25th March 2024

Cloud Accounting Innovations and Their Place in the Future

Businesses of all types and sizes are now benefiting from cloud accounting, which has been around since the early 2010s. But what do we mean by cloud accounting?

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Cloud Accounting Innovations and Their Place in the Future
Financial business protection by using a high-end operating system to process identity through cloud computing

Businesses of all types and sizes are now benefiting from cloud accounting, which has been around since the early 2010s. But what do we mean by cloud accounting? Why are so many companies tapping into it? Are there drawbacks we need to be aware of if these platforms are to firmly cement their position in our future society? This article sets out everything you need to know.

So, what is cloud accounting?

Cloud accounting refers to accounting platforms and software accessible remotely through the Internet. It allows businesses and individuals to access financial information and data whenever and wherever they are—as long as they have an internet connection. This makes the task of financial management much easier, and there’s no risk of geographical restrictions, either.

The benefits of cloud accounting

We’ve already mentioned some of the advantages of cloud accounting, namely that it provides real-time access to live data which is stored in the cloud, allowing businesses and individuals to make decisions based on the most recent information. However, that’s not the only upside of these platforms.

Cloud solutions are known for their scalability. They can be scaled up and down as business requirements change. This doesn’t require any huge infrastructure change, either, which not only saves on physical space but also costs. With cloud accounting systems in place, businesses don’t need to fork out expensive equipment and IT infrastructure or the maintenance and support that go with it.

The risks of cloud accounting

Of course, as with everything, there are also potential risks that must be considered when implementing cloud accounting software. Data breaches are the most common and occur when someone with unauthorised access gains sensitive information like bank account details, billing information or customer details. This can then be exploited and result in incidents of financial losses and identity theft. These risks are real for all-sized businesses too. In recent years, both TalkTalk and British Airways have been victims of such hacking with hundreds of thousands of transactions and customers impacted.

Hacking and cyber breaches don’t just negatively impact customers. Businesses using the software can also be affected through operational disruption. Without the accounting systems that help them day to day, many businesses struggle with a domino effect.

It’s also important to consider the likelihood of insider threats – either intentionally or accidentally. Some employees could potentially leak sensitive information and data, while others may practise poor password management – unfortunately resulting in insecure systems.

How can cloud accounting software become safer?

Despite the above examples of breaches, cloud providers are working hard to mitigate such risks and create stronger and more innovative systems with enhanced security protocols. This includes data encryption, which means that data becomes unreadable to anyone without appropriate access. When you combine this with multi-factor authentication, which again adds several layers of security to the overall process, as well as regular security audits, any vulnerabilities are proactively identified and dealt with. This not only ensures that customer data and information is secure but that the platform is able to run as intended.

For individuals using cloud accounting applications, there are several best practice techniques that can be followed to enhance the overall security of such platforms. Strong and unique passwords should be used, and these should be changed regularly. It’s a good idea to not reuse passwords over several websites too. Individuals should also install and use multi-factor authentication and be sure to embrace security audits and updates whenever they are available. Staying up to date with recent hacking trends and phishing attacks will also help individuals to be informed about techniques and will ensure the platforms they use are safer internally.

In addition, the above hacking events and cyber breaches have led the FCA to tighten its guidelines and reiterate specific security measures for businesses and individuals in the landscape to follow as best practice.

It does appear that trust in cloud accounting is growing, however, with an increase in accountants using the software. This stat alone should highlight just how reputable and beneficial these platforms can be. Indeed, with the right security in place and the relevant regulations met, cloud accounting offers an innovative and scalable solution to all types of business that can simplify financial management.

So what does the future hold?

There is a place for cloud accounting in the future, and we’ll no doubt see even more innovation in the sector as financial management works together with modern technology. Today, we have platforms that have combined efficiency with security, making financial management not just simpler but almost enjoyable too. With regards to security, businesses, individuals and cloud providers have a role to play but together we can ensure that our platforms aren’t just secure but that we are being proactive in our approaches to prevent such attacks from happening.

Categories: Articles, Finance/Wealth Management

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