Insight to All Things Currency and Treasury Management

Just last week, 15 FiREapps representatives attended the AFP Annual Conference in San Diego. After speaking with hundreds of treasury professionals that stopped by our booth, we have compiled the top six FX risk management challenges they mentioned.

1.    “Our processes are highly manual and done in spreadsheets.”

A recent Deloitte survey found that technology is still not being fully leveraged to support treasury. As such, treasury teams continue to manage FX through manual processes. At AFP, we heard time and time again from treasury professionals that their manual FX processes were error-prone and time-consuming. However, we know that automated FX enables treasury to improve operational efficiencies, gain insights into currency trends and save time. More importantly, it empowers them to reduce errors, costs and risk.

2.    “We know we have exposures, but we don’t have enough visibility to see what is causing them.”

While many corporations know their exposure numbers, they often lack insight into the underlying transaction currency balance data to see where exactly those exposures are coming from. FiREapps enables on-demand aggregation of raw general ledger data from ERP systems, as well as databases and spreadsheet data sources. We offer SAP and Oracle certified toolkits, queries for JD Edwards and PeopleSoft, and numerous data specifications for creating reports from other source systems to facilitate automated data extraction. This empowers treasury teams with insight into the underlying data, allowing them to determine the origin of their exposures.

3.    “Management is looking to leverage natural hedges.”

Some companies look to first internally eliminate their risk before placing hedges, while others have policies where they do not hedge at all. FiREapps helps identify organic exposure elimination opportunities to reduce risk across the entire organization – not limited to natural hedging – without the need to take out a derivative.

4.    “We only hedge our top currencies.”

In some cases, organizations only hedge or manage their top currencies. This can be because their processes are too time-consuming to manage all their exposures or because they simply lack visibility into currency exposures that they consider to be small. This can be a dangerous practice, as often times the smaller, unprotected exposures are subject to higher volatility and can lead to greater impact. As such, it is imperative for corporations to manage their entire basket of currencies. With the help of FiREapps, corporations can identify and quantify their total currency risk portfolio, and gain visibility into contributing accounts and currency pairs.

5.    “We are currently going through an acquisition period and are struggling to get visibility into the data of the new entities.”

FiREapps has experience working with multinationals as they go through the acquisition process and after the acquisitions have been completed. Because of this, we know how difficult it can be for treasury teams to identify and analyze the exposures of new entities. FiREapps has a proven track record of giving corporations insight into those new exposures as soon as the acquisitions are complete. In one instance, we were able to provide a corporation with access to the data of their newly acquired entities within an hour after the acquisition was finalized.

6.    “We want to manage our FX risk, but don’t have the budget for it.”

FiREapps enrollment is not only faster than other corporations – measured in weeks, as opposed to years like other treasury technology solutions or ERPs – it is also significantly less costly and provides quick, measurable return on investment (ROI) that generally provides larger cost savings than the amount spent on the subscription. Additionally, we have strategic banking partnerships that can minimize or eliminate the cost of our currency analytics solutions altogether.
Have a challenge that wasn’t one of the most mentioned at AFP 2017 or want to learn more?

Contact a FiREapps Director of Risk Advisory.