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Companies Converting to Cloud Accounting Despite Security Concerns


Once banking moved on-line and gained widespread adoption, it was only logical that cloud accounting would follow. In 2015, business use of cloud systems had achieved widespread adoption, and it will continue to accelerate in 2016, according to Forrester Research.

The term "cloud computing" refers to accessing and using software on a remote server. Rather than downloading or installing accounting programs, you log in into an account. All the transactions and data are stored on the mainframe server. Free email accounts, document storage, social media sites, and e-commerce stores are examples of cloud technology. In each case, the transaction occurs on the vendor's server, not on the user's personal computer. This configuration represents a return to the earliest days of computing, when everything was done on a mainframe. After personal computers were introduced, software and data management became individualized and fragmented.

The primary concern since the introduction of cloud accounting services has been security. The American Institute of CPAs (AICPA) found in a survey of members that although half of their members were using some form of cloud services, many were very concerned about data security and regarded it as the primary barrier to adoption, both for them and for their clients.

Despite these concerns, the advantages of cloud accounting are gradually winning converts. These advantages include:

  • Up-to-date and consistent software versions, virtually around the clock. If employees are running software on their own PCs, there are always issues with updating and maintaining software and operating systems. Cloud services eliminate this hassle.
  • Automatic data back-up. Business owners often neglect to perform regular back-ups and store data off site. So, when a computer crashes or there is a disaster such as fire or flood, they often lose all of their information. Cloud-based online software continually updates.
  • Integration of bank transactions and accounting systems. Bank transactions are automatically posted to the entered accounts, eliminating a data entry step.
  • Access data and information from anywhere. Previously, users had to be in the office and log onto the accounting computer. Now they can check balances and information through mobile devices and tablets from anywhere with Internet access.
  • Cloud accounting can be less expensive. Rather than purchase packages for hundreds of dollars and needing to upgrade them each year, monthly fees for cloud accounting reduce the total cost and allow business owners to purchase precisely the package of services they need.

Accounting software vendors are listening to customer concerns about security. Today, protocols have been established that rival the banking industry. Reputable vendors are also subject to outside audits on a regular basis. For example, the American Institute of Certified Public Accountants (AICPA) performs audits on cloud accounting systems to be sure that data is indeed secure. If you are thinking about moving your bookkeeping to the cloud, be sure to talk to vendors and consult your CPA for recommendations. You might find that the ease and convenience of cloud accounting make it the right choice for your company.


This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.
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