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Insight to All Things Currency and Treasury Management

The most recent award-winning FiREapps client, Flex – a global supply chain solutions company with manufacturing operations in more than 30 counties – was named a Highly Commended Winner in the Best Foreign Exchange category for the Adam Smith Awards 2018.

In 2013, Flex made the decision to move forward with automating their balance sheet exposure management program. Their complicated global environment and foreign currency exposures spread across 40 currency pairs meant they needed to address some manual, error-prone practices that plagued their program.

 

CHALLENGES HINDERING FULL AUTOMATION

A company with a hyper-global business model, Flex not only has operations in more than 30 countries but has over $24 billion in annual revenue and 200,000+ employees. Transforming its highly-complex operating model, especially in regard to Flex’s balance sheet exposure management program, was a priority.

Challenges to Flex’s Balance Sheet Exposure Management Included:

  • Various manufacturing operations around the world were not consistent in how they recorded multicurrency transactions within their ERP systems
  • Inconsistencies in how they approached the remeasurement of their balance sheets each month
  • Manufacturing plants typically ran their business operations on their own ERP systems

 

DEPLOYING FiREapps AS A SOLUTION

Once treasury full understood data challenges preventing them from implementing a truly automated FX program, they initiated a new strategy to help alleviate these issues.

Flex’s strategy was to get rid of the manual reporting of exposure data and the use of spreadsheets as an exposure management tool. In order to do so, treasury standardized FX accounting across worldwide subsidiaries and implemented FiREapps to manage balance sheet hedging. Implementation of a complicated balance sheet hedging program on FiREapps allowed Flex to reduce the possibilities of manual reporting and trading errors while enabling a systematic tracking of global hedge coverage.

Flex’s Program Today

Today, FX data is extracted directly from subsidiary-level ERP instances and sent to FiREapps and end-to-end exposure management and trading activities are seamlessly captured in FiREapps.

FiREapps captures the aggregated exposure data from the Flex internal workflow tool, enabling treasury to quickly analyze and understand their exposure prior to making hedging decisions. FiREapps then calculates a net FX trade per currency pair and automatically pushes the trades to FXall for execution.

Once trades are executed, FXall sends a confirmation file back to FiREapps to automatically generate internal trades to facilitate the allocation of the FX deals back to the legal entities. This approach enables Flex to get the best market price, reduce its overall FX trade volume and minimize back-office costs.

 

THE BENEFITS OF FLEX’S AWARD-WINNING, AUTOMATED PROGRAM

With a combination of internal IT development and a customized FiREapps implementation, Flex’s treasury team has achieved an end-to-end, automated balance sheet exposure management program, including automated reporting, consolidation and trading activities.

Automation of balance sheet exposure extraction and FiREapps implementation significantly benefited the overall hedging program. The integration of FX-all with FiREapps eliminates the chances of manual trading errors and the customized hedge coverage reporting that can be easily extracted from FiREapps as needed helps bring attention to any unhedged positions.

Through automation, Flex transformed their former program into one that prioritizes operational excellence. At the start of this journey, Flex was manually gathering data from 200+ balance sheet exposure reports in Excel, but now the exposure capture process is automated through FiREapps.

If you are looking to assess the current state of your program and develop a personalized, automated solution to achieve operational excellence within your FX program, FiREapps can help.