2021 is on track to be a record-breaking year for data breaches, with 1,291 breaches reported as of Q3 2021—and that’s after almost two years of reports citing an ongoing spike in cyberattacks since remote work mandates began.
Even though cybercrime has been all over the news lately, small business owners often have so many facets of their businesses to worry about that data security might not always be top of mind. According to a recent study commissioned by Bullguard, a security software company, 43% of small business owners “have no cybersecurity defense plan in place at all.”
Zero. Zilch. Nada.
Media outlets commonly paint pictures of an economy run by young, tech-savvy millennials. In reality, half of small business owners are over the age of 55 and often prefer using “old-school” tech to run their businesses—tools and processes that don’t protect their business data well enough from modern risks. This predilection for dated software can, unfortunately, leave your company’s most sensitive financial and customer data at serious risk and often ends in financial and reputation disaster.
One of the easiest ways to mitigate these risks is by embracing the cloud for all your data storage and processing needs, accounting included. And while transitioning to the cloud can seem burdensome if you’re comfortable with your favorite accounting software, the benefits are truly worth the effort. Cloud accounting provides increased accessibility and advanced security measures, making it a more convenient, safe, and reliable option for small businesses when compared to traditional accounting options.
Traditional accounting practices are risky
Before we can examine cloud accounting, we have to look at the common alternative—local or self-hosted software. This practice leaves your data open to potential threats like damage, hacks, and data loss.
Damage happens when you least expect it
When your financial information is stored locally, you could lose important information for good. Spills, drops, weather, fires, and old age can destroy devices and files.
Even if you manage to avoid spilling a Frappuccino on your laptop, local storage is still not a long-term solution. A study by Backblaze shows that a hard drive’s failure rate grows dramatically year over year. And since they are mechanical devices, it’s a matter of when—not if—a hard drive wears out and fails over time, which is three to five years in most cases.
The change to remote and hybrid working models has also increased the chances of damaging your laptop while shuttling it around in your car or public transit. And it’s not even safe at home, where an accidental crash into your desk by your kids or pets can send your laptop tumbling to the ground.
Physical devices are simply more susceptible to damage than virtual ones.
Security leaks are inevitable
When financial data is stored locally on one device, you’re at the mercy of that device’s security—which usually isn’t great.
Security protocols remain incredibly lax with remote workers, despite a severe uptick in cybercrime over the last several years. In a recent survey, 42% of employees admitted that the device they work on from home doesn’t even have antivirus protection, and only 22% consider their passwords complex or difficult to figure out. According to Verizon’s Data Breach Investigations Report, 81% of hacking breaches involve compromised and weak credentials. Even 23% of those using coworking spaces have reported that they face security and safety concerns.
Does your workplace have a security guard on premise? IBM’s 2020 Cost of a Data Breach Report found that 10% of malicious breaches were caused by a physical security compromise. Do you have a sticky note on your desk where you’ve written down your passwords? Maybe underneath your keyboard or in a drawer? You’re definitely not alone. According to the Ponemon Institute’s 2020 State of Password and Authentication Security Behaviors Report, more than 40% of IT specialists reported that sticky notes are used to manage passwords in their companies.
If you’re still using locally installed software and physical devices to manage and store your business data, you’re making it much easier for criminals to steal from you. Why risk it?
Backups and updates complicate your life
Local storage requires you to manually back up your data and update software/equipment. This can be confusing, costly, and time-consuming for small businesses.
Unless you have in-house IT specialists and cybersecurity experts, you’re doing these tasks yourself, or worse, floating these tasks to employees who aren’t qualified to perform them. It’s just asking for trouble.
And even with protection in place, attacks still happen. The 2017 WannaCry ransomware attack spread globally through computers operating Microsoft Windows. User files were held hostage, and the attackers demanded a Bitcoin ransom for their return. The cyberattack caused $4 billion of damage.
Do you know what makes cybersecurity experts really wanna cry? The attack was very much preventable. All people had to do to protect themselves was update Windows. Seems trivial, right? But do you install updates as soon as they become available? A study by 0patch showed that 58% of organizations run on legacy systems, meaning that they are using software that’s no longer supported with new security patches. It’s easy to forget to install patches and update your software when you’re a small business owner wearing several hats.
