Insight to All Things Currency and Treasury Management

After a volatile 2+ years (9 crises in 9 quarters, directly affecting 8 different currencies), it’s hard to believe that it’s already budgeting time for most companies.

If you’re like most corporates, you’re currently in the process of vetting what you’ll need to be successful as a finance organization in 2017— strategizing exactly how you’ll reach your KPIs, regardless of currency surprises or volatility spikes.

While those KPIs probably include keeping FX risk within the industry benchmark of $.01 EPS, specific hedging goals, etc., there’s an ever-increasing focus on improving the processes and efficacy of corporate currency programs. Why? Because missing the goals that define success no longer come without consequences— equating to negative salary and career impacts when they go unmet (think Christopher Bailey, Burberry CEO, and his 75% cut in pay due to “disappointing results”).

With more and more conversations centering around currencies and their impact on financial results than ever before, treasury and finance teams who meet today’s hurdles with a legacy approach are quickly recognizing major limitations. Often, this materializes after seeing the inability to quickly pull information and answer CEO, CFO and board questions firsthand, when it matters most.

In these scenarios, corporate finance typically sees a number of roadblocks:

— A TMS simply isn’t robust or detailed enough to explain currency exposures
— IT, as a resource, is becoming increasingly constrained; reports are more and more difficult to obtain
— Increased operational complexities (acquisitions, combining ERP systems) make legacy approaches inadequate from a time, human capital and risk standpoint
— Limited access to actionable data
— Time consuming processes that detract from other initiatives

While companies looking to overcome these issues usually weigh their options— including consultants that often cost up to $250k to establish a corporate currency program— the fact is, the very specific and distinct technology required to solve these problems has been around for years. It can be implemented quickly, for less money, and with more robust, insightful reporting— corporate currency analytics.

So why budget for corporate currency analytics in the first place?

Beyond beating out a manual (or partially-manual) process in terms of accuracy, time and risk protection, corporate currency analytics can allow for substantially stronger business decisions. 

Among a number of additional benefits, corporate currency analytics can help with:

Tangibly Reducing Impact
We’re not talking abstract or unquantifiable savings. Numbers don’t lie. Not only does a currency analytics platform utilize technology that allows corporates to reduce the impact currencies have on margins, it also benefits net income, EPS and many other areas of the business.

Visibility and Analysis
Having insight into data can give corporates a distinct advantage in terms of speed and strategy. What’s more, it allows companies to uncover otherwise difficult to see opportunities, such as netting, while simultaneously helping to identify ways to quickly reduce trading costs, such as organic exposure elimination.

Strategic Time Use
The automated aspect of corporate currency analytics gives companies the chance to free up time for activities beyond data gathering. By utilizing the right technology, companies can focus time and energy on forecasts, exposures and strategy something finance teams are often unable to spend ample time on due to the bandwidth that manual processes require.

As budgeting season keeps moving ahead at full speed, don’t forget the impacts that currency intelligence can have, both personally and professionally. In a rocky and unpredictable currency environment, there’s never been more of a case for making a change.

And the time to change is now.