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Insight to All Things Currency and Treasury Management

Earlier this week, Kimberly-Clark’s Global Markets Strategist, Aziz Samji, took the stage at TEXPO in Dallas, Texas with FiREapps VP of Strategic Markets, Andy Gage, to discuss Kimberly-Clark’s transition from a manual FX program to a fully automated environment.

In their journey to automation, Kimberly-Clark worked with FiREapps to define their program goals, address the challenges of their legacy FX risk management program and automate processes to drive more strategic analysis of exposures and impacts.

 

Defining FX Program Goals

 

Prior to automating an FX risk management program, it is important for multinationals to first take a step back and assess where their program is at today.

By looking at the 4 Profiles for Corporate FX Management, companies can look at where their programs are currently and where they want to be – whether it be starting, growing, optimizing or expanding their program.

Kimberly-Clark’s current FX risk management program falls under category 4 – “Expand”.

*Download the 4 Profiles for Corporate FX Management Infographic >>

 

Kimberly-Clark’s Legacy FX Risk Management Program

 

Kimberly-Clark’s former program lacked standardization and automation – and they were looking for a more efficient way to consolidate exposure at an enterprise level. Since most of their balance sheet programs were only managed on a monthly basis, there was unwarranted other income and expenses (OI&E) volatility.

With actual exposure collection form SAP varying by region/affiliate and being manually aggregated on a quarterly basis, Kimberly-Clark was looking for an automated program that provided a better understanding and visualization of exposure on an aggregated basis.

 

The Current State of Kimberly-Clark’s FX Program

 

With the help of FiREapps, Kimberly- Clark was able to further develop their FX risk management program – empowering them with automatic exposure aggregation from multiple instances of SAP, standardizing their processes and giving them the ability to analyze and drill down into exposures by entity, country, region or currency pair.

Kimberly-Clark’s treasury team – which is responsible for all strategic decisions withrespect to foreign currency risk – can now more effectively support its local entities in hedging by:

 

  • Assisting in implementation and standardization of FX risk management processes
  • Monitoring regional balance sheet programs to ensure they abide by threshold stated within FX policy
  • Assessing monthly OI&E volatility and examining the effectiveness of the existing balance sheet programs

 

Working with FiREapps as a technology partner has made it easier for Kimberly-Clark’s corporate treasury team to monitor ongoing FX activities and guide business units when needed.

 

Aziz Samji’s Top 4 Recommendations to Better Manage FX Risk

 

  1. Analysis of ERP data helps identify transaction information
  2. Automation of processes and data extraction helps delve into regional/entity-level accounting data and assess daily exposure
  3. Automated daily FX gain/loss analysis enables treasury to quickly identify unexpected impacts, respond to questions from FP&A and the CFO on unexpected results, and automatically view the source of potential FX surprises.
  4. Separation of accounts at the entity level for revaluation G/L, unrealized G/L from the derivatives, and unrealized and realized G/L from currencies makes it easier to isolate issues.

 

What Makes a Successful Program

 

Since enlisting FiREapps to help revolutionize their FX risk management program, Kimberly-Clark has been able to maximize the value of its treasury team, helping the company save money, reduce risk and reduce costs – making their program more successful than ever.

In the eyes of Kimberly-Clark, a successful program can be defined by managing EPS @ risk, increasing exposure identification, reducing program costs, driving corporate efficiency, reducing FX risk and improving the FX hedging program.

For nearly two decades, FiREapps has helped multinationals like Kimberly-Clark fortify their currency risk management programs and generate quantifiable results.

If you are looking to assess the current state of your program and develop a personalized solution for where you would like your program to be, FiREapps can help.