executive impact

Ascendant on the rise

By Chris Betros

No matter how tough the economy is, companies still need to manage their back office functions - such as accounting, finance, HR, payroll and taxes – which means there is always a demand for companies such as Ascendant Business Solutions KK. Established in 1995, Ascendant is a leading provider of outsourcing, consulting and technology services to foreign-multinationals in Asia. Services include financial management, human capital management and risk and compliance.

Overseeing the day-to-day operations of Ascendant is Henry Tan who was born and raised in both Ventura, Calif, and Jakarta. After graduating with a degree in marketing and finance, Tan, now 30 and a U.S. certified public accountant, began his career at Paramount Studios. He first came to Japan in 2002, and joined Ascendant in 2003 as bookkeeper for someone going on maternity leave. However, he made the most of his opportunity becoming an equity partner in 2006 and subsequently representative director in 2008.

Japan Today editor Chris Betros visits Tan at the Ascendant offices in Minami-Azabu.

How has Ascendant changed since you joined?

We were a small company back then, only about 10 people or so. So, it was nice to be a significant part of an organization from day one. Now we have 80-90 people here and an office in Hong Kong, which we opened last year. Our service lines have expanded and the things we do now, we could never do 8 years ago with confidence.

Who are your clients?

We have about 150 foreign multinational clients mainly from the U.S. (45%) and Europe/Australia (35%) and over 60% being listed organizations. We work in all industries - the largest being manufacturing, pharma, automotive, IT and fashion retail. Right now, we focus by choice on multinationals rather than Japanese companies as it is a niche market that is severely underserviced.

For example, not many of our Japanese competitors could make a phone call to the head office overseas or understand foreign compliance regulations (eg SOX), whereas our bilingual team can. We’ve been called a boutique big 4 firm in our service capability and quality but at a lower cost basis. Also, by focusing more on the core needs of a niche market rather than trying to do everything for everyone, we can provide a higher level quality of service. It is pretty amazing to note the exact same issues FMNs (Foreign Multi-Nationals) encounter in Japan, whether from the automotive to fashion to the hospitality industry.

What is your fastest-growing growing sector?

I’d say our human capital business. That refers to organizational design, incentive planning, corporate restructuring as well as payroll and benefits administration. Japan is at a transition point where old is clashing with the new - Eastern standards clashing with the Western approaches. Especially in FMNs, long gone are concepts of lifetime employment, seniority pay grades and rotating job functions, though a lot of legacy policies exist that support this "old" way. On top of that, a lot of foreign management get told by their HR vague answers or frankly, wrong answers but they have nobody to verify this with (though their gut is saying “hmm.”)

Foreign multinationals often need help with implementing change, so we do a lot of consulting in that area. We position ourselves as a firm that can implement the change rather than write a fancy powerpoint (usually a subset of just repeating what clients say in nice charts), as our outsourcing unit handles this type of work on an ongoing basis. This obviously helps us grow as it allows us to remain in contact with our clients over the long term as well as ensuring a stable revenue structure that typical consulting companies do not get.

That being said, our biggest area of operations is still in financial management where we conduct services such as bookkeeping to SPC accounting, tax to actually running client finance and accounting functions onsite.

How has the recession affected business?

We have been doing well, even in the recession, but it does take twice the work for 1/2 the results nowadays. The good news for us is, whether your balance sheet is good or not, you still have to do your accounting and pay your taxes. We have shut down a lot of clients recently. While the finance and real estate service clients declined, our pharmaceutical clients have done well as have some of our ecommerce clients. We are pretty nebulous, meaning that we are not stuck in any one industry and back office is generally back office - you need it whether you sell jeans or tractors. Another factor hurting us is the strong yen which sends our fees up when converted to local currency and reduces incoming FDI (foreign direct investment) spend.

How do you market your company?

About 90% of our business comes through word of mouth, so we don’t advertise in the traditional sense. We didn’t get proper brochures done until 14 years into the business. We have a sales team who network and we speak at events from time to time. We’re fortunate in that we work with the Big Four international accounting firms (Deloitte Touche Tohmatsu, PwC, Ernst & Young and KPMG), law firms and a lot of our clients come through them as we are complementary to their services (and not a direct threat/competitor). Clients send us quite a bit of referral business as well.

How will the change in global accounting standards affect the business?

There are three main types of regulatory accounting bodies we deal with -- the U.S., Japan and IFRS (International Finance Reporting Standards). The global framework is moving more toward the IFRS standard, so what you are going to see over the next few years, is a convergence of accounting methodologies. In the past, we have done a lot of convergence between two or even three different sets of books. In leasing, for example, the way you report something in Japan is different from the way you report something in the U.S until recently. The issues you have are in the "‘restatement" as investors want to compare apples to apples.

When you have a multinational client base, you have a lot of different jurisdictions to report to -- especially with listed organizations. It can get complicated, so when there are changes in the regulatory environment, it impacts us positively because Japanese firms tend not to understand GAAPS (generally accepted accounting principles) outside of Japan. This will also significantly affect Japanese companies with subsidiaries abroad.

