Cloud backups: Should you be doing more?

The benefits of cloud accounting are now well established. If you aren’t aware of these, you should contact your accountant immediately to discuss the business benefits you’re losing by not being part of the cloud software community.

One of the benefits of cloud software is the security it provides by utilising the servers of large and secure companies like Xero, Intuit and MYOB. However, like any other internet service, it is not 100% risk free. Generally speaking, the big software companies (including Microsoft, Xero, MYOB & Intuit) are not required to back up client data and don’t have to recover it for you in the event of a security breach.

So if something does go wrong or there is a glitch in the service, what remedies, or better yet, preventative measures, can you take?

BE AWARE OF YOUR TERMS OF SERVICE

All the major cloud accounting providers have a similar message hidden in their terms and conditions which shifts the responsibility of backups onto the user, insisting users must keep their own backups in order to recover information in the event of data loss. Most providers strongly encourage users to back up their data regularly outside the cloud system, with both Xero and Intuit taking ‘no responsibility’ for any lost data.

Terms of Service agreements will commonly include clauses like the following:

You must maintain copies of all Data inputted into the Service. [Company] adheres to its best practice policies and procedures to prevent data loss, including a daily system data back-up regime, but does not make any guarantees that there will be no loss of Data. [Company] expressly excludes liability for any loss of Data no matter how caused.

With the growing occurrence of ransomware attacks – like the ‘CryptoLocker’ virus that locked small businesses out of their data – is the cloud’s level of security alone enough to rely on? It should at least make users rethink their approach to protecting their online data.

WHAT ARE YOUR OPTIONS?

What preventative measures can you take? Should you do regular data backups to ensure contingencies and recovery plans are in place? We examine a few options available to you below, along with some pros and cons.

Option 1: Do nothing

Xero and Intuit both claim that their data is incredibly secure. There haven’t been any large scale examples of data loss at this stage and it is reasonable to think that this trend will continue. Up to this point, services are rarely down and most users will have never needed a backup to save the day.

Option 2: Export as much as possible via reports

Xero and Intuit say they don’t support a function for users to back up their own data. They believe this compromises the ‘one source of truth’ which is used as a selling point for cloud software. They do however recommend a list of reports for the purposes of a backup:

+ General Ledger                            + Trial Balance                   + Detailed General Ledger
+ Detailed Account                          + Aged Receivables            + Aged Payables
+ Transactions Balance Sheet
+ Chart of Accounts                        + Profit & Loss                  + Business Activity Statements
+ Fixed Assets                                    + Contacts                       + Invoices & Bills

These reports appear to capture key information on a cloud accounting file and could be exported and saved onto a user’s hard drive for safe keeping.

  • Cost:  
    Nothing, other than time
  • Pros:      
    No financial expense
    Captures all necessary data
    Doesn’t require 3rd party involvement
  • Cons:  
    Some information may be unnecessary and copied twice + Lot of time to re-enter some of this data + Requires user diligence in routinely copying these reports

For the Intuit user, this seems to be the best and only real option in order to backup data currently. An MYOB user should be able to take their file offline and take a backup of that.

Option 3 for Xero users: Utilise a third-party backup provider

For the Xero user, there are a few options available by third party providers to create backups of their file.

Control C: Uses daily backups to save data frequently.

  • Cost:          
    $50 annually per file
  • Pros: 
    Has an app
    Direct download to office
    Backs up transaction data including docs
    Easy access to historic backups
  • Cons:
    Cost bound by download size.
    Limited to 1,000 transactions saved a day

Boxkite: Takes daily backups and has comprehensive data including journals, bank transactions financial statements. Send files directly to a dropbox file linked to the account.

  • Cost:  
    $15 a month per file
  • Pros:  
    Backups saved within hours of new data in Xero
    Comprehensive data picked up
  • Cons:    
    Limited information regarding process
    Expensive
    Requires drop box for data to be sent to
    Limited to 1,000 transactions daily so initial backup will take some time

Ledger backup: Files are stored as a zip folder and sent through via an email or Microsoft OneDrive. Data is backed up on a schedule set by the user.

  • Cost:   
    $5 a month for single files, up to $150 a month for 100 backups
  • Pros:
    Data is saved as CSV
    Scheduled saves can be altered for larger clients
    Saves files that are in the folder section of Xero (does not save files attached to specific transactions)
  • Cons:   
    Access to these files is questionable
    Does not restore files

Taking cloud file backups at regular intervals is much like an insurance policy – you hope to never actually need it, but if you do, it is a worthwhile exercise. Sometimes you simply need to prepare for the worst and hope for the best.

Accru specialises in cloud accounting and can assist you to make the most of your cloud software. Please contact us if you need assistance.

By Gareth Livingston, Accru Melbourne

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