How can cloud-based accounting systems ensure data privacy?

1 Encrypt data

One of the most basic and essential ways to protect data privacy in cloud-based accounting systems is to encrypt data at rest and in transit. Encryption means converting data into a code that can only be deciphered by authorized parties who have the key. This prevents unauthorized access, modification, or leakage of data, even if the cloud provider or the network is compromised. Encryption can be done by the cloud provider, the accounting software, or the user, depending on the level of control and security required.

2 Choose a reliable provider

Another important factor for data privacy in cloud-based accounting systems is the choice of the cloud provider. Not all cloud providers are created equal, and some may have better security policies, practices, and infrastructure than others. Therefore, it is advisable to do some research and compare different providers based on their reputation, certifications, compliance, service level agreements, and data protection measures. For example, you may want to look for providers that have ISO 27001, SOC 2, or GDPR certifications, which indicate that they adhere to high standards of data security and privacy.

3 Manage access rights

A third way to ensure data privacy in cloud-based accounting systems is to manage access rights and permissions for different users and roles. Access rights determine who can view, edit, delete, or share data in the cloud, and how they can do so. By setting up access rights, you can limit the exposure of data to only those who need it for legitimate purposes, and prevent unauthorized or accidental access, misuse, or disclosure of data. You can also monitor and audit the activities of users and the cloud provider, and detect and respond to any anomalies or breaches.

5 Backup data

A fifth and final suggestion for data privacy in cloud-based accounting systems is to backup data regularly and securely. Backing up data means creating a copy of data and storing it in a separate location, such as another cloud service or a local device. This helps to prevent data loss or corruption due to technical failures, human errors, natural disasters, or cyberattacks. It also enables data recovery and restoration in case of any incidents. However, backup data should also be encrypted and protected with the same or higher level of security as the original data.