Relying on inaccurate, incomplete, and/or untimely exposure data can lead to significant (and sometimes material) FX surprises. Furthermore, when treasurers do not have accurate, complete, and timely visibility into 100% of their exposures, they end up only managing some fraction of their true risk. That means whatever risk management program the treasurer employs will not be as effective as it could be. A lack of confidence in the integrity of the data also often means that treasurers end up hedging their hedges – reducing the effectiveness of the program, increasing its cost, and potentially increasing risk as well.
Yet managing currency risk is actually not hard – if your multicurrency accounting data is an accurate and complete reflection of the underlying exposures and is timely (even if the data is accurate and complete, if it’s 15 days too late, the treasurer cannot effectively manage risk).
Based on our experience helping hundreds of companies manage currency risk, when treasurers receive the right data at the right time they have the confidence to effectively manage currency risk.