9 Feb, 2024
This article explores the benefits of cloud accounting software, how data security works with these platforms, and why running financial systems in the cloud now matches or exceeds on-premises security capabilities for many small businesses.
Cloud accounting software has become an increasingly popular option for small business owners looking to streamline their accounting and access their financial data anytime, anywhere. However, some wonder whether using the cloud for sensitive business data is truly safe and secure. This article will explore the benefits of cloud accounting software, how data security works with these web-based platforms, and why cloud accounting can take your business accounting to the next level while keeping your data safe?
For small business owners and accounting teams, cloud accounting software offers some clear advantages over traditional, self-hosted accounting platforms. Cloud-based solutions give you and your team mobile access to your data from any device and location. They also provide automatic updates and backups of your data to external servers operated by your software provider. This protects you in case of computer crashes, natural disasters, or other crises that could cause data loss.
Additionally, cloud accounting systems scale with your business growth. As you add more customers, vendors, inventory, and transactions, the software flexibly expands to handle the increased workloads. Upgrade fees are minimal compared to purchasing new self-hosted accounting software licenses and servers. For these reasons, 63% of small business owners are projected to spend over $100 million on cloud apps in 2023.
Discover why data security shouldn't be an obstacle to making a switch. Don't let the fear of data breaches hold you back from exploring new opportunities. With the right measures in place, you can safely and confidently make your move. It's useful to highlight a few differences between cloud-based and self-hosted accounting software:
Self-Hosted
Cloud-Based
For resource-constrained small businesses, trying to handle all hardware, software, security, backup, and update processes can become an unwieldy burden, especially as the company grows. Cloud solutions effectively outsource the bulk of this IT responsibility to specialized platform providers who can do it better and for less total cost.
Data security is often a top concern for business owners considering switching to the cloud. However, modern cloud accounting platforms employ advanced security measures to keep your data safe. Leading solutions use high-grade encryption both at rest and in transit to prevent unauthorized access. Software providers also utilize strict, layered access controls over who can view and alter your financial records.
Moreover, web-based accounting systems benefit from the security resources of large cloud providers like Amazon Web Services, Microsoft Azure, and Google Cloud. These computing infrastructure giants invest billions in cutting-edge cloud security tools and teams of experts monitoring threats 24/7. Essentially, your data inherits these enterprise-level defenses by riding on their cloud networks.
For these reasons, research shows sensitive data is often safer in the cloud versus self-hosted servers, especially for small businesses lacking robust IT security teams and measures. Cloud accounting providers also handle backups, disaster recovery, infrastructure maintenance, and software upgrades for you, reducing the security risks of managing servers in-house.
Concerns around disaster recovery and business continuity are driving many accounting teams to adopt cloud-based financial systems. The experiences of companies who have lived through catastrophic data loss spotlight why having critical accounting data and applications in the cloud protects operations:
These real-world experiences spotlight that, however rigorous on-prem security may be, it is vulnerable to simple user errors, floods, fires, theft, hacks, and more. Cloud platforms offer redundancy, automated backup processes, quick failover capacity, and geographic diversity. Desktop software just cannot match cost-effectively.
When evaluating cloud accounting platforms, ask vendors key questions about their security standards and protocols:
1. How is data encrypted? Look for 256-bit AES encryption or better in transit and at rest. Data should be unreadable without encryption keys if accessed without authorization.
2. What employee access controls are in place? Software companies should enforce strict permission levels and multifactor authentication for engineers to access your data. Audit logs should record access.
3. How are backups performed? Reputable software vendors will continuously back up your data to geographically separate data centers to prevent loss.
4. What disaster recovery provisions exist? Ask how quickly data can be restored from backups and what redundancy exists across data centers in case of outages.
5. Who provides the cloud infrastructure? Understanding which major cloud provider houses the accounting platform offers insight into security standards inherited.
6. How is security updated? Cloud accounting vendors should be continuously monitoring threats, updating to address vulnerabilities, enforcing data access rules, integrating new protocols like MFA, and more. Ask for specifics.
7. How is third-party access managed? If integrating with banks, payroll processors, sales channels, or other external services, strict APIs and data-sharing protocols should be outlined.
8. What compliance standards are followed? SOLC2, SOC3, ISO 27001, and PCI compliance signal security processes governing financial data are met.
As you evaluate options, prioritize vendors that have invested in SOC 2 certification. SOC 2 attests an independent auditor has validated security, availability, confidentiality, and processing integrity controls are in place around handling customer data in the cloud.
