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FOOD FOR THOUGHT

How secure is cloud accounting software?

Posted by Matt Smith on April 10, 2018

Think cloud-based accounting is somehow “less safe” than having your data and programs stored on-site?

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Think again.

 

How is cloud accounting data stored online?

 

The data used by and produced from your cloud-based accounting software is stored online. This is the defining feature of the program in comparison to traditional methods.

However, that doesn’t mean it is just floating in the ether. Bellingham Wallace’s chosen partner, Xero, has off-site physical data storage centres with dedicated servers. This is where your data is stored and drawn from.

 

How secure is this storage?

 

These data storage facilities combine both digital and physical security measures to keep your customer and financial data safe. In fact, Xero has security systems in place that are comparable to that of a bank.

 

"We design security into Xero from the ground up, using industry leading security technologies to protect our customers and their data."

 

Paul Macpherson, Head of Security at Xero, puts it simply:

 

"Protecting our customers’ security is fundamental to our business and is one of Xero's strategic priorities.

"We design security into Xero from the ground up, using industry leading security technologies to protect our customers and their data."

 

Here's how:

 


 

Unauthorised digital access

 

The first line of defence is taking control of who can access your data and to what extent. When you sign up for cloud-based accounting services, you are effectively providing read-only access to your transactional information.

 

Think of it as a bank statement being pushed through to Xero in digital form. This does not grant any access to funds, and only those you invite can view and process your data within Xero itself.

 

Alongside the expected password protections that keep user access limited, Xero has also introduced an optional 2-step authentication. When you login, you will need to input a unique code that is provided through your mobile device, as well as your password.

 

This way, even if your password is compromised, an unauthorised user would need access to your phone or tablet as well.

 


 

Hacking and malware

 

All data coming to and from these data centres is encrypted. Were your data to be intercepted, it would be unreadable to those outside of the system.

 

Not that interception is likely in the first place, considering the high-level firewalls, multiple layers of network protection and system segregation that Xero data centres have in place. These are regularly updated according to new industry standards and existing threats, and even if one is breached, there is another hurdle in the way of a would-be hacker trying to get access to your data.

 


 

Theft and physical damage

 

But let’s say an intruder takes a more old-school approach and decides to steal your data physically. In a regular business, this could be as easy as picking up an unguarded laptop or mobile phone.

 

Cloud-based accounting data isn’t stored on these portable devices, and are instead kept safe and secure at the data centres, guarded by enterprise-level security systems and dedicated security staff.

 

“We feel that Xero cloud accounting software is more secure than traditional desktop systems.”

 

Toby Bennett, part of the Bellingham Wallace team, is excited about cloud technology and what it means for his clients.

 

“We feel that Xero cloud accounting software is more secure than traditional desktop systems,” he explains.

 

“They enable our clients to benefit from world class encryption and security features that would otherwise be unaffordable to most New Zealand small to medium businesses.”

 


 

Disaster recovery

 

Damage to your data can occur in many forms, and theft is just one of them. In the interests of protecting your business against all comers, the cloud acts as a secure ‘off-site’ storage facility, which then has its own off-site backups too.

 

This keeps your accounting data safe from fire, floods, power outages and other disasters, both at your workplace and at the data storage facilities.

 

Add in the fact that backups are automatic, and you have an extremely robust defence against any kind of data loss.

 


 

Summary

 

As you can see, the idea that cloud-based accounting software is somehow less secure than traditional models is patently false.

 

In fact, in order to match the level of security you’d get with cloud-based accounting, you would need:

    • secure premises,
    • security staff,
    • an off-site automatic backup server,
    • high-level digital security software with inbound and outbound encryption,
    • multiple segregated networks,
    • dedicated anti-malware staff,
    • regular security audits, and,
    • multiple built-in user authentication methods.

 

To find out more, you can check out Xero's dedicated security information page.

 

Cloud-based accounting software isn’t as safe as accounting models of the past. It’s safer.

 

Xero is Bellingham Wallace’s preferred accounting software solution. As of 1 April 2018, we will be using Xero to process our clients year end financial statements. If you have any questions or would like to explore your options further, please get in touch with Matt Smith or Toby Bennett by replying to Xero@bellinghamwallace.co.nz

Topics: Financial Reporting