The traditional mode of storing and managing financial data on office desktops is becoming obsolete as cloud solutions supplant hard drives and teams embrace remote collaboration. In fact, 85% of enterprises will be “cloud-first” by 2025, which means whole departments will adapt to new ways of communicating and managing their data. Finance and accounting teams are increasingly migrating to cloud accounting systems, allowing multiple teams to access dashboards and collaborate from anywhere via the internet.
While cloud accounting offers companies numerous benefits in efficiency, cost and collaboration, it does introduce a security threat to private company data. Businesses must define and implement cloud security best practices to keep their data safe while operating online. These best practices must include technology guardrails and thorough policy training and communication with remote accounting professionals.
The benefits of cloud accounting for financial processes
Cloud accounting is safe and effective if implemented properly. Online software systems can introduce new methods of invoicing, paying bills, managing cash flows and more. Some higher-level benefits of using cloud software for accounting functions include:
- Lower costs: Traditional accounting systems require companies to invest in and constantly maintain IT hardware and servers to house company data. In contrast, cloud accounting software removes many of those setup and maintenance costs, because your data is stored via the internet, and cloud servers are usually maintained by the cloud vendor, not your company.
- Increased efficiency: Cloud accounting software streamlines many of the tedious bookkeeping tasks that can bog down an accounting team, such as invoicing, contact management, accounts payable and other repeating processes. With these time savings, teams can focus on analyses and reports that will help executives make strategic business decisions.
- Easier collaboration: Rather than transfer data and reports via email or a physical USB transfer, cloud accounting makes it easy to share reports in a single place (the cloud) that anyone with a login can access. Accounting teams can even work on a single document simultaneously within the cloud, reducing the number of duplicate files and work.
Despite the above benefits, sharing private company financial data on the internet can expose your data to hackers and other malicious actors. When onboarding cloud accounting software—and the remote accounting professionals using it—it’s important to not only establish a streamlined system for financial processes, but also basic cloud security best practices to keep your data secure.
Five cloud security best practices to protect your business
1. Know your vendor’s cloud security policies
When businesses use private data centers for their accounting, the enterprise is solely responsible for any data security mishaps. However, cloud vendors often operate on a “shared responsibility model.” This means the cloud provider will assume some, but not all, of the responsibility for cloud computing security. The shared responsibility varies by the cloud provider, and it’s important to know which security tasks your business is responsible for and which ones the provider will handle.
Here are some key questions to ask a prospective cloud provider when assessing their shared responsibility model:
- What is your team’s protocol for dealing with suspected security incidents?
- Does your team have a data recovery plan in case of a security breach?
- Does your software encrypt data both in transit and whilst in the cloud?
- What identity authentication methods does your cloud software support?
- What compliance requirements does your team support?
- What level of technical support are you willing to provide?
- What were the results of your last penetration test?
2. Identify sensitive data in your cloud
Not all financial data should be treated equally. Some data is considered sensitive or regulated, and your business could face regulatory penalties if it gets stolen. For example, any personally identifiable information (or PII) has strict compliance requirements and penalties in order to protect customer privacy. PII includes full names, social security numbers, email addresses and other sensitive information.
Knowing this, your business should include in its cloud security best practices a set of written guidelines specifying which data can be stored in the cloud and who can access sensitive data. When drafting these guidelines, be sure to check and adhere to all federal, state and local data privacy laws. If you need some help identifying sensitive data, there are data classification engines that can help you classify your data and fully assess your company’s risk.
3. Control access to cloud data
It’s important to make sure that only your employees can access data in your cloud. Consider setting up multi-factor authentication so that in addition to employees entering a username and password to access the cloud, they’ll need another form of personal identification as well. That way, if a malicious actor does get hold of an employee’s login information, they still won’t be able to access your data.
Moreover, many companies enforce employee-specific data access policies based on the employee role and least privilege. This means that once logged in, an employee will only have access to the cloud data needed to do their job. Some companies will even limit the actions an employee can take on cloud data. In this case, some users will have the permission settings to edit and share data while others will only be able to view it.
When onboarding remote or fractional accounting professionals, make sure to clearly identify what data they have access to and when that access will end. Keep track of employment or project status to ensure that sensitive data is no longer available upon project completion or a possible termination.
4. Educate remote professionals
While remote accounting experts may already have extensive experience with cloud accounting systems, they will still need to be made aware of your business’s specific cloud security best practices and guidelines in order to protect your data from hacking or other security breaches.
Some cybersecurity topics to train all in-person and remote staff on include:
- Strong passwords: The more complicated an employee’s login information, the harder it will be for a hacker to guess. Encourage remote accounting professionals to set complex passwords and change those passwords on a regular cadence to improve data security.
- Phishing: Teach employees how to spot suspicious links from unknown sources that are often disguised as emails from trusted sources. Send test phishing emails that can help remote professionals identify suspicious email addresses, links, offers and other phishing trademarks.
- Unauthorized software: Make employees aware that they shouldn’t download unlicensed software from the internet to their computer, lest some malicious software gets downloaded with it. If it’s not possible for remote professionals to use a company-sponsored device, it is still important to make sure that the person’s personal device is not used by other family members or in an inappropriate manner.
- Internet connection: Train employees to only log onto the cloud when they are on a secure network or VPN. Accessing cloud data on public Wifi, for example, could allow malicious actors to access sensitive information.
5. Encrypt your cloud data
Data encryption translates plaintext data into another form—often code— that only people with an access key or password can read. Data encryption may be included in your cloud service to protect your data from being read by unauthorized outside parties.
However, it’s important to note that cloud services that offer data encryption will provide their own encryption keys. This means that not only will your company have the keys to access the data, but the cloud service company will too. To truly ensure your data is secure, encrypt your data using your own keys in order to fully control who has access.
Finally, it’s not always enough to encrypt data while it’s in cloud storage. Malicious actors can intercept a data file in transit, so it’s important to protect the data even when it’s not yet in the cloud. For remote accounting professionals who often change their location, it’s important to encrypt the data while in transit from one location to another (e.g., a personal computer to the cloud).
Establishing cloud security is easier with tech-smart expertise
Paro offers highly vetted accounting talent and business system expertise that can help your business set up cloud accounting systems, evaluate current finance operations and, most importantly, help your business safely achieve its goals. Find fractional accounting experts with cloud experience or get a consultation for software system implementation to help you optimize your online accounting experience.