The security of your company’s financial information is an important factor to consider when deciding on an accounting method. You want to keep your information safe from getting lost or destroyed and protect it against theft. Two options you have for storing your financial information are the cloud and local storage.
- Accounting information stored in the cloud
Storing information in the cloud is a concept that tech savvy business owners have been aware of for many years. Thanks to the popularity of smart phones, the general public has become more familiar with storing information in the cloud as well. But what does it really mean to use cloud based accounting? On the most basic level it means that your information is being stored on secure servers that are maintained by a data service center. You can access your information that is stored in the server as an authorized user with unique sign-in information. Your financial information is available to you anytime you are connected to the internet and signed-in.
The convenience of constant access is one of the main benefits of cloud accounting but it can also bring up concerns about security. Cloud based accounting has several built-in security features designed to keep your information safe. Authorized users are the only people who have access to the information stored in the cloud. Each authorized user has unique sign-in information that creates and electronic activity log. If there is ever a question about something that has occurred there will be a record of who accessed the information. In addition, the security systems for cloud based servers are updated on a regular basis in order to protect against outside threats. Another type of fear you may have in relation to the safety of your information is that it may somehow be lost. This is an area where the cloud has a major advantage over storing information on hardware such as computers and external hard drives. Let’s use a smart phone as an example. If you lose your cell phone or drop it off a cliff, all the information physically stored on that phone is gone. All the pictures and videos of your kids, or cat, have disappeared with your phone. However, if you regularly back your phone up to the cloud then you still have access to all of those pictures and videos. It works the same way with cloud based accounting.
- Accounting information stored locally
Storing your accounting information locally simply means that you are keeping it in one physical location. That location could be your laptop, an external hard drive, or even a server in your office. This type of information storage may seem more secure because you can physically touch and see the location in which it is stored. However, storing your information in this way is kind of like putting all of your eggs in one basket. If something happens to that basket you could lose everything. For example, if all of your accounting information is stored on the hard drive of your computer you risk losing it through physical damage to your computer, a virus that wipes out your information, or the loss or theft of your computer. If you have an in office server that you manage yourself you risk exposing your information to hackers. Internet security is ever-changing and highly demanding. If you do not have the time or expertise to focus on the security of your server all of your financial information could be at risk.
There is much more risk associated with storing your information locally as opposed to using the cloud. The risk of losing your information or having it stolen is greatly reduced in cloud based storage because of the safeguards that are in place. Make sure to research the company you are considering for your cloud based accounting to insure that all of their software and technology is on the cutting edge.