Outsourcing accounting roles is a popular and cost-effective way for businesses to access professional and reliable accounting services without hiring full-time staff. However, outsourcing accounting also comes with some data security risks, as sensitive financial information is shared with third-party providers who may be located in different countries or regions. Data breaches, cyber attacks, theft or unauthorized access can have serious consequences for both the business and the accounting provider, such as reputational damage, legal liability, financial losses and regulatory penalties.
Therefore, it is essential to use the best software for data security in outsourcing relationships, to ensure that the data is protected at all times and that the communication and collaboration between the business and the accounting provider is smooth and efficient.
Data Security in Remote Working Relationships
The sensitive financial data that accounting firms handle on a daily basis needs robust data security measures when working with remote professionals. To address these concerns, accounting and finance firms need to invest in top-notch software solutions designed to secure the information they share with their outsourced accountants. In this article, we'll explore the top five software options that can help ensure data security in outsourcing relationships.
The nature of accounting work involves handling highly sensitive financial information. From payroll records and tax returns to financial statements and confidential client data, accounting firms deal with a treasure trove of confidential and valuable data. Therefore, maintaining the security and confidentiality of this data is not just a best practice; it's an absolute necessity for:
- Client trust and reputation management
- Compliance with regulatory standards
- Protection against cyber threats
- Preserving client confidentiality
- Securing remote access
- Mitigating insider threats
- Data backup and recovery
- Business continuity planning
Data security is not just a concern for IT departments; it's a fundamental aspect of the business strategy for accounting firms, particularly when working with remote accountants. The consequences of data breaches and lapses in security can be severe, ranging from legal penalties to reputational damage and financial losses.
Most Secure Cloud-Based Accounting Software
QuickBooks Online
QuickBooks Online is one of the most popular and widely used accounting software in the world, with over 7 million users1. It is designed for small and medium-sized businesses and offers a range of features such as invoicing, expense tracking, reporting, tax preparation, payroll, inventory management, and more. QuickBooks Online also integrates with many other apps and services, such as PayPal, Shopify, Square, Stripe, Gusto, HubSpot, and more.
One of the main advantages of QuickBooks Online is its cloud-based platform, which allows users to access their data from any device and location, as long as they have an internet connection. This makes it ideal for outsourcing accounting, as both the business and the accounting provider can work on the same data in real-time, without having to worry about syncing or updating files. QuickBooks Online also provides a high level of data security, as it uses advanced encryption technology, firewall protection, multi-factor authentication, automatic backups and regular audits3. Users can also control who can access their data and what they can do with it, by setting different user roles and permissions.
Xero
Xero is another leading cloud-based accounting software that is designed for small businesses and their advisors. It has over 2 million subscribers worldwide and offers features such as invoicing, bills payment, bank reconciliation, reporting, tax compliance, inventory management, project tracking and more. Xero also integrates with over 800 apps and services, such as Stripe, PayPal, Shopify, HubSpot, Gusto, Expensify and more.
Xero is a great option for outsourcing accounting, as it allows users to collaborate with their accountants and bookkeepers online, using a single ledger system that updates in real time. Users can also invite unlimited users to access their data for free, which is a unique feature among accounting software. Xero also ensures data security by using SSL encryption technology, firewall protection, multi-factor authentication, automatic backups and regular audits. Users can also customize their user roles and permissions to limit or grant access to specific data.
FreshBooks
FreshBooks is a cloud-based accounting software that is designed for freelancers and small businesses. It has over 24 million users, and offers features such as invoicing,
expense tracking, time tracking, reporting, tax preparation, payments processing and more. FreshBooks also integrates with over 100 apps and services, such as Stripe, PayPal, Shopify, Mailchimp, Slack and more.
FreshBooks is a good choice for outsourcing accounting, as it allows users to share their data with their accountants or bookkeepers online via email or a secure link. Users can also collaborate with their team members or clients on projects using FreshBooks’ project management tools. FreshBooks also provides data security by using SSL encryption technology, firewall protection, multi-factor authentication, automatic backups and regular audits. Users can also set different user roles and permissions to control access to their data.
Zoho Books
Zoho Books is a cloud-based accounting software that is part of the Zoho suite of business applications. It has over 50 million users, and offers features such as invoicing, bills payment, bank reconciliation, reporting, tax compliance, inventory management, project tracking and more. Zoho Books also integrates with over 40 apps and services, such as Stripe, PayPal, Shopify, HubSpot, Mailchimp and more.
