A listed retailer based in the UK had difficulties operating with foreign currencies to manage their international sales and purchases. That’s why their currency management strategy consisted in handling FX centrally, with a range of hedging programmes run manually to cover risk across its various business lines.
FX CHALLENGES
Given the complex nature of the business, gathering exposure data and continuously monitoring currency markets was a very challenging task. Hence why this retail company had difficulties taking advantage of positive market movements in a systematic, unbiased way.
They also were heavily reliant on manual processes, which meant that forecasts were not updated with real-time purchase data. As a result, hedging was undertaken based on outdated information. In addition to this, the traditional forecast hedging process had a great impact on the P&L and required significant unwinding throughout the year.
THE SOLUTION
The retail company turned to a currency management automation that could solve all these challenges. With Kantox Dynamic Hedging® solution, they implemented a rule-based treasury management strategy that consisted of combining a layered hedging programme with real-time updates based on live SO/PO data.
This was possible thanks to the instant connectivity between their systems directly to the Kantox platform, and allowed the organisation to seamlessly capture and manage risk. And they were also able to automate the different phases of the FX workflow.
THE BENEFITS
After implementing Kantox as their currency management automation solution, the UK based retail company saw an increase in the effectiveness of their hedging process. In addition, they significantly reduced their FX risk and costs.
By automating the end-to-end of the FX workflow, the Treasury team was able to save time to focus on more value-adding tasks and the risk manager improved governance and control over the currency management strategy. The team had better visibility over the FX currency hedging with a centralised tool that enables real-time risk monitoring and reporting.
With the right automation solution, any retail company could be able to manage their operations in foreign currencies more efficiently. Book a free strategy session today to talk to our currency management specialists and find the strategy that fits your needs.
