Japan Bank Account Management & Expense Payment Services: Overview
Our Japan Bank Account Management & Expense Payment Services is a key component of JTAX’s Japan Outsourcing Services.
Key features of our Japan Bank Account Management & Expense Payment Services include:
- 1Our Japanese professionals interface with your Japanese bank as required.
- 2We pay invoices that your Japan entity receives from third parties.
- 3We transfer salary payments to employee bank accounts in Japan (including bonuses and employee expense reimbursements.) JTAX can also handle calculation of payroll via its Japan Payroll & HR Service.
- 4We pay Japanese corporate taxes (both provisional and final) across to the Japanese tax authorities.
- 5We pay employee Social insurance and Labor insurance contributions to the relevant Japanese authorities.
- 6We monitor Japan bank account balances and make funding requests to cover upcoming expenditures.
Please Contact Us for more information about our Japan Bank Account Management & Expense Payment Services.
Download our Japan Outsourcing Guide
Download JTAX’s Japan Outsourcing Guide.
Japan Bank Account Management & Expense Payment Services - FAQ
Setting up our Japan Accounting & Bookkeeping Serviceinvolves two basic steps:
1. Initial client consultation
Our initial consultations focus on gaining an understanding of each client’s unique accounting and bookkeeping requirements. We confirm the format of monthly reporting that will be provided to foreign management (typically on a monthly basis).
2. Initial set-up
Once we have a clear understanding of a client’s requirements, we move on to setting up the Japan accounting and bookkeeping system. This may include:
- Ordering bank seals (“hanko”.)
- Opening bank accounts.
- Registering for online banking.
- Registering for automatic payment of certain expenditures.
Once initial consultations and the initial set-up have been completed, JTAX commences its monthly service. Typically, this will include:
- Interfacing with Japanese banks as required.
- Payment of third party vendor invoices.
- Transfer of salary payments to employee bank accounts in Japan (including bonuses and employee expense reimbursements.) JTAX can handle calculation of payroll via its Japan Payroll & HR Service.
- Making employee expense reimbursements.
- Payment of employee Social insurance and Labor insurance contributions to the Japanese authorities.
- Payment of Japanese corporate taxes (both provisional and final).
- Preparation of funding requests to cover upcoming expenditures.
- Monthly financial reporting to the client in English using a format determined by the client.
Key reasons to outsource accounting and bookkeeping in Japan include:
Cost: In most cases, it is dramatically more cost effective and efficient for the Japan operations of foreign companies to outsource their accounting and bookkeeping functions. Japanese finance staff, particularly those with foreign company experience and English language skills, command high salaries. A typical Japan operation is not sufficiently large to properly utilize a full time accountingfunction.
Japan Specific Challenges: Unique language and regulatory issues make it extremely difficult to handle accounting functions from outside Japan.
Operational Issues: The main role of the Japan operation should be to serve customers and drive sales in the Japanese market. An internal accounting functiondiverts limited management resources away from a customer / sales focus.
Internal Control: There are major internal control issues associated with undertaking accountingand bookkeepingwithin the client’s Japan operation.
Banking in Japan involves a number of unique features not found in other countries. This includes:
a. Bank seals (or “hanko”) rather than signatures are used to operate bank accounts in Japan. As a result, adding “signatories” to a Japan bank account may have little practical significance from an internal control viewpoint.
b. Checks are rarely used in Japan. Payments are made by way of electronic transfer or over the counter at a local bank branch.
c. Most banks do not offer general banking services in English. In addition, most Japanese corporate accounts do not offer traditional internet access and the interface of each banks proprietary online banking is Japanese only.
d. In order to make payments in Japan, the correct name and address of the recipient often needs to be supplied in Japanese characters.
Most well-known foreign banks (HSBC, Citi, etc.) offer only limited services to major multinational groups that have a pre-existing relationship.
Internal control is a major issue for the Japan subsidiaries of foreign companies.
Key risks in the internal control environment include:
a. Lack of external audit oversight : Even in cases that the foreign parent is a major corporation and subject to external audit, the Japan operation is often small and therefore not considered significant from an audit viewpoint. As a result, only limited audit procedures (if any) are undertaken. This means that the likelihood of significant error or fraud being detected is low in the short term.
b. Lack of segregation of duties : Typically, the Japan subsidiaries of foreign companies are relatively small and most employees are focused on sales and customer support. As a result, it can be difficult to implement appropriate segregation of duties.
c. The Hanko / Seal system : In Japan, bank accounts are operated by way of special seals (usually referred to as hanko) rather than by way of signatures. Securing these seals is of paramount importance.
d. Language differences : Most source documents related to the Japan operation will be written in Japanese. This makes verification by the foreign head office difficult.
Our Japan Bank Account Management & Expense Payment Service helps foreign management deal with internal control challenges and provides a level of assurance that the Japan operation is running smoothly and free of financial irregularity.
JTAX’s Japan Bank Account Management & Expense Payment Services provide a cost effective solution for foreign companies in Japan.
The Japan entity will typically have a relatively small head count with most employees focused on customer related tasks. In such circumstances it can be difficult to justify the high cost of a full time, bilingual finance person to support the Japan operation.
Unlike the “Big 4” (and other international accounting firms with offices in Japan) JTAX does not provide audit services. As a result, we are not restricted by audit independence concerns when it comes to providing bank account management and expense payment services.
When requested, we are able to work with your external auditors to assist in verifying information. Our senior management is drawn from the Big 4 and we have extensive experience dealing smoothly with external auditors.