The Dangerous Secret of Cloud Accounting (and What Accountants Must Do in 2025)


Why Ignoring Terms of Service Can Put Your Firm at Risk

A 2015 poll by the International Association of Privacy Professionals found that only 15% of users read Terms of Service agreements in full. Another 15% skim them. The remaining 70%? They don’t read them at all.

For accountants and bookkeepers, this poses a real threat. If you rely on cloud accounting platforms like Xero, QuickBooks Online (QBO), Sage, or MYOB, not knowing what you’re agreeing to could cost your clients their data—and cost you your reputation.

What the Fine Print Actually Says

Most cloud platforms are clear on this point:

Xero, known for being user-friendly, is quite direct: “Data loss is an unavoidable risk when using any technology. You’re responsible for maintaining copies of your data entered into our services.”

That’s just one of eleven responsibilities listed in Xero’s Terms of Service. Other platforms are no different.

What Happens When You Don’t Back Up?

Most cloud platforms are clear on this point:

  • - You: I can’t see my employee data after yesterday’s outage.
  • - Xero: Please restore your data from your backup.
  • - You: I didn’t make a backup.
  • - Xero: We’ll add you to the recovery queue. You're number 6,524.

This isn’t fiction. Service interruptions happen. And platform providers expect you to have your own backup strategy in place.

Why Cloud Accounting Is Still Worth It—With Precautions

Cloud accounting is efficient, scalable, and affordable. It improves collaboration, automates reporting, and integrates with hundreds of apps. But all these benefits assume you are compliant with security expectations and maintain data protection best practices.

Compliance: Your Legal and Ethical Obligation

Backing up financial and client data isn’t just smart—it’s often required by law. Privacy legislation, cybersecurity standards, and professional indemnity insurance policies typically mandate that firms take “reasonable steps” to protect data. That includes having backups.

The platforms back up their infrastructure. You are responsible for backing up your data.

What Is "Reasonable Effort" in a Cloud World?

Best efforts vary by task and resources, but depending on a vendor’s recovery queue isn’t ideal. In fact, it can lead to business continuity violations and non-compliance with data retention rules.

How to Eliminate the Risk

  • Download and store backups manually – This can take 12–18 minutes per file, per client. It’s time-consuming but possible.
  • Automate backups with trusted third-party apps – This ensures continuity, audit readiness, and peace of mind.

We built our own automated solution to do just that. Learn more and try it free: https://wowzerbackupandrestore.com

In Conclusion

Cloud accounting is powerful—but only safe when paired with proper backup practices. Don't let a hidden clause in the Terms of Service derail your compliance strategy or damage client trust.

Be the expert. Stay compliant. Back up your data.