Cloud in accounting: benefits, risks and what to watch out for

Cloud solutions are changing the way companies handle their accounting. They offer automation and access from anywhere, but they also raise questions of security and dependence on the provider that need to be weighed up.

How the cloud works in accounting

Cloud accounting means that both the software and the data are stored on the provider’s servers and you access them over the internet. You do not need to install a program on your computer or take care of updates; they run automatically.

This means you can work from the office, from home or on the road; all you need is a browser and a connection. It is precisely this flexibility that is one of the main reasons for the cloud’s growing popularity.

The main benefits

• access to data from any location and any device
• automatic updates and backups
• easy sharing of documents with your accountant
• integration with your bank and invoicing

Thanks to online access, the entrepreneur and the accountant can work with the same data at the same time, which speeds up communication and reduces retyping and errors.

Risks and limitations

The cloud depends on an internet connection and on the reliability of the provider. If the connection goes down, you may not be able to reach your data just when you need it most.

You should also consider where the data is physically stored, how it is protected and what happens if the provider terminates the service.

• dependence on an internet connection
• security and personal data protection
• data portability when changing provider

What to watch out for when choosing

Before you start using a solution, check the contractual terms, the data export options and how security is handled. It is important that you can retrieve your data at any time in a usable form and are not permanently locked in with a single provider.

It is also worth finding out how the provider handles backups and data recovery in the event of a failure. A good service should have these processes clearly described.

Using it securely

Multi-step sign-in, strong passwords and role-based access management all contribute to protection. The sensitivity of accounting data requires you to pay as much attention to security as to the bookkeeping itself.

Cloud versus local software

The alternative to the cloud is traditional software installed directly on your computer. It works even without an internet connection and you have the data physically with you, but you take care of updates and backups yourself.

The choice depends on your needs. If you work from several locations and want to share data with your accountant in real time, the cloud is more convenient. If you prefer full control over your data in your own environment, a local solution may suit you.

• cloud – access from anywhere and automatic backups
• local software – data physically with you, offline work
• the decision depends on how you work and your security requirements

Personal data protection

Accounting data also contains personal data, for example that of employees and business partners. When using the cloud, therefore, keep in mind the obligations relating to its protection.

Check where the provider processes the data and whether it has appropriate contractual and technical safeguards in place. The company remains responsible for data protection even when someone else physically manages the data.

How to get started with the cloud

If you are considering moving your accounting to the cloud, do it step by step. Choose a proven provider, discuss the solution with your accountant and first test whether the user interface and the range of features suit you.

Training the people who will work with the system is also important. Even the best tool only brings benefits when the team knows how to use it properly and follows the security rules.

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Frequently asked questions

Is data in the cloud safe?

Reputable providers use encryption, regular backups and certified data centres. Security, however, also depends on you: on strong passwords, multi-factor authentication and correctly configured access rights.

What happens to my data if I cancel the cloud service?

That is why it is important to check the export options in advance. A good service will let you download your accounting data in a usable format. Check the termination conditions and the deadline for downloading your data in the contract before you start using the service.