A client left me on good terms a while back. Bookkeeping went in-house, clean handover, no drama. Months later their new bookkeeper asked for the prior year's transaction listing. The subscription had lapsed during the handover and nobody had exported anything. The data was not lost, just behind a paywall nobody had budgeted for.
Disclosure up front: I work at Xero. Read this as field notes from someone who uses the platform daily, not a neutral review.
TL;DR: Cloud ledgers retired the backup habit the desktop era enforced, and nobody picked it up. Xero archives your file when you stop paying. QuickBooks and FreeAgent delete after a year. Your record-keeping duty runs five or six. Export on a schedule, and put the responsibility in the engagement letter.
What Happens to Your Ledger When You Stop Paying?
Less than you would assume, and it varies by platform. Xero archives the organisation: the data sits for up to seven years, but while archived it "cannot be accessed by anyone", and the only way back in is reactivating and paying again (Xero). There is no read-only tier for a cancelled file.
QuickBooks Online is more generous on access and harsher on the clock: read-only for one year, 90 days on a trial, then the account is deleted (Intuit). FreeAgent takes access away the moment you cancel, stores the data a year, then deletes it automatically (FreeAgent).
Whose Job Is the Backup?
Yours. It says so in the contract you signed. Xero's terms put it plainly: "Data loss is an unavoidable risk when using any technology. You're responsible for maintaining copies of your data entered into our services." The liability clause limits Xero's exposure for lost or corrupted data to "taking reasonable steps to try and recover that data from our available backups" (Xero Terms of Use).
The provider commits to keeping the service up. Nobody commits to you pulling a readable copy on a Tuesday in 2031 because an inspector asked.
The Mundane Failures, Not the Dramatic One
The frightening version, a major platform losing everything, is the least likely. The dull failures are what catch practices out.
A subscription lapses on a client who drifted away. Someone with admin rights voids a year of transactions, and the platform replicates that faithfully everywhere, because a valid instruction is not an outage. A migration completes and the history does not arrive in a form an inspector could use. A relationship ends badly and access is cut before anyone exported anything. When I go through an outgoing accountant's files, missing history is the most common gap I find.
What Do I Actually Export, and When?
Four things, on a fixed rhythm, whichever platform the client is on. A ledger export in a readable format, not a proprietary one: a file only one vendor can open is a hostage, not a record. The filed accounts and returns, stored outside the platform that produced them. Source documents somewhere I control. And a year-end snapshot riding along with the month-end close, so the position I signed off can be reproduced.
That copy has to outlive obligations longer than any retention window above. A limited company keeps records six years from the end of the financial year they relate to, and failing to do so carries a £3,000 penalty or director disqualification (GOV.UK). Sole traders keep theirs at least five years after the 31 January deadline (GOV.UK), and Companies Act 2006 s388 sets its own three and six year floors. MTD adds a wrinkle: some VAT records must be kept digitally, "within functional compatible software", so a folder of PDFs may not be compliance (VAT Notice 700/22).
If I cannot open it without a subscription, I do not really have it, which is the same instinct behind reaching for Excel first. Third-party backup tools solve a real problem, but they put another company in front of client financial data, a subprocessor decision rather than a free win.
So I will take a side. The client owns the records. I own making sure a copy exists that outlives the subscription. That belongs in the engagement letter, because the job is currently done by an assumption, and both parties assume it is the other one.
Frequently Asked Questions
Does Xero back up my data, and can I get it back if I cancel my subscription?
Xero backs up its own platform, which is a different thing from backing up for you. Cancel, and the organisation is archived and unreachable, though held for up to seven years unless you request deletion. Getting back in means paying again.
How long can I access my accounting records after the subscription ends?
It depends on the platform, and none match your legal retention period. QuickBooks Online gives one year of read-only access, then deletes. FreeAgent ends access on the cancellation date. Xero gives none once archived.
Whose job is it to back up cloud accounting data, mine or my accountant's?
Contractually the subscriber's, and the terms say so explicitly. In practice it should be written down. I take responsibility for a readable copy that outlives the subscription, and say so in the engagement letter. If nobody has told you who holds the copy, ask.
Not sure what would survive your ledger subscription ending tomorrow? Get in touch and I will run through what to export, in what format, how often. Best done before a bank feed clean-up, not after.