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8 tips for securely managing finances
Business Basics

8 tips for securely managing finances

9 min read

Can you handle a financial loss due to cyberattack? More than half of small businesses cannot. Inc. reported that when small businesses fall prey to a cyberattack, 60% will go out of business within six months. 

Since these attacks are increasing, it’s important that you securely manage your business finances to protect your future.

1. Separate personal and business bank accounts

One way to more effectively manage your finances and minimize exposure risk is to insulate your business finances. It’s necessary to open a business bank account, such as a business checking account, as soon as you get your business license and begin taking money at a trusted financial institution. Not only does it help you carefully manage your finances and easily itemize expenses for tax deductions—it keeps both you and your business more secure. 

Separate accounts for business and personal finances prevent accidental access, unnecessary exposure, and intentional fraud. Employees should never have access to your personal accounts or personal information, and you should never accidentally spend company money for personal use. Bank accounts are generally very secure, but only as secure as the users allow. Minimize the users and specific transactions to keep your accounts secure. 

2. Check credit reports

A business credit card can be a critical piece of the cash flow strategy for your small business finances. Business credit is generally secure, but to securely manage business finances you’ll need to stay aware of your credit score. 

Your credit score is much more than just a number or an indication of the interest rates you can expect when seeking financing. Your credit score is just one piece of your credit report, which is a concise analysis of your debts, payments, accounts, and financial history. It’s important to understand personal and business credit scores and where yours fall on the spectrum, because it can impact your ability to secure loans and favorable interest rates. But when it comes to security, the full credit report is what you need. 

Your credit report will indicate the following: 

  • Identification (SSN or EIN)
  • Credit accounts (including age of account, limits, and usage)
  • Payment history
  • Inquiries
  • Bankruptcy
  • Past-due or over-the-limit accounts

Your credit report can be an important security feature, as you’ll be able to see all accounts opened in your name, or your businesses’ name, as well as any suspicious inquiries or a judgment on your report. As a business owner you are entitled to a free credit report each year, and you should take advantage of this report to identify suspicious activity or fraud.

If you do suspect fraud or anticipate a breach, you can place a fraud alert on your accounts through one or all of the business credit bureaus.

3. Use secure passwords & MFA

Secure management of your business’s finances begins with your passwords. Each account and software platform needs a secure password for access. We recommend using these best practices for maintaining secure passwords: 

  • Long, memorable passwords instead of short, complex ones
  • Different passwords for each account
  • Use multi-word phrases that don’t include personal information (dates, names, etc.)
  • Use a password manager
  • Enable Multi-factor authentication (MFA) which can keep your account more secure and alert you to any attacks or attempted breaches
  • Regularly change passwords—try setting a recurring alert on your calendar to remind you
  • Never share passwords

Read our full article on securing business passwords here

4. Choose secure software

It’s 2020, so most companies are putting a premium on cyber security. You will have a wide range of choices when it comes to secure software for your business. It’s just a matter of choosing the best software for your business that also offers the necessary protections that keep your money and data secure.

According to Verizon’s 2020 Data Breach Report, 43% of cyberattacks are targeting small businesses.

How to identify secure software in 3 steps

  • Data encryption: Data encryption is a way of shielding your data from any outside entity. A good software platform will provide data encryption that will allow you to choose what data you share and then safely encrypt it so that even their platform can’t leverage that data for the wrong purposes. Many modern software companies rely on integrations, so data encryption is key for the API requests. 
  • Cloud-based: There are many advantages to cloud-based software, one of which is the ability to recover information in the event your account is compromised. Cloud software is also key for 24/7 monitoring and the implementation of decades of technology to provide many layers of security. 
  • Security testing: A good software company knows that it isn’t perfect, and relies on security experts to make it as safe and protected as possible. Choose a software platform that regularly tests for security breaches through independent services to truly identify and repair any weaknesses. 

A good example of secure financial software is Plaid, which relies on MFA, cloud infrastructure, data encryption, user permissions, and independent security testing to provide secure payments between financial applications and customers. 

5. Track digital activity

Tracking digital activity can help protect financial information. Email accounts, expense management software, bank accounts, and even credit card platforms may offer usage information such as the number of users, names of users, how often they login, when changes or updates are made, and other relevant details. You can track this activity simply by logging into the accounts, but you may also be able to turn on alerts or create a log of the activity for reference. 

If you notice any suspicious changes to your accounts or your business expenses aren’t adding up, this activity log should provide the best starting point for investigation.

6. PCI compliance

The Payment Card Industry Security Standards Council (PCI Security Standards Council) determines the safest measures for merchants and vendors to process payments via credit and debit cards—particularly online.

PCI compliance has two main goals: 

  • “Helping merchants and financial institutions understand and implement standards for security policies, technologies and ongoing processes that protect their payment systems from breaches and theft of cardholder data.
  • Helping vendors understand and implement standards for creating secure payment solutions.” 

From the PCI Security Standards Council

PCI compliance is not enforced or demanded, but is a status achieved and maintained by the institution. It is critical that you strive to remain perpetually PCI compliant and demand the same from any software or applications you use for your business. 

PCI compliance doesn’t just protect your customers. The best practices of payment card security will also shield you from breaches of data and finances. It’s a constant effort, but well worth the commitment. 

In fact, the PCI forensic investigators found that companies who experienced breaches had previously passed compliance but had grown lax and fallen out of compliance at the time of the attack. 

7. Update software frequently

Along with your ongoing PCI compliance, it’s important that you frequently monitor your software for updates or upgrades. The software updates pushed by developers are often designed specifically to fix identified weaknesses in the platform. If your software isn’t up-to-date you may be vulnerable to breaches or exposure. 

Our best advice is to allow for automatic updating or set a reminder in your calendar to systematically check for updates at the end of each week on any program containing sensitive financial data. This often includes point-of-sales, inventory management, expense management, budgeting, and accounting software. And it bears mentioning again—don’t forget to update passwords periodically, as well.

Hiscox reported that small businesses (sized 50-250 employees) lost $184k in 2019 to cyberattacks.

8. Rely on trustworthy accounting professionals

Small business owners often start out with a skeleton crew and wear multiple hats, but if you want to prioritize secure finances you’ll need to invest in professional accounting. Accounting software is helpful, but only gets you so far if you don’t have the human support that can help securely manage your business’s finances for maximum safety and savings. 

A professional business accountant or financial advisor can help your financials in the following ways: 

A good accounting professional will help you maintain secure and healthy finances to keep your business on track. 

Secure finances—worth the effort

We know as a small business owner that small businesses move fast, but we urge you to take the necessary precautions to help you manage your company’s finances securely—for you and your customers. 

Remember that security is an ongoing process, not an event. And when you’re ready for secure financial management software, Divvy will be ready, too.

Divvy creates software to track business expenses, create budgets, pay bills, and create virtual credit cards—for free. See more with a demo of Divvy.

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