Two major issues that need consideration when choosing a banking and payments solution for the Japan entity:
1. Internal Control
Internal control is a major issue for the Japan subsidiaries of foreign companies.
Pertinent features of the internal control environment in many Japanese subsidiaries of foreign companies include the following:
Lack of External Audit Oversight
Even where the foreign parent is a major corporation subject to audit, the Japan operation is often small and not considered significant from an audit viewpoint. As a result, limited audit procedures (if any) are undertaken increasing the likelihood that significant error or fraud will be detected in the short term.
Lack of Segregation of Duties
Typically, the Japanese subsidiaries of foreign companies are relatively small and focused on sales or customer support. As a result, appropriate segregation of duties in matters such as payments and bank account management can be difficult to implement.
The Hanko / Seal system
While bank accounts in most countries are operated based on signatures, in Japan accounts are operated by way of special seals (usually referred to as hanko).
This article provides some additional information regarding Japanese Hanko: The Use of Corporate Seals in Japan.
Most source documents related to the Japan operation will be written in Japanese, which can make verification by the foreign head office difficult.
Use of our Japan Bank Account Management and Payments Service helps foreign management deal with internal control challenges and assures them that the Japan operation is running smoothly and free of financial irregularity.
The Japan entity will typically have few employees who will be focused on customer related tasks. It can be difficult to justify the cost of a full-time, bilingual financial support for the Japan operation.
Our Japan Bank Account Management and Payments Service provides a cost effective solution.
Key Features of our Japan Bank Account Management and Payments Service
Key aspects of our Japan Bank Account Management and Payments Service include the following:
1. Initial Consultation
Our initial consultations focused on understanding the client’s requirements in terms of payments and bank accounts.
We then clarify the unique aspects of payments and bank account management in Japan. Some of these features include:
- Use of bank seal / hanko rather than signatures to operate bank accounts.
- Checks are rarely used in Japan. All payments are made by way of electronic transfer or over the counter at a local bank branch.
2. Initial Set-Up
The next stage involves setting up the key elements of the banking / payments system. This will include:
- Ordering bank seals / hanko.
- Opening bank accounts.
- Registration for online banking.
- Registration for automatic payment of certain expenditures.
3. Monthly Service
On a monthly basis, key aspects of our Japan Bank Account Management and Payments Service include:
- Payment of third party vendor invoices.
- Payroll payments to employee bank accounts in Japan.
- Employee expense reimbursements.
- Payment of corporate taxes (both provisional and final).
- Preparation of funding requests to cover upcoming expenditures.
- Interfacing with the bank as required.