I notice that the topic of Interac is getting bigger on the expat net around Japan. A number of folks have hit me from both Shawn at Let’s Japan and the Gaijin Pot site.
I just want to make it clear that the only hard evidence we are seeing is that there will be some kind of reorganization, and the date set for it is October 1.
What does the reorganizing do? It sounds like it is taking the assets out of one company or a set of companies, and putting them into a new company, which the buyout firm of Advantage Partners is playing a role.
When you think about this in accounting terms, what would the “assets” of Interac be? Well, besides things like real estate and leasehold interests, cash-on-hand, tables, chairs, computers, one other specific thing is servicing contracts—the right to give performance to the different Japanese schools in return for cash payment from the school boards along the way.
Is this a hard asset? No. In fact, it might not even appear on the books, since the right to the cash is not earned yet. There are different, somewhat dry, rules about this, be it U.S. GAAP, IFRS, or J-GAAP, but the overall result is the same: you don’t really earn it as revenue until you perform what you said you were going to do. If someone’s paid you ahead of your performance, you have cash as an asset and a corresponding liability, usually referred to as “deferred revenue”.
Governments are usually good debtors, so it may even be the case where the ALT service is performed, and the company has a receivable sitting on its books for services performed.
So, to make a long story short, the people who are saying that Interac is hurting for cash may not have it right. The business model is very simple:
A) Send various young people from around the English speaking world, with varying qualifications, to the various Japanese high schools.
B) Collect money from the school boards and pay the young people less than what you get from the school boards.
Very easy, ne?
So if you have this kind of business going, why would anybody think it would go flat? Endless streams of English-speaking young people flying in weekly to Narita, a set number of Japanese public and private schools that need the warm body.
Is the reorg a means of getting around commitments other than cash ones? Hmmmm. Yeah. That is a possibility, and I think Osaka branch of General Union might be on to something. If Interac can’t do business in certain locales, does the law also say that another company that accepts the Transfer of Business can’t provide the same services? I really don’t know the answer to that.
Also, I am thinking about whether the Utah (USA) parent of Selnate isn’t rearranging things in Japan to create some kind of tax benefit for U.S. federal taxes. Congress, this year, has been changing some of the tax laws concerning overseas operations, making some of the older tricks and tax “structuring” less favorable. This area is also very complicated, so I’ll skip it for now. But the point is this just might be a lot of paper shuffling around the same business model.
Please don’t get your socks all knotted up about whatever Selnate/Interac is doing. Until the J-Government refuses to use dispatch agencies in the Dispatch ALT scheme, there will probably be some kinds of jobs there for you.
(P.S. They keep saying “Advantage Partnets”, but I only see Advantage Partners out there . . . )