How safe are your sensitive financial data if you outsource it to an offshore accounting firm? For US businesses, outsourcing accounting tasks could mean savings and access to specialized expertise. But even then, when companies entrust confidential information to offshore partners, the question of data security is usually important.
Offshore accounting services simplify complicated accounting tasks but safeguard your information. Here are some steps and best practices to help you keep your financial info secure through these services.
Why US Businesses Choose Offshore Accounting Services
Many US businesses are outsourcing accounting tasks to offshore partners. Such services offer access to skilled accountants at a fraction of the price of getting in-house staff. From accounting and payroll to financial reporting and tax preparation services, offshore accounting services help simplify operations, improve productivity and also free up your time to concentrate on main company tasks.
Still, outsourcing exposes client and company data including financial records, tax information and payroll information. This data might be in danger of unauthorized access, theft or breaches in case not properly safeguarded.
Knowing the Risks of Data Breaches
No business is immune from data breaches. Cyberattacks, accidental mishandling of information and insider threats are only some of the dangers of outsourcing. These risks could become multiplied when dealing with offshore accounting services in case the service provider doesn't implement effective data security controls.
For instance, encrypted data transfers, ineffective password policies and nonexistent physical security in the service provider's office can expose your financial info to these kinds of threats. Recognizing these dangers is the first step toward mitigation.
Best Practices to Protect Your Data
You can take various measures to safeguard your information in case you use outsourced accounting services:
1. Partner with Reputable providers
Not all offshore accounting service providers are equal. Do your due diligence prior to signing any contracts. Search for partners that have experience dealing with US businesses and enforcing stringent security requirements. Ask about their data security procedures & certifications and adherence to international regulations like GDPR or ISO 27001.
2. Use encrypted Communication Channels
All transmissions of data between your business and the offshore provider must be Encrypted. Secure file sharing platforms and virtual private networks (VPNs) safeguard your private data throughout secure transmission.
3. Set Clear access Controls
Limit access to your data to the people who need it most. Offshore accounting service providers must establish role-based access controls to restrict access to very sensitive data to authorized personnel only.
4. Use Cloud-Based Solutions
Cloud accounting software provides greater data security than local storage. Offshore accounting service providers that utilize secure cloud platforms backup your information and prevent unauthorized access. These platforms frequently offer two-factor authentication, firewalls and real-time monitoring.
5. Demand regular security audits
A good offshore provider should perform regular security audits and send you the results. These audits evaluate their security and locate possible weaknesses.
The Role of Strong Policies on Data Security
Data security isn't about technology only. It's also about enforcing other tough policies like:
- Password Policies: The first line of defense, which is often updated passwords, must be strong. Offshore partners should demand complex passwords for all workers.
- Data Disposal Protocols: Very sensitive info must be destroyed when no longer necessary. For example, electronic files should be wiped clean and paper documents shredded.
- Training for employees: All personnel in the offshore service provider must be trained in cybersecurity best practices to reduce human mistakes.
Questions for Your Offshore Provider
Data security should be a conversation everybody should have before they partner. Some essential questions to ask your offshore accounting service provider:
- What encryption techniques do you employ for data transfer and storing?
- How can you protect my sensitive information?
- What certifications / compliance requirements do you follow?
- Do you do regular security audits and discuss the findings?
- How do you handle used data?
These questions can give you an idea of their commitment to data security.
Related Blog | Data Security Benefits of Tax Preparation Outsourcing for U.S. Firms
Final Words
Outsourcing to offshore accounting services might transform the way you handle your business finances. However, security must always be a top factor in your process. Best practices like selecting a dependable provider, using encrypted communication and enforcing good security procedures can help safeguard your personal data and your rights while outsourcing.
Your financial info is basically your business’ lifeblood. Choose an offshore accounting service provider that cares about data security so you can receive a genuine partner in your business growth.
The Fino Partners is a provider of offshore accounting solutions with a strong data security focus. Let us simplify your accounting while protecting your sensitive information. To learn more, contact us today.
