Insight to All Things Currency and Treasury Management

When looking back at 2018 thus far, it is easy to see how volatile movements in one currency can take treasury and finance teams by surprise and cause volatility in other currencies at the same time.

As we saw with the Turkish lira earlier in August, volatility on its part drove down other emerging market currencies. And, if the last 15 quarters of currencies crises and the tripling of European negative FX impacts in Q1 2018 are any indication, future volatility is sure to arise.

Luckily for treasury teams that have the tools they need to fully manage their risk, they know fully what exposure they have to their entire basket of currencies and are unaffected by future volatile events.

Organizations that experienced impacts from currency events like the fall of the lira (and resulting fall of the rand and rupee) should be looking forward to 2019 now and budget for technologies that can help assess and manage their exposures in order to avoid future unexpected FX impacts to their EPS or EBITDA in the coming year.

The first step is to take a look at what may be hindering an organization’s ability to manage their FX exposure.

Factors affecting a treasury team’s ability to manage FX generally include:

  • Lack of FX risk capabilities in their current technologies
  • Inaccurate, incomplete and untimely data
  • Largely manual process that are time-consuming and susceptible to human error
  • Insufficient visibility into underlying accounting and exposure data

Enterprise currency management solutions can help in all of these areas to deliver actionable data, increase transparency into the underlying drivers of currency risk and automated processes.

The Business Case for Enterprise Currency Management

Assessing what factors are playing a role in a company’s inability to avoid FX impacts is only the beginning. When the time comes to present your 2019 budget it is important to be able to justify your needs, and FiREapps solutions for balance sheet, cash flow and enterprise currency analytics build the business case for you.

Define the Value of FX Risk Management

FiREapps can help you proactively identify your EBITDA or EPS at risk and gauge your corporation’s sensitivity to FX. This allows you to show your CFO how the company is currently affected by exposures and builds the business case for the technology needed to mitigate that risk.

By knowing where your company stands, you can identify the possible ramifications of continued FX impacts, including revenue losses, credit rating downgrades and limited access to liquidity.

Cost and Risk Efficiency

FiREapps Interactive Cost and Risk Efficiency (CoRE™) Analysis enables treasury to be confident in their hedging decisions, improve cost analysis and reduce risk. It quantifies your current exposures, determines the potential impact and identifies opportunities where you can reduce the most amount of risk for the least amount of cost.

Investing in Tech Leads to Efficiency

Aside from reducing overall FX risk, the implementation of an enterprise currency management solution can eliminate time formerly spent supporting a spreadsheet-anchored program and allow treasury practitioners to be strategic and focus on value-add tasks.

Accelerated ROI

As a SaaS-based technology, FiREapps’ fast implementation boasts quick wins to generate proof of concept, enabling treasury to reduce risk substantially within one quarter. Instead of being measured in months, FiREapps implementation process is measured in weeks, taking far less time and costing less than the implementation of an ERP or TMS.

Bottom Line

Now is the time to plan for an enterprise currency management solution that can provide actionable data, reduce risk, lessen transaction costs, improve hedge performance and save time.  When you think about projects for the upcoming year, you need to consider where you can get the most value for the lowest investment and FiREapps’ ability to automate the foreign exchange risk management process and breed confidence in your ability to manage exposures do just that.

To see how an enterprise currency management solution can help improve the results of your currency management program schedule your personalized demo today.

Read more information on how you can build the business case for a currency analytics solution.