Jeffrey Levine from Persofi & I had a fascinating discussion recently. We discussed the differences in accounting & bookkeeping in Israel versus the UK, as he provides bookkeeping, accounting and CFO services in both countries. We also discussed the differences between outsourced bookkeeping services & outsourced CFO services.
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Here is an edited version of the discussion Jeff & myself had over Zoom. The primary discussion we had on the differences in accounting and bookkeeping in Israel versus the UK is about half way down the discussion. The explanation that Jeff gives on how outsourced bookkeeping services differs from outsourced CFO services is just after.
An Accountant and a CFO
Eric: Jeff, you are an Accountant in the Israeli marketplace. Tell me a bit about your background and what you are currently doing?
Jeffrey: My background is actually unique. I’m a CFO and an Accountant, not only in the Israeli marketplace but also the UK marketplace. I bring a depth of experience. I think it’s really important to differentiate what is a CFO and what is an Accountant. Accounting does bookkeeping, whereas a CFO provides strategy. I have a company called Persofi.com which is a UK authorized accounting practice, where I’m offering a combination of CFO, accounting services & bookkeeping services using advanced systems, including DOKKA. This is what I’m doing today for a number of clients.
E: I remember when I spoke to you last, we had coffee about a year ago, and you were spending a lot of time in the UK. With the onset now of Corona and people not travelling very much, where people have gone into a virtual space, how have you adapted to this new world, where you’ve got accounting clients in the UK, you were previously flying there on a regular basis, but now everything has suddenly become virtual?
J: I’m totally setup for the virtual world. I’ve been virtual for a number of years now. I became an expert in the cloud accounting and have setup cloud accounting for over 40 clients. For me, I embrace the virtual world. In these times, where companies are under stress, they need not only bookkeeping and accounting services, but also need strategic advice, therefore I offer a unique online experience to these people from a remote location.
Slow for businesses to embrace cloud accounting software
E: And your bookkeeping & accounting clients, are they adapting to this new world themselves? Previously they might have wanted face to face meetings. They might have actually wanted to have delivered some of the documentation. Are your bookkeeping and accounting clients comfortable dealing with a purely virtual environment?
J: I believe so. I think it’s a slow progression. I think the market is moving towards that way. I think we’re seeing a major paradigm shift in the way companies are going to be working. I for one, have always advocated that companies, do not necessarily need on-premise CFO’s and that they can use a part-time CFO, as long as they have the systems and the efficiency, and I know it sounds funny, but even the basic filing of documents is organized correctly, then there’s no reason why the online marketplace can not succeed today and tomorrow.
E: So all the clients you have are using cloud accounting software, or are any of the bookkeeping / accounting clients you have still using desktop / on-prem accounting software?
J: No, I don’t get involved in that. I have in the past been with one or two clients that have done that, but I think the challenge for companies now is to migrate to the cloud ASAP, and if that means choosing a new accounting software, then so be it. I think that this has to be the way forward. There’s no reason in todays world to have a desktop accounting package. If you have got that, then you are working in old technology, and you’re running your business at a big risk.
Accounting in Israel versus UK
E: You mentioned you are working in two different markets, the Israeli and the UK markets. Why have you chosen those markets. Why are you not offering bookkeeping, accounting & CFO services in other markets, such as the United States?
J: This is where my experience has been. I’ve spent most of my career in three countries. A bit in South Africa, where I trained professionally. I’ve spent a lot of time in Israel, and I’ve spent a lot of time in the UK. This is where I have my expertise. I don’t have much exposure to the US, and I don’t think it’s a place I want to go. I think the UK & Israel marketplaces are big enough, and they are both very exciting. In fact, you could say that if Israel is the Startup-Nation, that the UK is touted as the Scaleup-Nation. You’ve got both, and that’s a great combination.
UK accounting market more advanced than Israel accounting market
E: So you’re in a unique position that you’ve got an understanding of two different marketplaces in the accounting and bookkeeping spaces. What is the difference in the process, and the accounting software, generally in the accounting and bookkeeping spaces, between the UK & Israel. Can you tell us the differences and the similarities?
J: I’m sorry to say this, but the UK market is far more advanced than the Israeli market. Not only are there great cloud accounting solutions, but the HMRC is much more digital than it is in Israel. They have geared up for this for many years. In fact, last year they went one step further with MTD, Make Tax Digital, whereby companies are now forced to use a recognized accounting software to do the VAT returns.
Whether this has been successful I’m not sure, because a lot of the companies are using cheat solutions to avoid it. But I think at the end of the day, companies have to realize that they have to move digital. Israel is lagging behind but it remains to be seen how they catchup. As an example, in the open banking in the UK, it’s really great, and you can get your bank statements downloaded very easily. Revolut has the option of downloading bank statements.
While I’m thinking about it, you now have combined bank / accounting software packages, like TIDE, where your bank account is synchronized to your accounting software package. These are big advantages in the UK. I haven’t seen this come up in Israel yet. So I think Israel has a way to go still.
Accounting Software in Israel versus the UK
E: Specifically with accounting software, in the UK people are using very sophisticated cloud accounting software – Xero, QBO, Zoho, some of the SAGE products. And I’m talking more about the SMB’s, not the medium to large companies. Where in Israel, the accounting software still seems to be lagging behind. Do you believe that’s accurate, and why? Why is Israel, with so much technology not becoming more progressive on the accounting software side?
J: That’s a very good question you’ve asked. I wouldn’t say it’s an old school monopoly. I think the accountants are reluctant to change. They have the market cornered, and companies either don’t know, or are not prepared to invest into alternative cloud accounting solutions. There are very few accounting software solutions in Israel at the moment. I haven’t checked Hashevshevit recently, but I don’t think they offer a cloud accounting solution. And Priority Zoom is very much a network, desktop orientated package, and quite cumbersome to run. I’m not sure why Israeli companies are lagging behind, and why they are not adapting to the new tools that are out there.
