Insight to All Things Currency and Treasury Management

Deloitte recently released its 2017 Global Corporate Treasury Survey. Among its findings:

  • More than half of the 200-plus treasurers surveyed identify FX volatility as a top challenge due to current global political turmoil
  • Despite recognizing it as a top challenge, 75 percent of respondents say they are not actively managing key FX-related risks
  • Technology is not being fully leveraged to support treasury, especially in monitoring key risks using real-time analytics and reporting

These findings – mounting concerns about FX volatility, a lack of active FX management and an absence of real-time technology – confirm many companies lag when it comes to transitioning to a fully-automated corporate currency program. Why? Because automated FX empowers treasurers to address these gaps by leveraging cutting edge technology and analytics to better manage currency risk.

There are additional benefits in automating FX: Improved operational efficiencies, deeper insights into currency trends, significant time savings, deep reductions in errors and costs, and – most importantly – reduced risk.

If you are a treasury professional whose organization has not yet embraced automated FX, now is the time to build the business case convincing your CFO to transition to an automated FX risk management as part of 2018 planning.

#1 Automating FX Increases the Predictability of EPS and EBITDA 

The main goal of an FX program is to reduce the impact of currency on a company’s financial results. For CFOs, this impact is reflected in EPS or EBITDA results. A fully automated FX program results in more accurate, complete and timely data, which helps reduce the impact of currency on EPS and EBITDA. With an automated FX program in place, companies can manage FX volatility to 1 cent EPS or less. (In one case of one multinational, FiREapps facilitated an automated program that reduced the impact to EPS of less than 1 cent per share; this reduced balance sheet losses from $49M in 2014 to less than $2M by 2016.)

#2 Reduction in Hedging Costs and an Increase in Productivity

Automation enables finance teams to customize their currency programs to align to the company’s overall risk tolerance. Because automation generates detailed data (uncovering opportunities to reduce exposures), hedging decisions can be made faster and more accurately. If your organization is inclined to hedge (or prefers to exhaust its organic hedging methods and natural offsets first), automation improves the efficiency and effectiveness of currency hedging.

#3 Automated Currency Risk Management Means Enhanced Controls

Fifty-two percent of respondents in the Deloitte study say treasury teams are feeling the impacts of ongoing banking regulatory reforms, which are driving increased hedging costs. Your CFO’s goals include establishing clear controls for auditability and determining the most cost effective way to do so. Automation accomplishes both by eliminating compliance inefficiencies inherent in manual processes and generating clear audit trails. This makes it easier for companies to adhere to the latest regulatory requirements.

#4 Automated FX Increases the Value Treasury Professionals Bring to an Organization

Automated FX programs free treasury professionals from time-consuming tasks such as collecting data gathering from multiple sources and inputting data into spreadsheet-based legacy systems. Instead, treasury professionals can spend their time analyzing data and tracking exposure trends. This repositions how they are perceived in an organization, enabling them to bring genuine value and emerge as key resources in strategic planning.

Want to Know More About the Benefits of Automated FX?

Be part of our upcoming, complimentary webinar, Currency Management Programs: Now is the Time to Automate on Thursday, September 21, 2017 (11 am ET | 8 am PT).

FiREapps and Treasury and Risk magazine will deliver unique insight into how corporations – regardless of their size or scope – can quickly and effectively move from inefficient, manual FX environments to sophisticated, fully-automated programs, resulting in improved operational efficiencies, significant time savings and deep reductions in errors, costs – and most importantly – currency risk.

Participants can earn 1.2 CTP/CCM or FP&A recertification credits from the Association for Financial Professionals.

Click here to register or to learn more.