With lean staffs treasury has to automate the little things.
The days when treasury could rely on an analyst to fiddle with spreadsheets to help make the exposure management cycle work are gone. Either the analyst is not in the budget anymore, and will not be again, or that analyst is more valuable working in a relationship capacity with the business units than manually working data in Excel.
The result of this gap of course is a turn to technology. And to good effect, as was described in a presentation at a recent meeting for The NeuGroup’s FX Managers’ Peer Group. At the meeting, a client of both 360T and FiREapps walked meeting participants through the various steps of her company’s project to set up STP between its enterprise finance system, FiREapps and 360T.
The goal was to capture and pre-process FX exposure information via FiREapps, pass that information seamlessly to 360T for trading, utilize Misys for confirmation and settlement matching, and then incorporate a SunGard treasury workstation for deal capture and monitoring. Finally, again on an STP-basis, pass the journal entries back to the GL (see diagram below).
The benefits of this process were many, according to client. First, the process allowed for greater flexibility, which meant any corporate-structure changes could easily be incorporated. There was also excellent operational efficiency, resulting in reduced data aggregation/validation and a greater focus on analysis and decision-making. The structure created needed transparency through expanded reports/analysis, which revealed to stakeholders in different parts of the company how what they do can impact the balance sheet (and ultimately, cash). Related to this was the ability to get a high-level snapshot of all exposures. Lastly, the setup allowed for more compliance and control.
Although these benefits helped immensely, there is still work to be done, the client said. The next step in the implementation is to expand the structure’s hedging capability, specifically to go beyond forwards and swaps to protect cash and address any accounting risks. Also on tap is to explore ways to better leverage analysis/reporting.