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Finance

DATA BREACHES: REDUCING RISKS FOR ACCOUNTANCY PRACTICES

Bruce Penson, Managing Director at Pro Drive IT

 

We recently explored why data breaches are an issue for accountancy practices and what can go wrong if you do suffer one. But what can you do to avoid one in the first place?

Before looking at how we can prevent data breaches, it’s worth considering the underlying causes. Most breaches can be attributed to the actions of people. The Information Commissioner’s Office (ICO), which is responsible for data protection in the UK, said about 50% of reported breaches in the last quarter were down to data being ‘disclosed in error’.

With all that in mind, here are our practical tips for preventing a data breach and handling one if it does occur.

 

Train your staff!

Considering human actions — whether intentional or not — are the leading cause of data breaches, you’d be surprised how many firms do not provide regular, or even any, staff training on the subject.

We know training can be a burden, particularly for smaller firms, but these are some of the essentials to cover:

  • All staff should read your information security policy on starting and at least once a year thereafter (just make sure it’s easy to understand and not too long).
  • You should provide cyber security training at least once a year, preferably twice a year. Online training is the easiest way to manage this, although it can be more engaging face to face.
  • Train your staff on the correct use of your IT systems — especially new starters or when you introduce a new system. If employees can use the system properly, they’ll be less likely to disclose data accidentally.
  • Keep your staff up to date on developments, particularly on breaches that may have happened elsewhere and why. You can subscribe to blogs to get this information delivered to you and pass it onto staff in a monthly newsletter.

 

Bruce Penson

Certification

Taking your business through a cyber security certification program will ensure your firm is following best practice and has the right policies and procedures in place to prevent cyber-attacks or data breaches.

The international standard for this is ISO 27001, but this may be a little tedious for small and medium-sized firms. Cyber Essentials and IASME Governance, which cover the general management of your data and configuration of IT systems, are much easier for SME firms to achieve.

We at Pro Drive firmly believe the accounting world should follow the lead of the legal sector, which has made Cyber Essentials a mandatory requirement.

 

Passwords

With more and more business data being stored in the Cloud or on the web, passwords have rapidly become a significant weak link in a firm’s IT systems. Why?

These days, we have a lot of passwords, but secure ones aren’t easy to remember. As such, people tend to use memorable passwords, reuse the same one for multiple sites or apps and in the worst cases, write them down or save them on their computers. Go on, admit it: do you have an Excel sheet with all your passwords on it?

All this can lead to a very unwelcome problem if someone gets access to your password — either from a phishing email or if it is disclosed when one of your providers suffers a breach.

There are two things you can do right now to help avoid this scenario. Firstly, you should encourage your staff to use a password manager to securely store passwords and identify any that are weak or duplicated. Secondly, arm them with the latest advice from the National Cyber Security Centre on how to generate a secure password using three random words.

 

Communicating breaches

Even with the best precautions in place, it is almost inevitable you will suffer a breach at some point. So, when this happens, you need to be prepared with an appropriate breach response plan that includes:

  • Any actions that need to be taken with your IT systems (for example, notifying your IT team or provider);
  • Whether you need to notify the ICO and if so, how to do it;
  • How to inform anyone whose data is involved in the breach;
  • Whether you should be communicating the breach in public, e.g. via social media.

Accountancy firms may be familiar with the recent data breach at Wolters Kluwer, one of the leading providers of software to the sector. In a perfect example of how NOT to communicate such an issue, Wolters Kluwer only said there was an issue with its systems — not what had happened, or which data was potentially compromised. This led to rumours on social media and significant worry among clients.

Although no firm likes publishing details of a breach, it is better to do so as soon as possible, along with the steps being taken to address it. This way, you can demonstrate your firm is in control.

Don’t let a data breach put your practice out of business. Join us at our Data Breach Workshop in October to find out more about minimising the risks. Until then, you can always contact our expert team for advice.

 

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Finance

HOW TO MANAGE YOUR CASH FLOW IN UNCERTAIN TIMES

CASH FLOW

While the world is constantly changing, probably at a faster pace now than ever before, businesses need to manage cash flow and costs to drive success in uncertain times, says Matthew Thorpe, partner at Haines Watts Essex.

 

Managing people and expenses

There are certain costs that you just can’t avoid as a business – to keep your operation running seamlessly, but scrutinise the detail and cut down on any non-essential expenses. Check things like your SaaS subscriptions and look out for costs that auto-renew and if you do cancel, remember to also cancel your direct debits too.

You might want to put a freeze on hiring new people, but ensure that other roles and responsibilities are clearly and efficiently assigned across your team. The Coronavirus Job Retention Scheme (CJRS) has been introduced by the Government to help UK employers access support to continue paying part of their employees’ salary to avoid redundancies. Affected employees are classed as “furloughed workers”.

Once furloughed, the employee cannot work or they will not qualify for the scheme. For businesses that perhaps need to go further, there may be some roles they don’t need any more, but businesses should work sensitively with people to manage this.

 

Cash is king

In uncertain times, owner managers will need to keep operations going to ensure financial stability. You should look to manage debt more efficiently by negotiating extended payment terms with creditors. You could also renegotiate loans for longer repayment terms to give yourself a lower monthly payment, helping the business to set some cash aside each month.

