Insight to All Things Currency and Treasury Management

FiREapps’ latest webinar gave participants a unique glimpse into specific steps one $13B+, Fortune 500 company took in modernizing its currency risk management program.

Currency Management Programs: Now is the Time to Automate, provided Amit Singh, senior vice president, Newell Brands, with an opportunity to share his first-hand experiences in overseeing his company’s transition from a legacy FX program to a fully-automated one.

According to Singh, Newell Brand’s previous currency management process was entirely manual, spreadsheet-driven, lacked balance sheet hedging capabilities and required FX trades to be completed over the phone.

What a difference 18 months can make.

After transitioning to an optimized, fully-automated program in 2016, Singh said his team went from managing an $800 million balance sheet program (as of 2015) to managing $2 billion today. Equally important, he said, the new workflow reduced transaction-net-losses from $90 million (cumulative, 2013 – 2015) to $2 million last year.

An Automated FX Wish List

For many organizations, leveraging automation begins with building a business case to convince executives of the need; however, in the case of Newell Brands, Singh said company leaders shared his belief that improvements were needed.

“We knew we had to make a choice,” he told webinar guests. “We could have maintained the status quo and continued to manually do everything. But that idea was quickly rejected, because how can you manually collect data from 38 different ERP systems?”

More effective data collection was only one goal, said Singh. He also wanted his treasury team to be able to break free of spreadsheet-focused work. So, in addition to automated data gathering, he wanted a program that enabled automated analysis and trade execution. Additionally, he was seeking a modernized hedging program – one that delivered both a broader scope and greater coverage. Finally, Singh’s team was looking for a technology provider that could serve as a hub for its other technology partners, which included SAP, FXall, Bloomberg and Kyriba.

After comparing their options, Singh said, Newell Brands selected FiREapps because its agile, SaaS-based technology delivered on all the items his team was seeking on its automated FX wish list, plus FiREapps could adapt as Newell Brands’ needs changed.

Transitioning to automation paid off. Singh’s presentation included more than a dozen positive outcomes that followed modernizing the program. His list of results included:

  • A system that pulled data from 38 ERP systems and 25 business units
  • The ability to manage 14 additional currency pairs
  • More than $1M savings in annual FX trading costs

Andy Gage, vice president of strategic markets for FiREapps and co-host of the presentation, said such results are common once companies make the commitment to automate FX.  And, he said, it’s becoming more common for corporations to automate considering today’s market conditions.

“Given the rise in currency volatility we’ve seen in the last several years, we are seeing a trend where companies recognize the value in fully automating their FX programs,” Gage told attendees. “With political crisis becoming more common around the globe, corporations never know where the next big currency impact will be coming from.”

“Automating FX is one step companies can take to protect key earnings,” Gage said. “It’s an effective way to make sure companies are hitting the industry standard MBO of less than $0.01 EPS impact.”

Next Steps: Make a Business Case for Automated FX

Find out for yourself how Newell Brands did it. For a limited time, you can watch an exclusive rebroadcast of this informative webinar here.

Answers to webinar polling questions confirmed most attendees view FX as a top priority, but only about half said their company was planning to automate in the coming months.

If you recognize your organization needs to automate its FX program and want to make sure its included in your 2018 budgeting, read 4 Reasons Why Now is the Time to Automate Your FX Program.