This post was most recently updated on November 15th, 2022
Many businesses and accounting teams are moving towards accounting software and its cloud-based approach to storing and sharing data. Research suggests that 88% of the SMEs surveyed are strictly demanding or looking to move towards cloud-based solutions. This shows that the shift towards accounting software is here to stay and will not slow down soon. However, there are some doubts and myths about accounting software and how they work.
While we won’t be busting myths here, we understand that most of these myths arise from a place of lack of knowledge. In this article, let’s properly understand accounting software and the technology that powers it to be the tool. We will also look at the various data security measures and technologies that accounting software employs to keep your financial data safe.
But before that, let’s understand what the cloud is. Where is the data stored?
All of your data is stored in the ‘cloud.’ However it may sound, it does not mean a physical space in the sky. Cloud is a term that refers to a collection of various physical servers that are stored in different locations. That is where the data is stored, and the storage mechanism follows utmost data security standards. Further, this allows your data to be distributed and not centered and keeps it from being damaged if something happens to the data source. Since there are multiple servers and frequent backups in play, this problem is completely solved.
So, ‘the cloud’ is essentially a term that refers to services and software that run on the Internet and not on a centralized server or device. These can be accessed through internet browsers or other applications. You have probably already used Google Drive, Netflix, Amazon Prime, and so on – all of these use cloud storage to bring you the files you require. Cloud accounting, too, works in the same way as accounting software. It stores your data in remote servers and provides you with a dashboard to access it seamlessly.
Now, let’s look at some security measures that are provided along with cloud storage in order to ensure no vulnerabilities with the financial data.
- Natural Event Protection: Storing financial data on the cloud instead of physically provides it security from all sorts of natural mishaps. Your data is automatically backed up in a timely manner to ensure there is no theft or damage of the data.
- External Threat Protection: Cloud-based storing mechanisms come with solid protection against hackers trying to get into your financial information. Accounting software uses security APIs that give your data the all-around protection that it requires and ensure no theft or data breach.
- Internal Threat Protection: This is about ensuring the data is safe from any possible internal threats. This is made possible by using role-based access mechanisms, two-factor authentication, user hierarchies, and other strategies to keep things in place and safe. Depending on your requirements, you can also explore deeper and more in-depth cybersecurity measures that can be applied to your cloud data.
Apart from that, accounting software has some underlying features that ensure the utmost security of your business data. Let’s look at those features.
Here are some features that accounting software inherently comes with and which are designed to keep your data safe and provide you with all the security measures.
This is a way to give another layer of authentication in order to let someone login. This can also be applied to specific tasks or user actions to ensure safety – like approving expenses, confirming billing, etc. Two-factor authentication adds another safety layer that is needed to keep things secure.
With accounting software, not everybody has access to all the data, and it is up to the owner of the software to decide on which people to share access with. Further, this access can be shared in a role-based manner. What that means is that people with access will only be able to do what their role allows them to do. This is also an important step to ensure safety from possible internal threats.
You can set up checks and approvals at different stages. That way, if a specific action is being performed, it will raise a confirmation alert to you before performing the task. This way, the final power of approval will be in your hand and not in the hand of the person who intends to take that action. This is an important step towards ensuring the holistic security of all operations.
User hierarchy is important to understand who reports to whom. That way, everybody is answerable, which keeps them in a position to be proactive towards keeping the data safe and secure. Further, the user hierarchy also ensures which users will be able to see whose documents and so on.
Validation rules are important for setting up rules and strategies for storing and handling financial data. These rules are important to ensure no outlier data makes it to your data set. Based on your business needs, goals, and requirements, you can use validation rules to escape all sorts of data and keep your business financial data clean and safe.
This is another feature offered by accounting software that is not really intended to improve security, but it ends up doing that. Workflow rules allow you to create proper structures and processes using which the work will be carried out. This gives you an overview and insight into the processes like never before. Things like how data is logged, accessed, modified, utilized, and more will be visible and in your control – giving the security back to you!
In conclusion, accounting software works on the more advanced technologies of today. And, as it is with everything tech, these tools, too, will keep evolving and will move to newer methods. The idea is to understand this change and know how things work in order to make informed choices while selecting the accounting software for your business.