 

Daily forecasting

As a business owner, you need to create a cash flow projection and update this regularly if you are to improve things. You can do this using financial information to create a picture of how the business will look in the next 12 months. The forecast needs to show revenue sources and expenses, which will show the ups and downs of business income and can be used to make sure that enough finance is in place.

 

Good house-keeping

While banks and other finance providers recognise that the cashflow of a business may be disrupted by the impact of Covid-19, they are still going to want to see that you are viable and continue to trade in these uncertain times. Make sure your business is organised and don’t let disorganisation cause unnecessary issues. You can evidence this by having detailed forecasts; current order books and projections (as best as possible).

Having instantly accessible, accurate financial information allows you to plan effectively, spot issues before they become problems and manage your money in the most efficient and rewarding way.

 

Embrace technology

Software is now incredibly user-friendly and accessible from anywhere. For a business owner embracing the technology, this means:

  • Invoicing can be done instantly when a job is complete, emailed to the customer with an easy to use link to a payment platform.
  • Comparison websites can automatically monitor and help maintain lowest cost for things such as light & heat, insurance etc.
  • Technology can be used in place of face-to-face meetings. It can also enable them to adapt production lines to different demands.

All of these things and more, used properly, can make managing your business finances quicker, easier and often cheaper.  You will also be able to bring clarity to where your business stands and prepare for the next steps.

 

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Finance

HOW FINANCIAL SERVICES CAN GET TO GRIPS WITH RISING SUPPLY CHAIN RISK

FINANCIAL SERVICES

By Alex Saric, smart procurement expert, Ivalua

 

UK businesses have never been more dependent on their suppliers to help them deliver goods and services to their customers. Be it retail, manufacturing or financial services, suppliers have a vital role to play when it comes to innovation and meeting customer expectations. However, as supply chains become increasingly global, businesses are potentially exposing themselves to more risk than ever before.

This is especially true in financial services. Whether it’s the impact of geopolitical events like Brexit or global tariff wars, supply shortages, security or the businesses impact on the environment, an organisation’s failure to identify and mitigate risk could see millions wiped off its share price, and its corporate reputation left in tatters. Risk can present itself anywhere and at any time, so financial services firms must be ready to address it. However, many simply don’t have the ability to evaluate suppliers for risk factors, leaving them wide open to business operations being hindered, or being slapped with financial penalties.

 

More suppliers, increasing risk

One reason why financial services firms aren’t able to evaluate suppliers is the breadth and scale of today’s supply chains. For example, French oil company Total said in in a recent human rights briefing paper that they work with over 150,000 direct suppliers worldwide. This is just one example of how large and varied the roster of partners has become. Research from Ivalua has found that financial services businesses on average are working with around 3,600 suppliers annually, which is evenly split between UK-based and international partners. That number is expected to rise, with 60% expecting the number of suppliers they work with to rise.

The expanding nature of suppliers is only going to expose financial services firms to more potential risk than ever before, yet 78% say they face challenges gaining complete visibility into suppliers and their activities.

A lack of supplier visibility leaves businesses unable to identify and mitigate against supply chain risk. In fact, almost three-quarters (73%) of financial services firms have experienced some type of risk during the last 12 months. These include; supplier failure (43%), environmental impact, such as pollution or waste (35%) and supply shortages (45%). Supply shortages can be among the most damaging to a business, as seen by both the KFC chicken shortage which closed stores, and the summer 2018 CO2 shortage which caused companies such as Heineken and Coca-Cola to pause production, impacting supply across Europe during the World Cup.

 

Businesses unprepared for the worst

One way financial services firms can better prepare for risk is to ensure they know what to plan for to reduce the impact. However, whilst some say they have a contingency plan in place to deal with risk, many of them are unprepared. Financial services firms admitted to not having comprehensive and deployed contingency plans in place to prepare the supply chain for risk such as; natural disasters (68%), supply shortages (67%), geopolitical changes (65%), environmental impact (63%), supplier failure (62%) and modern slavery (50%).

In order to effectively prepare for these types of risks, it’s vital that financial services businesses fully understand their suppliers, their business environment, global variations in regulations, geopolitics, and a host of other factors. But for many, there are multiple challenges when it comes to gaining this understanding. A prevailing factor is an inability to gain visibility into all suppliers and activity because supplier management data is stored in multiple locations and formats, making insights difficult to access. This leaves teams unable to review supplier activity and assess compliance.

 

Making supplier management smarter

It’s imperative that financial services businesses are able to respond or prepare for supply chain risk. Clearly, much more needs to be done to ensure they have complete visibility of suppliers, especially in an era where regulators can levy heavy fines for GDPR breaches and scandals spread in minutes over social media. These types of risks can be reduced in the future if procurement teams have a 360-degree view of suppliers which will help with contingency planning and risk management.

For example, in the instance of supply shortages, plans could be put in place that identify alternative suppliers to ensure any shortages do not impact end users. This type of supplier collaboration is paramount when it comes to managing and mitigating against supplier shortages. When it comes to regulations, financial services firms can’t allow a lack of visibility to limit their ability to ensure all suppliers are compliant.

To do this, teams must take a smarter approach to procurement that gives complete visibility into suppliers throughout the supply chain. This will allow financial services firms to identify and plan for risk, reducing the potential damage, and ensuring they are working with and awarding business to low-risk suppliers. Supply chain risk is rapidly becoming an overarching concern for financial services firms, but by providing the ability to assess suppliers, they will have all the insights they need to mitigate the impact on business operations.

 

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