Cloudy With A Chance of Convenience
Last week, in our article about paper-based vs. electronic accounting systems, we mentioned cloud bookkeeping solutions. You may know a little, or a lot, about the concept of cloud technology. What you may not know, is that there are multiple cloud-based solutions for storing your bookkeeping data. You may also not know how these solutions can make your data safer, more accessible, and more secure. Read on below to learn more about the difference between cloud and local bookkeeping solutions.
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Traditionally, bookkeeping software, like most other software, stored your data on a local hard disk inside the computer on which the data was entered. If something happened to that computer, if it was lost, stolen, or badly damaged, the data onboard that disk would never be seen again. This could be catastrophic for some users, so people would go to great lengths to store redundant backups in multiple places to prevent a disaster. This, in turn, became dramatically inconvenient and, as a result, people stopped adhering to their own backup protocols, which caused further problems.
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Cloud-based software foregoes the traditional reliance on a local hard drive and stores your data on “the cloud:” a collection of distributed servers connected to the internet. The data is usually stored in multiple places at once (to prevent data loss in the event that one server goes down or is damaged) and encrypted (to ensure security).
Cloud solutions, particularly cloud bookkeeping solutions, provide multiple benefits. They allow for simultaneous access to your data from any location that has internet access. They allow your bookkeeper to get real-time updates on the status of your books from anywhere she happens to be. Because cloud solutions are so accessible, they usually allow for the most frequent and fast entries.
With respect to security, despite what some traditionalists may tell you, cloud solutions are often preferable to their desktop cousins. Reputable bookkeeping companies provide and maintain bank-level encryption for all of the data they store. Compared to a typical at-home, desktop setup, cloud solutions are normally infinitely more secure and reliable. There is simply no contest between the ability of a large security-dependent corporation’s ability to provide tough security and the ability of a small law-firm to do the same.
State Bar Regulations
There is one important caveat to our full-throated recommendation of cloud-based, electronic bookkeeping systems. Some state bars have stringent rules regarding how law firms store data that is the subject of solicitor-client privilege. Some state bars do not allow those data to be stored “off-site” or require the data to be stored in a particular fashion with particular security measures.
Most states have modernized their rules to the point that they allow firms to use electronic, web- and cloud-based bookkeeping software as long as its heavily encrypted and secure (which most, if not all, of these solutions are.) But you’ll want to doublecheck your local guidelines to ensure you don’t run afoul of any prohibitions.