Accounting is all about managing records of finances. However, simple the term may sound the operations involved with it are not. Irrespective of the industry and size of business, the accounting remains a core process to keep the overall functions progressive and streamlined.
Accounting operations have come across significant changes in recent times to deliver more accurate and faster results. Development in technology holds the main responsibility for that. Some of the benefits that accounting has gained because of advancements in technology are:
- Ability to take instant actions for urgent requirements
- Real-time monitoring of business performance
- Global connectivity of finance and transactional records for the firm
- Integration between the applications to automate data sharing
- Reduced errors and manual efforts to increase efficiency and accuracy
The Dependency of Business on Accounting Operations
These benefits have added to the enhanced competition and have also got businesses (and their customers) accustomed to them. For instance, consider the time this process may take:
- Generating invoice for a service
- Sharing the invoice with customer
- The customer makes the payment
- Confirmation of payment
- Enabling the service access to the client
With the level of automation that industries are currently relying upon, this entire process can be executed within a matter of seconds. However, if the accounting operations go down for an hour, the process will go on hold. The client will not like it.
There is also a possibility the client would contact your competitor and will starting using their services by the time your accounting department gets back on track. Also, the client might tell their peers about it.
Moral of the story is: downtime in the accounting services means –
- Billable hours of accounting team are lost
- Clients may be lost
- Quality of services suffers
- Finance record loss or discrepancy
According to Inc, almost half (40% to 60%) of small businesses that are working without a formal disaster recovery plan shut down after a disaster strikes. Implementing a precise Disaster Recovery and Business Continuity plan can raise the chances of sustainability significantly.
How to Deploy Business Continuity in Accounting
Some incidents cannot be predicted. They could be natural as well as human-instigated. To keep your accounting department safe from such an event, you need a well-framed plan. Here are some of the steps that you can take to deploy a Business Continuity and Disaster Recovery (DR & BC) plan for your accounting services.
Step 1: Identify the Resources in Your Department
Start with the identification of essential resources of your accounting department in order to find protection for them later. For most of the businesses, critical resources of the accounting department are staff, data storage, infrastructure, workplace, and so on. You are advised to create an even narrower list of resources to address the issue even more precisely.
Step 2: Identify Types and Severity of Risk to the Resources
Risk analysis and assessment merely require you to look for the possible events that can disturb the accounting operations. You can categorize them into different categories, such as – technology issues, staff issues, workplace issues, ransomware attacks, and more.
You can list down the possible disturbances in the categories (for example technology issues can be power failures, local hardware disruption, limitations with the data storage, etc).
Once you have listed the possible risk, the business continuity plan requires you to recognize their severity. Mostly, they are categorized as: negligible, moderate, severe, and hazardous.
Step 3: Define Risks and Their Impact on the Processes
It is crucial to understand that some processes are more critical than others. By identifying the resources and risks in the previous steps, you can analyze how they impact the operations and how much impact for each process can you bear. In other words, get your priorities right.
The impact on the processes can be identified in various ways. If it is related directly with the monetary transaction, you can count on the loss. A survey by IDC on the Fortune 1000 indicates that the average hourly cost of an infrastructure failure is $100,000 per hour. The number could be less for smaller businesses. However, it might matter more for them.
Other processes may involve the issues that could be evaluated with regards to downtime. Effect on quality and loss of clients are some of the other factors that some experts suggest taking into consideration.
After gathering all these factors, you can define Recovery Time Objective (RTO) and Recovery Point Objective (RPO) for every business process. These factors determine the loss due to a disaster and time to restore the services after the crisis.
Step 4: Formulate and Deploy the Methods to Mitigate the Risks
After the analysis of the available resources and their vulnerability, you need to put in the actions to reduce the risk. Some of the quick methods to get a business continuity and disaster recovery plan are:
a) Deploy security at the workplace. It is something that most firms already have in place. Restricted access, CCTV surveillance, availability of firefighting solutions, multiple exits, etc. are some of the methods suggested.
b) Use redundant resources for necessary hardware and infrastructure. Along with that, you can focus on reducing the dependency on hardware by choosing alternatives, such as – e-docs instead of printing the documents, cloud hosting of accounting applications to work without a local server, and other such solutions.
c) Maintain an offsite backup of the data to ensure that any event of disaster doesn’t disturb your accounting operations for long.
Step 5: Train Your Staff
In the case of any disaster that can disrupt operations at your workplace, your employees should be aware of their roles and responsibilities. Conducting regular mock drills to train the employees is one of the recommended actions. The recommended practice is forming a DR & BC team that will handle troublesome situations.
Accounting department works in tandem with various other departments, which makes it necessary for DR & BC team to have members from different departments to carry out the plan correctly.
Step 6: Analyzing the Plan and Improving it
As the technologies upgrade, your processes change as well. Therefore, the plan to keep the processes continuous will also require updates. It is vital that you keep analyzing the performance of the existing plan. While you conduct the mock drills to train the employees, you can also check the effectiveness of the plan as well.
Going with the scheduled and organized plan assessment is a smart move. Maintain a proper record of the expected RPOs and RTOs compared with the performance of the plan during the assessment process.
Increasing number of businesses are choosing cloud as their DR & BC solution. There are some hosting service providers, such as – Ace Cloud Hosting, that offer built-in DR & BC solutions along with 99.999% uptime guarantee, which means downtime of fewer than 6 minutes in the year.
You can also contact our cloud solutions consultant to know more about how you can leverage cloud services to enhance the performance of your accounting team while delivering continuous service.