Zoho Books is a suitable option for outsourcing accounting, as it allows users to invite their accountants or bookkeepers to access their data online for free. Users can also work with their team members or clients on projects using Zoho Books’ project management tools. Zoho Books also ensures data security by using SSL encryption technology, firewall protection, multi-factor authentication, automatic backups and regular audits. Users can also customize their user roles and permissions to manage access to their data.
Wave
Wave is a cloud-based accounting software that is designed for small businesses and self-employed professionals. It has over 4 million users, and offers features such as invoicing, expense tracking, reporting, tax preparation, payments processing and more. Wave also integrates with some apps and services, such as Stripe, PayPal, Google Sheets and more.
Wave is a budget-friendly option for outsourcing accounting, as it allows users to share their data with their accountants or bookkeepers online for free. Users can also collaborate with their team members or clients on invoices using Wave’s invoicing tools. Wave also provides data security by using SSL encryption technology, firewall protection, multi-factor authentication, automatic backups and regular audits. Users can also set different user roles and permissions to control access to their data.
Wave has a unique pricing model, as it offers its accounting software for free. Users only pay for optional services such as payment processing (2.9% + 30¢ per transaction) and payroll services ($20-$35/month + $4-$6 per employee/contractor). Wave does not offer a free trial.
Comparison
Most Secure Non-Accounting Software
Team Communication and Collaboration Tools
Effective communication is the foundation of any successful outsourcing relationship. When collaborating with outsourced accountants, accounting and finance firms must ensure that communication tools are not only efficient but also secure. Here are a couple of software options to consider:
Slack: Slack is a widely used team messaging app that provides end-to-end encryption, secure file sharing, and customizable data retention policies. It allows accounting teams to communicate seamlessly while ensuring that sensitive financial information remains protected.
Microsoft Teams: For organizations already using the Microsoft ecosystem, Teams offers a secure platform for messaging, video conferencing, and document sharing. It integrates with other Microsoft 365 apps, making it easier to manage and secure data.
Secure File Sharing and Document Management Software
One of the primary concerns in outsourcing accounting functions is the secure exchange of financial documents. These software solutions can help firms manage and protect their digital assets:
ShareFile: ShareFile by Citrix is a secure file-sharing and collaboration platform. It offers features like secure data storage, access controls, and end-to-end encryption. ShareFile also allows for electronic signatures, streamlining document workflows.
Box: Box is another cloud-based platform that focuses on secure file storage and sharing. It offers robust security features, including advanced access controls and encryption, to safeguard sensitive financial documents.
Also read >> How to Go Paperless in Accounting: First Steps
Remote Desktop and Virtual Private Network (VPN) Solutions
Remote access to accounting systems is a necessity when working with outsourced accountants. However, it can pose a significant security risk if not managed properly. Consider these software options for secure remote access:
TeamViewer: TeamViewer is a remote desktop software that provides secure access to accounting systems. It uses end-to-end encryption to protect data transfers and allows firms to monitor and control remote sessions.
OpenVPN: OpenVPN is an open-source VPN solution that enables secure remote access to network resources. It offers robust encryption and authentication methods, making it a reliable choice for ensuring data security in outsourcing relationships.
Data Encryption and Endpoint Security Tool
Protecting data at rest and in transit is essential. Employing encryption and endpoint security solutions can help firms safeguard sensitive financial information:
Bitdefender GravityZone: Bitdefender offers comprehensive endpoint security with features like antivirus, anti-malware, and advanced threat detection. It helps protect devices used by outsourced accountants from cyber threats.
VeraCrypt: VeraCrypt is an open-source disk encryption software that allows firms to encrypt entire drives or specific files. It adds an extra layer of security to protect sensitive financial data.
Password Managers and Multi-Factor Authentication (MFA)
Weak passwords are a common vulnerability in data security. To mitigate this risk, consider implementing password managers and MFA:
LastPass: LastPass is a popular password manager that stores and secures passwords for various online accounts. It encourages the use of strong, unique passwords and supports MFA for added security.
Duo Security: Duo Security provides MFA solutions that enhance access security. It offers a range of authentication methods, such as push notifications and hardware tokens, to ensure that only authorized individuals can access sensitive data.
Final Thoughts
Accounting firms are no longer limited to in-house teams, but are increasingly tapping into the talent of remote accountants, often referred to as outsourced accountants, to meet the demands of their clients. While this outsourcing trend offers numerous advantages, such as cost savings and access to specialized skills, it brings with it a critical concern: data security.
Accounting firms have a fiduciary duty to their clients to safeguard their financial data. A data breach or security lapse can erode the trust that clients place in their accountants. Reputation damage can be devastating, resulting in client loss, legal liabilities, and a tarnished brand image.