It’s equally easy to make mistakes. Botched updates and backups can result in costly downtime and interrupt your team’s workflow, which often leads to stress and frustration.
Cloud accounting provides a safer alternative
Rather than using a desktop app or software, cloud accounting works by storing information on servers in multiple data centers and making it available online. This provides extra layers of security and increased accessibility for your team.
Access your accounts from any device, any time
When your accounting data is stored in the cloud, you can easily access it without being tied to a specific location or device. That’s invaluable for remote teams and businesses that do not have in-house accountants.
And unlike local servers and devices, the cloud makes data available to you even when fixes and changes are being implemented. You don’t have to worry about downtime, an issue that costs many larger corporations between $300,000 and $400,000 hourly, according to a Statista report from 2020.
Even if your personal computer becomes damaged or stolen, your data is still safe and accessible in the cloud. It’s immediately available to anyone who needs it—including team members and any contractors or freelancers you work with regularly. But at the same time, the data is completely inaccessible to those without authorization to access it.
Only you decide who is allowed access to your cloud accounting data, and those team members who do have permission can access the data from anywhere and at any time, even after business hours—a key factor to successful remote team productivity and collaboration.
In Neat, reports are safely stored, regularly backed up, and can be accessed at all times.
Automatic backups and updates free up resources
Backing up data locally leads to downtime, but it’s also a manual process that always comes with the chance of something going wrong. With cloud accounting, backups and updates happen automatically, with no downtime, so your information is always up to date and accessible.
In the cloud, your business data is securely stored in multiple data centers, on multiple secured servers, with multiple copies. This ensures that even if one data center experiences a hiccup, your data remains safe and available at another secure location.
You also won’t have to wait months or years to see bug fixes and improvements implemented to your cloud accounting solution like you would with locally installed software. Best of all, you don’t have to hire an IT expert or burden underqualified employees with any of these important processes.
Encryption secures your accounts
Data is kept secure in the cloud through a process called encryption. When data is encrypted, it’s essentially converted into code that cybercriminals won’t be able to decipher and use, even if they manage to breach the system and access it somehow—a bit like Ralphie’s secret decoder ring in “A Christmas Story.”
The only way to convert the data is by using an encryption key, which your cloud provider doesn’t even have access to and is stored behind a firewall—a security device that blocks all suspicious incoming and outgoing traffic from your network.
Without access to the encryption key, trying to crack the code is an incredibly time-consuming, costly, and usually futile exercise that’s just not worth it for criminals.
Encryption not only keeps your data safe but also helps your company stay compliant. The General Data Protection Regulation (GDPR), for example, is one of the most commonly violated data privacy laws, one that requires businesses that interact with customers and partners from the European Union to protect the privacy and confidentiality of their data. One of the key measures that the GDPR requires is encryption, and violating GDPR and other regulations related to data protection can lead to expensive fines and long, equally expensive legal battles.
Regular security audits keep your data secure
Companies that offer cloud storage services, Neat included, perform security audits regularly to validate their systems. They even order third-party network testing to help uncover potential weaknesses and security gaps their testing might have missed.
Because guaranteeing data security and accessibility is the bread and butter of their business model, cloud providers are always monitoring and upgrading their systems at no extra cost to users.
This, too, is a big deal for small businesses that might not have the budget to hire internally or outsource IT security experts to take care of their data. In the cloud, you’re paying for storage, but the peace of mind of knowing that your data is safe comes free of charge.
Neat offers secure cloud accounting to small businesses
Neat takes security as seriously as we take cloud accounting, using best-in-class security measures to keep your data protected at all times.
- Our cloud accounting infrastructure is monitored around the clock to ensure that the application and all accompanying tools are always secure and running.
- Our software and apps are hosted on strictly controlled data servers.
- Both Neat and its partners perform third-party security audits and testing multiple times throughout the year.
- We encrypt your stored files with the same standard used by U.S. banks and credit agencies.
- Your customer data is never sold or given to third parties. Ever.
- Our uptime is always above 99.9%, and your customer data is always backed up in its entirety on multiple servers.
If you’d like a more detailed look at all the measures Neat takes to keep your accounting data safe and secure in the cloud, take a look at to our security page.