As readers here know, the security of client financial and accounting documents is a critical concern.
The cost of a data breach can be devastating – not only for the bookkeeping clients themselves, but also for any bookkeeping and accounting firms whose systems may get breached by cybercriminals – both internal and external.
Accountants, bookkeepers, payroll and accounts payable staff have access to private financial information for many individuals and partners. This includes Social Insurance Numbers, bank account numbers, addresses and debit and credit card information for employees, contractors and vendors.
In some cases, these can amount to thousands of records – even for small and medium-sized businesses.
It’s essential to maintain this data. But it’s also essential to ensure it’s safeguarded against compromise.
But according to one study specific to accounting firms in the U.S. state of Maryland, data breaches were all too common:
The Maryland study’s authors reported:
- 56 incidents of general unauthorized access.
- 23 incidents of hacking
- 11 incidents of phishing
- 8 incidents of stole or lost physical media
- 6 ransomware incidents
- 3 incidents of unauthorized or improper disclosure by employees
All told, the study identified 132 incidents of compromise, affecting at least 4,016 records.
According to research by the Ponemon Institute, the average cost of a data breach is $150 per record.
So an accidental data breach affecting 300 vendor, client or employee records can easily cost a mid-size accounting firm $45,000.
When you include larger firms from all industries specific to Canada, The Ponemon Institute estimates the cost of a data breach to be in about CA$5.8 million.
While nearly all bookkeeping and financial service professionals mean well, and have the best of intentions, many companies have developed ad hoc systems using a variety of ‘bolt-on’ applications that don’t always work well together.
Many times, we come across companies who are still trying to use GoogleDocs to store and transmit extremely sensitive financial documents for accounting/ bookkeeping, payroll and accounts payable purposes for which the system was never designed nor intended.
This frequently leads to system vulnerabilities.
For example, a Verizon report estimates that more than 80% known data breach incidents can be attributed to password management failures.
When you have too many websites, apps and platforms in play, you can wind up with too many passwords, too – and too many separate software updates. It’s easy for something to get lost in the shuffle. But small errors can lead to big problems: The biggest data breach in history – the Equifax breach in 2017, is attributed to the failure to download a small Apache Struts patch. One which most small business owners and accounting firm principals would never have known about had the breach not made the news.
Considerations for Small and Medium-Sized Businesses
Starting about 2005, there were a series of improvements in data storage and machine learning technology that enabled the financial services industry to develop a new generation of accounting document management systems. We developed our own proprietary system, LedgerDocs, in 2010, with the accounting and bookkeeping professional in mind. It was one of a series of innovative solutions to have come out over the last decade.
We are also seeing a revolution in workflow management and office automation technology. Together, these software platforms and solutions are enabling both accounting/bookkeeping firms and their clients to simplify their back office and financial operations, delegate non-core tasks more efficiently, improve accuracy and save time and money.
The most modern document management platforms enable users to get documents to and from banks, vendors, accounts payable recipients, tax agencies, accountants and any others using a simple, secure system that requires only one upload.
Used correctly, they simplify and streamline the communications process – resulting in less opportunity for error or breach:
- Fewer emails to outside vendors
- Fewer passwords to manage
- Fully encrypted
- Web-based – so local users aren’t responsible for software updates and patches.
Security and Encryption Standards
The best accounting document management systems 256-bit SSL encryption – the highest commercially-available security protocol in the financial services industry. They also feature daily backups, the instant granting and revocation of access privileges, and redundant Cloud-based data storage.
Benefits for Accountants and Bookkeepers
Now that the need to physically handle the document and enter its’ data into your accounting solution has been eliminated or automated, the bookkeeper enjoys a number of awesome benefits:
- Time savings (the data gets filed to the accounting program automatically, no more need to drop off papers, or to sort documents);
- Easier storage & recovery (documents exist digitally, and you can search through thousands of documents for a particular one with ease);
- More value for clients (send automated reminders, make note of important events, no more lost documents);
- Less worry & stress (control your incoming documents, customize your interactions with clients, eliminate the need to send reminders to clients).
If you’re still using a legacy system, like GoogleDocs, Excel spreadsheets or the good-old-fashioned “shoebox method,” we invite you to try a free trial of LedgerDocs, risk free. Or check out our free tutorial video here.
We look forward to hearing from you.
– Beanworks Guest Blog