I’m not sure why Israeli companies are lagging behind, and why they are not adapting to the new tools that are out there.
Intuit, SAGE & Xero in Israel
J: Not really. The Israeli market is pretty small. And it’s pretty hard to break into. So I can’t see that changing. And also, there is the language barrier. And they also have to get the permission of Mas Hachnasa Income Tax. Now I know in the case of Xero, in the past, they didn’t actually meet the criteria. So Xero wouldn’t be able to come into the Israeli Accounting Software marketplace. That is another barrier of entry.
Now I know in the case of Xero, in the past, they didn’t actually meet the criteria. So Xero wouldn’t be able to come into the Israeli Accounting Software marketplace. That is another barrier of entry.
E: One of the differences we’ve also seen is that when you’re looking at the international market, the client seems to choose what their accounting software is. The accountant often makes recommendations. Some of the accountants insist on working with specific accounting software packages. But often the client decides what accounting software they want to use, or at least, they access the accounting software themselves. In the Israeli marketplace, it appears that often the businesses don’t even know what accounting software is being used. Do you agree with that?
J: I think that’s a fair assessment. I think that has to change. If the CFO can not access the accounting program from any computer, that’s a problem. That accounting program needs to be interactive with dashboards, and at the moment they’re relying on old-fashioned tools, such as excel, and there’s no integrated reporting approach in place. That is a danger. The other thing is that Israeli companies grow really quickly, so they grow on inadequate accounting systems, so they’re always playing catchup, and there’s always other priorities, so the accounting solution which should drive the business is holding the business back. I think too many companies are blind to this scenario.
Outsourced bookkeeping versus CFO
E: Lets change the subject now. You mentioned something interesting earlier, that you operate in two different worlds. The world of bookkeeping and data processing, and the world of CFO, which is more advisory and strategy. Bookkeeping is becoming more automated. You have got Intuit moving towards bookkeeping automation. You’ve got companies like Bench which are trying to change the traditional relationship between clients and their bookkeepers. Give me your views on the future of the accounting and bookkeeping industries. Are bookkeepers going to turn into CFO’s or do you believe there will still be a place for data processing in the future? Where will bookkeeping be in five to ten years time?
J: I think there will be a lot more automations, but we’ll have to see where A.I. is going, and the whole integration of A.I. into document reading. DOKKA is a leader in this, so we’ll have to see where this is going. I think there will be a place for Bookkeepers, but they’ll be more like administrators as well, to make sure things are correct. In a lot of companies things are not that simple. In theory you should be seeing a more automated process, whether it is from the payment collection, from the banks, from the invoices, from the whole payment process, but I still think you need people to make sure the checks and balances are there. So I think there will be a role for bookkeepers. But it will be a changing role.
The key challenge for companies is still to understand cashflow. To understand the impact on your cashflow on different scenarios. There might be software dealing with this today, but it’s still an area of concern, where you still need strong financial help. Not in your current business but where the company is going. And what needs to happen for the company to survive. And I think if you don’t have that proper cashflow or budget process in place, then I think the company is at risk.
Full time CFO versus Part Time CFO
E: Last question. When would a company put in a full time CFO internally and when would they use an outsourced CFO such as the service you’re offering. When is the best time to use an outsourced CFO?
J: Let me answer the question in this way. When is the best time to learn about parenting? You learn about parenting before you become a parent, not on the job. In the Israeli marketplace, there are a lot of these outsourced CFO companies around, but I think the companies should source a CFO right from the beginning, even as part of the founding team. Not only to advise them on what accounting systems to use, but also on strategy. I think from Day 1, even from Day 0, the company should have some sort of CFO role. In some cases it can be an exchange for shares, or other options in the company if the company can’t afford it right away. But I think it’s imperative that the sooner the companies have a CFO advisor on board, the greater their chances of success will be.
I’m interested in Israeli clients and helping them with building their businesses and scaling up their businesses in terms of bringing them the required technology and systems, and to take them to the UK and other markets. My focus is on helping Israeli clients scale-up.
A company should have a CFO, part time or full time, from Day 1, even from Day 0
E: Thank you for giving me your time today Jeff, and for giving us some interesting thoughts on the differences in the Israel versus UK accounting markets, and also how accounting services differ from CFO services.
Do you have strong views on the Accounting & Bookkeeping industry?
This is a series that DOKKA is running where we explore the thoughts of Bookkeepers, Accountants, CFO’s & others involved in the Bookkeeping & Accounting space throughout the world.
See some of our previous discussions with global accountants and bookkeepers:
Mary McBlain from McBlain and Davis Accountants – Understanding the Bookkeeping & Accounting industry in the UK
Hossein Dadkhah from DataDrivenCIOs – Factors Accounting companies should consider when dealing with client data
Lisa Cervantez from PureSpeed Lightwave – Why an internal Finance Team chose SAGE 300 as their Accounting Software
Jeffrey Levine from Persofi – Bookkeeping differences between Israel versus the UK
Zane Orton from M-inent – Future of Bookkeeping
Akiva Brett from KB Tax – A South African Tax Practitioner
Julie DeLong from Backyard Bookkeeper – Part 1 – Choose between Quickbooks Online and Quickbooks Desktop
Julie DeLong from Backyard Bookkeeper – Part 2 – Advice from a Virtual Bookkeeping Company
Holly Dunn from Accountable Bean – SAGE versus Intuit
Want to discuss your views on the accounting and bookkeeping industry!