Beyond trusting an individual software vendor's security claims, the cloud model itself empowers businesses to protect critical financial data better than on desktops or local networks:
Cloud accounting software uses encryption techniques like TLS, SSL, HTTPS, and AES to secure data transfers and information at rest. Self-hosted software relies more on unencrypted protocols.
Cloud platforms allow remote access from any device, enabling oversight of financials when traveling or working from home. Adding off-site access layers data protection.
Cloud providers quickly deploy updates, patches, filters, and measures against malware, viruses, and ransomware attacks trying to seize local machines and servers.
Cloud accounting platforms provide constant backups to prevent data loss from user errors or hardware failures. Easy point-in-time restores undo unwanted changes or data corruption.
Cloud accounting software deployment allows instant updates to be activated per user instead of IT-coordinated efforts to manually patch standalone machines. Updates address vulnerabilities.
Cloud platforms mitigate insider threats, as employees cannot as easily walk off with data on hard drives or inadvertently delete records. All activity logged.
Cloud administrators can enforce layered access permissions, temporary privileged credentials, and multifactor authentication across users far better than desktop tools.
Cloud accounting provides high availability across globally distributed data centers. On-premises software means a full outage if headquarters power or servers are disrupted.
For these technology and process control reasons, analysts widely recognize running financing systems in the cloud has now matched or outpaced on-premises security capabilities for many businesses.
While data shows that generic cloud hosting provides inherent security advantages over local servers, you still want confidence in your particular accounting platform. So, which solution ranks as today's top cloud accounting software?
Based on analyst reviews and leading surveys of small business owners, Jaz stands above competitors for capabilities, ease of use, mobility, and security standards. JAZ leverages Amazon Web Services' cloud infrastructure, inheriting world-class physical and network security. On the software side, Jaz employs end-to-end encryption, role-based access restrictions, expert monitoring teams, and data recovery provisions.
On top of these technical controls, Jaz has robust accounting tools like Tax Profiles, Chart of Accounts, Double-entry Bookkeeping and 60+ other add-ons to simplify managing accounting. The platform scales from 1 to unlimited users, making it suitable for even fast-growing businesses.
Jaz empowers entrepreneurs to securely manage accounting from anywhere while leveraging the most trusted name in small business financial software.
Deciding between the various major cloud accounting platforms comes down to a few key factors - features, ease of use, mobility, integrations, and security. Here's a quick comparison of the top solutions:
Evaluating the detailed security specifics for your shortlist of accounting software vendors takes a little legwork by speaking with sales teams and sifting through documentation. And platforms continue advancing their monthly security feature sets. But in broad strokes, all major cloud accounting providers meet rigorous standards - especially on-premises tools.
By leveraging a top cloud accounting solution like Jaz, small businesses can safely migrate their financial data management to the cloud, collaborate across teams, avoid data loss, scale up security protocols, and access reports easily without compromising security. Cloud adoption continues to accelerate specifically because platform protections now match or exceed on-premises alternatives. So, small business owners can confidently turn to trusted cloud accounting systems to take their financial oversight and decision-making to the next level.
Integrating seamlessly with popular bank feeds, payment processors, and other everyday business tools, Jaz centralizes all your key financial data for real-time reporting and insights. Built-in automation plus customizable workflows remove administrative headaches so you can focus on profitability.
Jaz is the all-in-one accounting solution built to simplify and automate your most complex accounting tasks like invoices, bills, bank reconciliations, payments, and more so you can get back to growing your business or serving more clients.
Get Started for free and take control of your financial operations with Jaz.
Cloud accounting software is a type of accounting system that is hosted on remote servers and accessed through the internet. It allows users to access their financial data and perform accounting tasks from any location with internet connectivity.
In many cases, cloud accounting software offers better security features and data protection compared to traditional accounting software. With regular updates and strong encryption protocols, cloud accounting software is designed to provide a safe environment for managing financial information.
Yes, reputable cloud accounting software providers implement access controls, encryption, and regular security updates to protect access to sensitive financial data. These measures help in preventing unauthorized access and maintaining the integrity of the data.
Yes, most cloud accounting software allows for easy migration of existing financial data from traditional accounting systems. This process is typically facilitated through data import features and conversion tools provided by the cloud accounting software.
When selecting a cloud accounting software, it's important to consider factors such as data security features, ease of use, scalability, integration with other business systems, and the reputation of the provider in safeguarding financial data.
