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How the Cloud Safeguards Sensitive Data


Although cloud accounting continues to gain acceptance, some small businesses may still wonder if they truly need to shift away from packaged software or manual systems. Today's cloud-based systems often contain the most updated and efficient accounting technology available. Additionally, cloud systems often exceed in-house data safeguards with built-in security and automatic backups, all included in the low monthly fee.

Cloud-Based Accounting System Users Recognize Data Security Benefits

A recent survey on cloud computing conducted by DC Velocity found that 94 percent of respondents recognized additional security benefits since adopting a cloud system. Post-implementation, many small businesses' initial concerns immediately fall to the wayside. Rather than experiencing added security issues, cloud accounting users actually lighten their day-to-day technology responsibilities by letting the cloud provider manage automatic software updates and data backup.

Advantages of a Cloud-Based System

In general, cloud accounting systems typically offer these security features which are helpful to small businesses:

  • Off-site servers protect data from issues such as power outages and local weather-related disasters.
  • Data backups occur automatically
  • Dedicated firewalls
  • Encrypted Data Storage

Implementing each of the above-named security features individually may become cost-prohibitive for small businesses. With cloud accounting, all four are included in the price of system access.

Today's cloud-based systems often contain the most updated and efficient accounting technology available.

In-House Procedures Also Contribute to Enhanced Data Security

Aside from the use of a cloud-based accounting system, small businesses can take separate steps to protect their data in-house. The white paper lists three important ways to protect important financial information:

  • Provide employee education focused on data security
  • Require the use of strong passwords
  • Remove former employee access on a timely basis when they leave the company

Additionally, for files containing sensitive data, encryption software may be utilized to restrict access.

Choosing a Cloud Service Provider

When the time comes to look for a cloud-based system, several factors should be evaluated when choosing a provider.

  • Current Customer Satisfaction. Mine the existing customer base for indications of client satisfaction. Follow up with phone calls to ask about the clients' experience with cloud accounting and how it has made their jobs more or less efficient.
  • Security Standards. Request copies of the cloud service provider's security certificates to ensure they meet industry standards.
  • Individual Security Components. Understand which features make up a strong cloud accounting system, including two-factor verification and third-party encryption. Make sure the cloud provider uses them.
  • Privacy issues. Ask the provider if they will be sharing data with other businesses.
  • Contract Termination. Understand what happens at the end of the business relationship. Ask the provider about what happens to the data stored in the cloud system and determine who the ultimate owner of the store data is.

Each year, more small businesses choose to move their accounting data to a cloud-based system. By understanding the data security features associated with these systems, it's possible to gain confidence in this highly popular delivery software method. Enhanced data backup and data security, along with increased efficiency of the accounting process are just a few of the many benefits found in today's cloud accounting systems.


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.