Insight to All Things Currency and Treasury Management

With a potential Brexit on the horizon, uncertainty levels are definitely high. Come June 23rd, voters will take to the polls, with an announcement on results expected shortly after.

The myriad of potential implications resulting from the UK’s possible decision to leave the European Union range from increased volatility to new obstacles for companies with both UK and other EU-based locations.

Substantial currency fluctuations and volatility uncertainty are nothing new. Corporates have learned that often, they simply can’t know where volatility will spike next.

For many corporates, automation has been the most effective way to monitor currency program health when unforeseen crises, including situations like Brexit, arise. On the front-end, automation allows companies to quickly access accurate data as close to real-time as possible. In terms of analytics, automation can turn repetitive tasks into more accurate, less time-consuming templates.

An Instant View of Exposures

One of the major benefits of automation is having the ability to instantaneously view accurate, in-depth analytics. This can especially come in handy when other outside variables are shifting quickly or unpredictably.

On a recent check-in call, we heard an excellent example of this in action. One of our European-based clients let us know about their plan to stay on top of the possible rate changes that Brexit (and the speculation surrounding it) could substantially effect. They decided that they would pull data out of their instance of SAP multiple times a day, pulling rate sets and tracking any change. By utilizing this feature, they’d be able to see any outward trends directly in their reporting and more, any impacts on their corporate exposures.

In other words, by leveraging the trend analytics that automation can offer, the company secured a way to ensure their specific goals were being met, factor in rate changes, and immediately see any direct impact.

An Immediate Scenario Calculator

When automation is a key tool in one’s currency program, corporates can turn a previously cumbersome and error-prone process into one that’s insightful, reliable and that yields major value (like increased predictability and more accurate forecasting).

However, a powerful instance of automation (and more specifically, reporting) can also give you the ability to immediately see the results of “what if” scenarios. This can help you to weigh out possible outcomes of situations that could effect your organization as a whole— developments like Brexit.

Here at FIREapps, for example, within our Revenue and Expense Analytics, we have a variance analysis toolkit that allows our partners to compare the impact of rate change utilizing a scenario rate. This makes scenarios like “what does it look like for me if the sterling’s rate dropped 5%? What about 10%?” instantaneously answerable. What’s more, it can help organizations to gauge the effect of any impacts on their balance sheet or on their P&L, depending on the way their automation is set up.

Although we’ve seen the Brexit vote coming for a while, we all know that volatility often shows up without warning. By putting the right processes and technology into place, companies give themselves the best shot of navigating through the fluctuations and surprises— coming out more strategic, equipped and ready to successfully weather the storm.