8 Reasons Why You Should Back up Xero

19 Jun 2024

3 min read

Anju George

Cloud-based accounting software like Xero has become popular for managing business finances. Xero serves over 4.2 million customers across more than 180 countries globally, underscoring its widespread adoption among small and medium-sized businesses. Despite Xero's built-in security features, regular backups are essential to safeguard against data loss and cyber threats and to ensure business continuity.

Data loss can have severe repercussions. Recent statistics show that nearly 70 percent of small businesses close within a year of experiencing significant data loss. Moreover, the data breach cost for SMBs averages around $4.45 million, which can be devastating for businesses with limited financial resources. Given these statistics, it is evident that safeguarding your Xero data through regular backups is not just a precaution but a necessity. In fact, Xero themselves recommend regularly backing up your data to ensure data safety:

"You're responsible for keeping records of data entered in Xero, so we recommend you regularly perform your own backups."

"Data loss: Data loss is an unavoidable risk when using any technology. You’re responsible for maintaining copies of your data entered into our services."

"No compensation: Whatever the cause of any downtime, access issues or data loss, your only recourse is to discontinue using our services."

This article explores the different reasons to back up Xero and how to integrate best practices to ensure comprehensive data protection.

1. Limitations of Xero's native retention

Xero's built-in retention features are limited and can pose challenges for businesses seeking comprehensive data protection. Here are some key limitations:

(a) No native recycle bin

Xero lacks a native recycle bin feature, making it difficult to recover deleted items directly through the platform. Once data is deleted, it cannot be easily retrieved unless a separate backup exists. Therefore, it is important to have a third-party backup solution to ensure that deleted items can be accessed as and when needed.

(b) No native retention

Xero Starter, Standard, and Premium plans do not offer any data retention to protect data from accidental deletions. The only way to take a backup of your Xero data is to export all the data manually. You need to export data from individual areas of Xero manually and reports from the reports screen, which can be time-consuming for large volumes of data.

(c) Lack of granular restore options

None of the Xero plans has an option to restore individual transactions or specific records. This may not be sufficient for businesses that need to recover specific data points without affecting other data.

(d) No easy way to track deletions

Tracking changes in transactions or deletions in Xero requires a cumbersome journal and history notes review.

2. Data loss due to third-party app integrations

Xero integrates seamlessly with numerous third-party applications through its API, enhancing functionality and streamlining workflows across different financial tools. However, integration failures can lead to data discrepancies or loss. For instance, if an integrated payroll system or CRM fails to sync correctly, it could result in incorrect financial records.

Regularly backing up your Xero data, including data from third-party integrations, ensures you can recover from integration issues quickly and efficiently, maintaining the integrity of your financial information.

3. Risk of unauthorized access

Xero’s role-based access control is crucial for managing user permissions and ensuring that only authorized personnel can access sensitive financial data. Errors in setting these permissions can lead to unauthorized access or accidental data manipulation.

For example, if an employee inadvertently gains access and deletes important financial records, having a backup ensures you can access the data and correct the permissions, maintaining data integrity and security.

4. Legal and compliance requirements

Xero maintains detailed records of all financial transactions and user activities, essential for audits and regulatory compliance. Losing these records can lead to non-compliance and legal issues.

Regular backups help preserve these historical records, ensuring you meet compliance obligations and can provide accurate data during audits or legal inquiries.

5. Accidental deletions/human error

Accidental data deletions are a common issue in any business environment. Whether it’s an erroneous entry deletion or an employee mistakenly removing critical financial data, having a backup ensures you can quickly access the lost information without disrupting your business operations.

For instance, if an employee accidentally deletes a batch of transactions, the ability to restore this data from a backup is crucial to maintaining business continuity and reducing downtime.

6. Cybersecurity threats and data breaches

While Xero implements robust security measures, no system is entirely immune. A comprehensive backup strategy ensures that your financial data is not lost during a cyberattack, minimizing downtime and monetary loss.

For example, in the event of a ransomware attack that encrypts your financial data, having a backup allows you to access a safe snapshot of your data from a point in time before the attack, ensuring business continuity.

7. Data corruption and technical failures

Technical glitches and data corruption can occur unexpectedly. A backup allows you to restore your Xero data to a previous, uncorrupted state, ensuring the integrity of your financial records.

For instance, if a system update or software bug corrupts your financial data, a backup enables you to revert to an uncorrupted version, maintaining data accuracy and reliability.

8. Business continuity and disaster recovery

In the event of a disaster, such as a system failure or natural calamity, having a backup is essential for business continuity. It ensures you maintain access to your financial data and can resume operations with minimal downtime.

For instance, if your office experiences a fire or flood, having cloud backups ensures you can access your financial data from any location, thereby minimizing operational disruption.

Conclusion

Regularly backing up your Xero data is critical for safeguarding your financial information, ensuring compliance, and maintaining business continuity. By implementing a secure cloud backup solution like SysCloud, you can protect your business from data loss and recover swiftly from disruptions.

Frequently Asked Questions

Why is it important to back up Xero data?

Backing up Xero data is crucial to protect against accidental deletions, cyber threats, technical failures, and limitations of Xero’s native retention features. It ensures business continuity and compliance with legal requirements.

Does Xero back up your data?

No, Xero does not back up your data and recommends that you back up your data regularly. Do not take our word for it; here is the extract from Xero’s support documentation highlighting the need to back up your data:

“You're responsible for keeping records of data entered in Xero, so we recommend you regularly perform your own backups.”

Can Xero data be recovered after a cyberattack?

Yes, with a robust backup solution, Xero data can be restored after a cyberattack, minimizing downtime and financial loss.

What are the best practices for backing up Xero?

Best practices for backing up Xero include implementing a third-party cloud backup solution, storing backups in multiple locations, regularly testing backups, and keeping backups secure from ransomware and cyberattacks.

How often should I back up my Xero data?

It's recommended to back up your Xero data regularly, such as daily or weekly, depending on the volume and criticality of your financial transactions, and your business requirements.

Are third-party cloud backup solutions reliable for Xero?

Yes, third-party cloud backup solutions like SysCloud are designed to provide robust and automated backup for Xero, offering enhanced data protection and recovery options. Learn more about SysCloud backup for Xero.

Have more questions? Learn more about Xero backup

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