Thanks to the internet, business operations have changed drastically over the past two decades. Financial management is different now, revolutionised by online banking, closed accounting software, automated payment systems, and tools that entrepreneurs can use to streamline their operations and improve their bottom line.
However, the benefits come with new risks. Cybersecurity threats like phishing, hacking, and identity theft pose problems to a business's finances. The consequences of a security breach can be severe. However, they're not inevitable. There are ways to maximise the benefits of the internet and technology and minimise or even eliminate the extra risks involved. Here are the factors you should look out for!
The rise of online banking has made it easier for businesses to manage their finances from anywhere with an internet connection. You can check account balances, transfer funds, and pay bills with just a few clicks. What was once the job of many accountants or secretaries can fall down to just you or one employee, meaning you'll spend less on paying for financial management.
Cloud-based accounting software is pretty much essential for modern businesses. The special programs can make it easier for you to automate invoicing, track expenses, and generate financial reports. While data analysis is still a human task, making that data easily digestible is made much simpler by financial tracking software.
You can even play around with the settings to pose different questions to the data. Where are the profits coming from? Where are the biggest expenses? You can acquire this data much easier with digital records and finances.
That said, you should use online banking with caution. Passwords should be strong and unique, and you should always use two-factor authentication if it's an option.
Digital payment systems have transformed the way that businesses accept payments from customers. These systems make it easier to accept credit card payments, automate billing, and process refunds.
The benefits do have risks. Payment systems are middlemen that often collect fees and are still tracked by tax records. Some systems are less reliable than others, and the reliability of payment software is sometimes up in the air.
Businesses must ensure that payment systems are appropriately integrated into their accounting software to ensure accurate record-keeping. They must also ensure that payment systems comply with data privacy regulations such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA).
Cybersecurity is a new issue that businesses have had to face as the internet has become more and more a part of financial management. Hackers and cybercriminals can use phishing emails, malware, and social engineering to gain access to sensitive financial information.
To protect against these threats, businesses should take a comprehensive approach to cybersecurity. For example, you should investigate cyber security solutions, train employees on how to identify and avoid possible threats. You should have regular security checks and updates as common issues get more advanced.
Data backups are also essential in case of a security breach. Backing up data to an offsite location or cloud-based system can help businesses quickly recover from a cyber attack.
Finally, businesses should consider cyber insurance. Cyber insurance can help protect against the financial losses and reputational damage resulting from a security breach.
Outsourcing and collaboration are common in business, and even more so with the help of the internet. Entrepreneurs can work with professionals around the world without the need for a physical meeting or office. Outsourcing financial management such as bookkeeping or payroll processing can help your business save time and money.
However, it's essential to vet outsourcing partners carefully to ensure proper cybersecurity measures are in place. It's also vital to use secure communication tools and encryption when sharing financial data with external parties.
Collaboration tools such as video conferencing, project management software, and cloud-based file sharing have also become essential in the internet age. These tools allow remote teams to work together seamlessly, improving productivity and efficiency. First, however, ensuring that all collaboration tools are adequately secured to protect against cyber threats is crucial.
The internet has made running a business more accessible but not necessarily less risky. Regardless of how digital they go, entrepreneurs need a proactive mindset to their financial management and security. With the right tools and practices, you can streamline your financial operations, increase efficiency, and protect yourself from cyber threats.
Businesses must keep up with the latest developments in technology and cybersecurity to ensure that their finances and data remain secure. By staying informed and taking the right approach to risk management, you can thrive in the internet age.