Tell us about your team.

We have about 85 people. Of those, 70-80% are Japanese, with slightly over 50% being women. The average age is late 30s to mid-40s, though we have people from 22 to 60. We have over 10 nationalities in our office. We have teams for finance and accounting, human capital, risk/compliance, sales and back office functions. A lot of our staff have lived abroad and are bilingual. English is the office language we generally use, though I try to encourage my foreign staff to speak Japanese when given the opportunity.

Do you have much turnover?

Around 12-15% -- some voluntary, some not. Our organization is not for everybody and I am transparent in interviews about this. I tell them why I would join and why I wouldn’t join this company from the beginning. I also tell them that what they may be doing at the start may be very different from what they will be doing in six months. For example, I am proud to say that three of our receptionists became consultants because they could adapt to the environment and grow with it -- seize the opportunity presented as I did 8 years ago. I am a believer in exponential growth and making an environment conducive to it.

What areas are you hands-on?

Service quality control and hiring are areas where I am hands on. I’ll interview anyone from a potential successor to the receptionist who joins us. To that end, I work with staff closely. That being said, hands-on doesn’t mean doing everything. Our company rule is that no internal meeting should last more than 45 minutes because people can have drawn out meetings that just waste time - so hands on is one thing - but doing it effectively and efficiently is another. For example, our monthly management committee meetings are 45 minutes. Because it is so short, it forces us to prepare in advance to be concise and get to the point. I am pretty hands off in the execution of plans because our team does that well.

Do you miss your bookkeeping days?

Not really. I am an accountant and it is good to understand how numbers work - for anyone really - but I don’t have the typical personality of an accountant. Rather, what I love about this position is being able to work in multiple industries and do some fascinating work with great companies and meet a ton of people in the process. Every day is a new day with new opportunities.

What is a typical day for you?

I don’t have a fixed schedule. I sometimes do conference calls at night or early in the morning with potential or existing clients abroad. When I am not here, I am out meeting potential clients or interviewing candidates for hire.

Do you travel much?

I go to Hong Kong once every three months to our subsidiary there, and on top of that, Korea, Australia, the U.S. and UK. The HK team there made the business profitable in six months demonstrating demand for our type of services elsewhere. As such, international expansion is definitely part of our future plans - which will lead to more travel. I look forward to it.

Any weekend work?

I enjoy what I do so, it does not really feel like work. People often talk about work-life balance but if you are enjoying it, it is not work. It’s only when you are doing something you don’t want to do that it is a problem.

What about when you are not working?

I enjoy piano and have been playing since I was 5. It is how I helped pay my way through college in the U.S. I don’t do any live gigs here in Tokyo, now, however. I also have two dogs that I enjoy spending time with.

Does anything frustrate you about doing business in Japan?

It can be hard to deal with passive resistance to certain things that arise from the gaps between the Western and Japanese approach. There are times when no one will say no to you and I wish they would. Instead, you’ll get “We’ll think about it" or even agreement to do something, but nothing happens. I am used to straightforwardness - if you think I am stupid, just tell me - and probably that is one reason why we don’t have Japanese clients at this point of time.

For further info, visit www.ascendantbusiness.co.jp/en

© Japan Today

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Really interesting interview! I wish the best for his company and commend them for the work they're trying to do.

It can be hard to deal with passive resistance to certain things that arise from the gaps between the Western and Japanese approach. There are times when no one will say no to you and I wish they would. Instead, you’ll get “We’ll think about it” or even agreement to do something, but nothing happens. I am used to straightforwardness - if you think I am stupid, just tell me - and probably that is one reason why we don’t have Japanese clients at this point of time.

I think this everyday just asking about simple things in my office. It's funny in some situations, and extremely frustrating in others.

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Soaking up the local business culture, eh.

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Hmmm sounds good

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I don't know for absolute certain, but the word in the accounting community is that the business model works like this:

1) Rely on ACCJ to funnel business opportunities to this company, particularly smaller, overseas outfits looking to do some business in Japan.

2) Convince the foreign company that it's better to outsource their finance function (including HR & payroll) to Ascendent than to have an in-house team in Tokyo.

3) Hire people at cut rate to service this now-outsourced business. The article mentions 10-15% turnover on a staff of 80. Which piece of your now-outsourced company functions are going out the door with that turnover? 150 multinational companies and a staff of 80. Hmmm.

4) Once the foreign company signs the outsourcing deal, they're somewhat stuck. If you had hired the wrong in-house team, you can try to make adjustments. But if you outsource, your remedy is really just breach of contract. (Remember, you signed up in the first place to save money and avoid legal and financial headaches.)

The business model works fine as long as everything works right. If something doesn't work right, for whatever reason like turnover, it can be a mess. This is why I believe these kinds of firms are "unique". Once it goes beyond something that looked like the traditional accounting firm into some new "professional services" firm, there are too many moving parts.

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I think its alot easier to fire a company than fire an employee

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Hoofin, Thanks for clearing that up. It makes a lot of sense now. Companies, be careful who you hire!

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