Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
Unquestionably, ecommerce stores are the future of businesses. They allow more people to buy products and pay for services, opening up a whole new world of convenience for both sellers and consumers. However, it also calls for a new, next-level responsibility: accounting security.
Financial data is a vital aspect of ecommerce transactions. You need it to complete accounting records and use them for financial management, compliance, and forecasting business plans. However, some of this data holds your online business and client's confidential information.
Hence, you must ensure that you use and process them with full protection. If you have a business accountant for your ecommerce business, they must keep accounting records safe from cybersecurity threats. This article will discuss best practices for ecommerce business accounting. Read on to find out how to keep your accounting data safe and secure.
The Most Common Cyber Threats to Accounting
On the bright side, ecommerce is a good thing for businesses. But on the dark side, people can find new ways to target companies and steal some money from them. Unfortunately, it's relatively easy to get or access information these days. If you're not careful, you'll be exposed to tons of online data security risks.
Here are three of the most common cyber threats to ecommerce accounting and bookkeeping:
- Ransomware - A type of malware that prohibits access to client documents or software unless you pay for a ransom. They would use anonymous forms of payment like cryptocurrency and expose your company's confidential data.
- Phishing - A type of cyber threat where the attacker acts as a legit individual or organization and tricks people into opening an online link or file that contains ransomware. Then, they will use your information for fraudulent financial acts, such as in tax filing.
- Data Theft - An act of stealing corporate information, such as bank credentials and financial reports to use them for financial intentions. They hack on company databases, servers, or devices to steal confidential data. While this threat doesn't necessarily damage the whole system, it gives unwanted access to your resources for others' financial gain.
7 Best Practices for Ecommerce Accounting Security
Generally, cyber threats are out of your control. Most of the time, you never know who does them and when they plan to attack until they actually do. Fortunately, ecommerce businesses have a lot of options to counter these problems. Here are seven practices we can recommend:
Upgrade Your Accounting and Security Tools and Platforms
Relying on old or outdated technology can put you at a higher security risk. It might contain little to no security features, and hackers take advantage of this by effortlessly breaking through the systems. Ensure to pick software and tools that can detect security issues.
Moreover, never ignore the update notifications and ensure to run them as soon as possible. It's not just about old or new technology; even the latest tools can receive damage when the built-in security lacks quality or updates. Keep this in mind as one of your buying factors when choosing an accounting platform.
Make Additional Copies of Important Information
If your original documents went missing or were destroyed, you need a backup plan to revive them. It's always good to prepare physical and digital copies of your financial records, even if they are properly and securely stored in a certain device or physical storage.
That way, you can recover faster when something terrible happens. If you were unable to make backup copies before the incident, turn to external sources instead. For example, you can file a request for a tax return copy to the IRS or other related accounting authorities.
Create Strong Passwords and Store Them Properly
Passwords are keys to important private information. It is best to use long passwords that combine letters, numbers, and symbols in random orders. Also, ensure that every logging platform has a unique password; never use one for more than two credentials. That way, there are fewer chances to get hacked.
Unique passwords work best to secure your private files, but there's no way you can remember all of them in your head. In that case, ensure proper storage so you know where to find them when you're lost. Don't store in places that someone else can access, such as emails or computer documents with obvious file names (e.g., passwords.docx). You may try locked files or password managers as an alternative tool.
Leverage User Access and Permissions
Look for an ecommerce accounting software that allows you to manage user permissions. For example, you can divide your employees into different roles: compile the read-only users, standard access users, invoice-only access users, and more. It helps you control who can and cannot see certain sensitive data.
Moreover, it prevents the likelihood of unwanted intruders, whether they're within or outside of the company. What's important is that you can give access only to those who need such information and keep your accounting system worry-free.
Implement Multiple Login Authentication
If a one-step login makes you anxious, you can apply two or multiple-factor authentications as a security measure. It's where users need to pass a different form of identification aside from passwords.
These include fingerprints, card numbers, security codes, and captcha tests. It tightens the security further and decreases the chances of unwanted access. Multiple authentication features are usually pre-installed on software, but some are extensions that need installation. Additionally, ensure that your passwords are unique so that authentication can be useful.
Stay Secure Anywhere, Anytime With Cloud Accounting
Are you worried that one day you might lose your backup USB or computer documents? That time won't come with cloud accounting solutions. Cloud storage secures your files in a trusted third-party cloud vendor's space. For high-level security, it uses multiple backups and encrypted data transfer (which won't be read and blocked by another party).
Moreover, you can access your financial data anytime and anywhere with a cloud system. No matter the device, you can get in as long as you know the correct credentials. With a strong password and a cloud system, you can bring accounting security to another level.
Educate Your Team
You can't rely on technology and policies alone for data security. You also need the people who use them to know the dos and don'ts of cybersecurity. So educate them about the need for a top-tier accounting solution and the consequences. Make them understand and remember how crucial their smallest actions are to the overall system.
If you need to learn more, you can always find different study materials about accounting security. Some examples are certified online courses, financial expert advice, and articles about ecommerce accounting.
Safe and Accurate Ecommerce Bookkeeping and Accounting With Unloop
Most ecommerce entrepreneurs lose minor to major revenue percentage due to fraud. One of the reasons is that companies lack a strong accounting security system. It's one of the most important aspects of accounting for an ecommerce business, so you should build a strong foundation right from the start.
If you find the complexities of data security difficult to grasp, especially small business accounting for multichannel ecommerce, hire a bookkeeping or accounting team to take charge of accounting tasks. They will do most of the jobs, but they will also let you understand the goal of their action plans.
Consider working with Unloop. We offer bookkeeping and accounting services (with the help of partner accounting firms) to ensure your books are updated regularly, accurately, and securely.
If you want to know more about how to do accounting for an ecommerce business, Shopify or Amazon accounting essentials, or find the best accounting and budgeting for ecommerce businesses, book a call to discuss this further.
Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.