks redundancy. Data stored on a single PC or computer network is vulnerable to a wide range of threats, from viruses and Trojans, to physical damage, like an employee spilling coffee on their work computer. If you use a work laptop instead of a PC, you risk having your device and the accounting data on it stolen or destroyed. In these cases, it can be exceptionally difficult, if not altogether impossible, to recover the data you’ve lost.
- Local security has a number of weaknesses. Data stored on your computer is prone to attack by ransomware and viruses. And, the less knowledge you have of proper IT practices, the higher your risk of these attacks will be. If you are solely responsible for your company computer’s security, this means that the PC is not particularly secure at all, unless you are an IT security expert. Over and above these data security risks, your computer and the data on it can be physically stolen and forever lost unless you have securely backed up your accounting information.
These are two issues that you need to take seriously or mitigate altogether. Luckily, you can solve both of them at the same time by moving your accounting into the cloud. Any trustworthy cloud accounting vendor will provide extensive backup services and store your backed-up data in multiple locations for added security and peace of mind.
This protects your company’s financial data against floods, hurricanes, fires, burglaries and other potentially devastating scenarios. Many service providers have gone the extra mile to protect your information against natural disasters by storing your data in geographically diverse and highly protected server facilities.
Cloud accounting services utilize top-class security to safeguard and protect your financial information. Most data centers have 24/7 on-site security and the strictest digital access controls available, which minimizes the chances of expensive and catastrophic data breaches.
How Cloud Accounting Works
‘The cloud’ is a collection of secure servers based in remote and heavily protected locations. Every cloud-based accounting company operates their own cloud, providing users with an alternative to local data storage that offers many security-related benefits.
Most cloud options are based on similar systems, but there are also many differences between them. Some clouds handle mathematical equations and calculations rapidly, while others are flexible in their applications. Others still store vast amounts of information, which is useful for larger businesses who have many gigabytes or terabytes of data to store.
Cloud accounting security varies from company to company. Some service providers give you the opportunity to encrypt data on servers and while it is being transmitted. Others combine these options to provide each of their clients with a custom security approach depending on their specific needs and the nature of the data they need to store. Some services even allow you to selectively grant individuals access to data on the cloud by generating digital keys.
Should You Make the Move?
There are a few things to consider before you switch your business’s accounting to the cloud. Before you move anything into cloud-based storage, assess your cloud provider’s policies and security protocols to ensure that they align with your company’s needs.
There are a few risks of transitioning to cloud accounting that you should be aware of. These are:
- Sluggish system speeds and reduced access to data. Some cloud accounting systems that aren’t worth their salt can take minutes to load, and may even lead you to believe that your data is not saved as you work. You can maximize productivity by trying out cloud systems before you buy one, and only choosing trusted, well-established service providers for your accounting needs.
- The possibility of being hacked. Even the largest cloud accounting companies can fall prey to cyber criminals if their security systems are not in line with the latest industry standards. You should only choose to work with companies that have consistently good reputations in cloud accounting and implement the newest and most effective security measures to keep your data safe.
- You may need to relinquish some control over your accounting data. Depending on how your information is encrypted and stored, you might be granting other parties access to it when storing it on the cloud. If a third party, such as a government or a lawyer, were to request access to your data, your service provider may be obligated by law to hand it over, whether or not you consent to this.
It’s possible to address and mitigate some of the risks, at least to a degree. You can search for encryption options that give you maximum control over who can view your company’s data and choose vendors that prioritize their customers and respect their privacy. Always test a cloud accounting system before making a purchase if you can.
Your accounting data is exceptionally valuable to your business, and you must safeguard it at all costs. It’s up to you to decide where you store it and who is entitled to handle it. If you are overseeing company-wide data, you will have even more pressure on you to keep this information safe and avoid costly security breaches. It’s vital that you choose a cloud service provider that can handle your data correctly.
Make The Move That Works For You
If you’re considering moving to cloud-based accounting software, we recommend taking the time to understand how cloud services work and how the move could impact your business in the future. Security should always be your number one priority, but you will need to consider aspects like the speed of your service and the amount of control over your data it grants to third parties.
You should also implement some best practices for keeping your data safe on the cloud if you choose a cloud-based accounting option. Define your user permissions, change your passwords regularly, and keep an eye out for suspicious and potentially fraudulent activities. If you or your employees encounter any red flags, the sooner you alert your service provider, the better your chances of being able to protect your information against threats.
Last Updated on May 15, 2021.