Sales exist, but the money doesn't arrive. Considering cash flow risks for SMEs and investors in the wake of the Zentoshin bankruptcy

Cashless payments are convenient.
You can complete a payment just by tapping your card or scanning a QR code.
However, the more convenient a system is, the harder it becomes to see where the money travels before it reaches your account.

In July 2026, Zentoshin (Chuo-ku, Osaka), a company that handled credit card payment processing, filed for bankruptcy with the Osaka District Court and received an order to commence bankruptcy proceedings on the same day.
It is a major bankruptcy with liabilities amounting to approximately 125.9 billion yen as of the end of the fiscal year in March 2025.

Furthermore, according to reports by Tokyo Shoko Research (TSR), it is possible that financial statement fraud had been ongoing for at least 20 years to hide deteriorating business performance.
TSR reports that due to factors such as inflated deposit balances (approx. 17 billion yen), fictitious receivables (approx. 15.4 billion yen), overstatement of worthless goodwill (approx. 8.8 billion yen), and failure to record payments owed to merchants (approx. 21.7 billion yen), the net assets that appeared positive on the books were, in reality, likely a debt excess of approximately 60.5 billion yen.

In this article, using the Zentoshin bankruptcy as a starting point, I will organize what this means for side-hustlers, SME owners, and investors. While it may look like a difficult news story, it is actually a matter that affects everyone.

The concept of the 'pathway of money'

Money from cashless payments does not reach the recipient's account the moment it is paid.
In reality, it passes through several companies.

There is the card company, the payment processing company, and in some cases, early payment services and the merchant's bank, before the money finally arrives in the account.
Zentoshin played the role of a 'payment processing company' within this pathway.
It is said that they also provided a service where they would communicate with card companies on behalf of merchants and advance the sales proceeds to the stores.

If any part of this pathway becomes blocked, the merchant experiences a situation where 'sales have occurred, but the money is not arriving.' The Zentoshin bankruptcy is a case where this structure became reality. In fact, the impact, such as payment terminals becoming unusable and deposits stopping, has already been reported, primarily affecting restaurants.

Cash flow risks for SMEs

What we need to understand here is that 'having sales' and 'having cash' are completely different things.

Even if a company is profitable on its financial statements, if accounts receivable are not deposited, the cash on hand does not increase.
There is always a time lag between the closing date and the payment date, and it is systems like payment processing companies and factoring that bridge this time lag.
In this case, the 'intermediary company' itself went bankrupt, and because they had been committing fraud for many years, the merchants were left waiting for payments with almost no way to grasp the credit status of their business partner.

Even if a company is profitable, it will go bankrupt if its cash flow is blocked. This is what is known as bankruptcy while profitable.
For SMEs, using convenient services like payment processing or early deposits is not inherently bad, but it is worth considering at least once: 'If that company were to stop, how much could our own cash flow withstand?'

Risks for those with side hustles

This is not just a story for SMEs.
There is a similar structure for people who use platforms like Coconala, e-commerce, or various payment services for their side hustles.

Of course, the credit card payment processing that Zentoshin handled and the mechanisms of side-hustle platforms are not exactly the same.
However, they share the commonality that 'a company is positioned in between from the moment a sale occurs until the money actually enters your account.'

Depending on whether the payment cycle is 'same-day' or 'end-of-month closing, next-month payment,' the flexibility of your cash flow on hand changes significantly.
The situation of the company in the middle is something we rarely think about, but this news is a good opportunity to start paying attention to it.

Risks for personal household finances

The same structure applies from the perspective of household finances.

Cashless payments and point-based economic zones are convenient, but we rarely have the opportunity to be conscious of which companies our money is passing through.
That is precisely why you should keep your emergency savings separate from these payment pathways and secure them in a bank account that you can withdraw from immediately.
This is a point worth confirming again every time we see news like this.

Perspectives to keep in mind as an investor

From an investor's perspective, there is an even deeper lesson to be learned.

When analyzing companies in industries such as finance, payment processing, leasing, and guarantees, it is insufficient to look only at superficial figures like profit and net assets.
In the case of Zentoshin, TSR reported that while net assets were approximately 2.48 billion yen in the black on the books, after correcting for accounting fraud, there was a possibility of insolvency amounting to approximately 60.5 billion yen.
If the premise that the figures themselves are disclosed correctly collapses, the analysis of financial statements cannot hold up in the first place.

Of course, the reality is that when accounting fraud is involved, it is difficult for individual investors to see through it completely from the outside.
Financial statements are published after undergoing audits, and it is not realistic for an individual to discover fraud that went undetected for 20 years.
That is precisely why, when looking at companies that handle credit, such as those in finance, payments, and guarantees, one should keep an eye not only on profit growth, but also on whether operating cash flow is keeping up with profits, whether receivables or accounts receivable are increasing unnaturally, and whether there is an excessive dependence on business partners. Rather than trying to see through everything perfectly, a sense of distance that aims to slightly increase the probability of noticing something strange seems just right.

Of course, this is a special case involving one company, Zentoshin, and it is not a story about the entire payment agency industry or the entire financial sector being in danger.
In fact, in this bankruptcy, it was reported that regional bank groups that had transactions with the company recorded receivables that were uncollectible or at risk of delay, but it is appropriate to take this as an event that highlights the importance of credit management again, rather than saying that "financial institutions are in danger."

What we can do

If we were to translate the points we have looked at so far into our own actions, we could consider the following.

If you are doing a side job or running a small business, the first thing to do is to understand your payment cycle in numbers.
How many days does it take from the time a sale is made until the money actually enters your account?
How much in sales remains unpaid right now? If this remains ambiguous, your response will be delayed when the time comes.

It is also safer not to rely on just one payment method if possible.
Credit card payments, bank transfers, payments via platforms, and cash.
While it may seem like an exaggeration when your business scale is small, if you only have one payment route, your entire cash flow will stop the moment that route is blocked.

As for household finances, you should keep your emergency funds in a simple bank account that you can withdraw from immediately.
While points and payment apps are convenient and should be used, keep the funds that serve as your last line of defense outside of complex routes. Even just doing this makes a significant difference in your peace of mind when an emergency occurs.

As an investor, when looking at companies that handle credit, such as finance, payments, guarantees, and leasing, do not judge them solely by profit figures.
Are accounts receivable or accrued income inflating unnaturally? Is operating cash flow keeping up with profits? Are allowances for doubtful accounts sufficiently set aside?
If you make it a habit to check these areas, the accuracy of your judgments will gradually improve.

Summary

The bankruptcy of Zentoshin is a case that is too valuable to be dismissed as mere news of a single company's bankruptcy or scandal.

Sales and cash are different.
Payments and deposits are different.
Behind convenient services, there is always a "company in the middle."
This sense is relevant to everyone, whether you are doing a side job, running an SME, or investing.

This is not a story about cashless payments being dangerous.
Try to be conscious of the "path of money" behind the convenience from time to time.
Maintaining that level of distance is the right way to approach this news.

※ The methods of accounting fraud and the amounts mentioned in this text are based on reports by Tokyo Shoko Research. Details may change in the future as investigations by authorities and bankruptcy trustees progress.