Benefits of keeping your bookkeeping data on the cloud versus on local hard drive

WLP Group

Cloud versus on-premise. This was the battle that many accountants had and was a popular argument at the start of the accounting software industry. Today, this debate has been forgotten. Nearly every business from Apple to your local SME uses Xero cloud accounting software.

What is the cloud?

First things first. The cloud is not some actual cloud but rather just a server located somewhere around the world. Nearly everything is stored on the cloud today. Your Gmail data could be stored in some server in Singapore or Germany or South Africa but you’d never know. In addition, data is often backed up and kept in multiple servers to deliver data to you faster depending on your physical location.

For example, say that Google keeps your data in Singapore and South Africa. If you’re in Japan for vacation, Google will fetch your Gmail data from their Singapore server since it’s in Asia and nearer.

The alternative is to keep your bookkeeping data stored locally. This means that you’ll have to purchase, set-up and maintain a physical server (which is basically a computer). If you’re not a software engineer, this might mean having to hire a full-time software engineer to ensure that there’s no overheating and that everything’s backed up and running 24/7.

Cloud accounting means that your data will never be burned down and lost forever

Before AWS and cloud computing, many companies purchased IBM’s mainframe computers to hold data. This was costly and inefficient and often required a lot of space and maintenance. But a key disadvantage was that your data was susceptible to physical attacks. This could be an overheating of your mainframe which causes it to burn down, or a natural disaster that literally wiped out your mainframe and all your data.

In either case, this wouldn’t be an issue with a cloud accounting software like Xero. Your data will be automatically backed up and encrypted without any hassle from your end. 

But is my bookkeeping data protected with Xero?

Bookkeeping and financial data is very important and is often kept confidential to protect all parties involved. Many businesses would hate to have their private financial data known by competitors. Firstly, like every good technological company, Xero encrypts all your bookkeeping data. Xero then replicates it in several different servers located around the world. This means that the failure of one server won’t affect your Xero experience or account at all.

Bookkeeping with Xero isn’t just about encryption. Xero also offers MFA (Multi-Factor Authentication) and this prevents hackers from getting your data even if they somehow manage to get their hands on your email and password. And since Xero is a large publicly traded bookkeeping software company, they are also bound to hold security audits and put your data security as a priority.

Want to learn more about Xero?

If you’re keen to learn more about Xero and how your data is kept safe and secure, contact our bookkeepers at +65 6493 2970.