00:00:00:36 - 00:00:40:22
Speaker 1
Here are five key ways to improve the efficiency of treasury operations. Welcome to CurrencyCast CFO Edition. My name is Agustin Mackinlay. I'm the financial writer at Kantox and your host. In the current setup episode we're focusing on currency management from the lens of the Chief Financial Officer. In this week's episode, going to present five ways CFOs can deploy special-purpose technology to improve the efficiency of treasury operations. Across the three phases of the FX workflow:
00:00:41:08 - 00:01:12:19
Speaker 1
the pre-trade phase, the trade phase, and the post-trade phase, at least five major areas of improvement can be singled out. Improvement number one: set a strong FX rate feeder. Commercial teams often lack the capability to use the FX rate they're required to price in, in a data-driven and efficient way. With favourable forward points, they could use a forward rate to price more competitively without hurting budgeted profit margins.
00:01:13:16 - 00:01:44:05
Speaker 1
With unfavourable forward points, they could price with a forward rate to remove excessive markups. So what is the improvement? Whatever the number of transactions, solutions to price with a forward rate can be easily scaled to all the currencies required by the commercial teams. With all the pricing markups per client segment and per currency pair. Improvement number two: Process all kinds of exposure.
00:01:44:44 - 00:02:10:34
Speaker 1
Most treasury management systems or TMSs are designed with accounts receivable and accounts payable in mind. And while that works fine for balance sheet hedging, it precludes the automation of cash-flow hedging programs that are based on a type of exposure that arises earlier in the lifecycle of a transaction, namely forecasts for budget periods and firm commitments for sales and purchase orders.
00:02:11:44 - 00:02:48:18
Speaker 1
So the improvement is to use API-based technology that allows members of the finance team to automate the process of capturing all the relevant types of exposure information, making it possible to run cash flow hedging programs and combinations of hedging programs that require different types of exposure to be managed. The third improvement is improved trade management. The trade phase of the FX workflow is where most of the attention of CFOs has been placed as multi-dealer
00:02:48:18 - 00:03:31:31
Speaker 1
trading platforms such as 360T have reduced the cost of FX trading for companies. And while the execution of trades itself is sometimes manually initiated, most systems lack the capability to automate the process of triggering the trades. So what's the improvement? What special purpose software brings is the capability to automate not only the entire trade phase of the workflow with the help of multi-dealer trading platforms but also the crucial link with the pre-trade phase by ensuring that the execution of trades is done at the right moment in time.
00:03:31:31 - 00:04:13:28
Speaker 1
Improvement number four: Automate hedge accounting. Compiling the documentation required to perform Hedge accounting is a time-consuming and costly process, as changes in the fair value of the hedged item are compared to changes in the fair value of the corresponding hedging instrument. So what's the improvement? The perfect end-to-end traceability of automated FX solutions makes it possible for the accounting team to automate the entire process of compiling the required documentation, and that enables CFOs to provide in a cost effective way, more informative financial statements.
00:04:13:28 - 00:04:58:44
Speaker 1
Finally, improvement number five: Automate swap execution. The process of adjusting the hedging position of the company to the cash settlement of the underlying commercial exposure is one of the most time-consuming and error-prone activities carried out by members of the finance team. It might require an enormous amount of swapping. So, what's the improvement. Swap automation, a task that most Treasury management systems are unable to perform, is a key feature of currency management automation. With perfect traceability, members of the finance team can draw on or rollover existing forward positions while eliminating operational risks along the way.
00:05:02:39 - 00:05:27:43
Speaker 1
According to a recent survey by Citi, efficiency within treasury is the number one expectation in tech. The five improvements just outlined allow CFOs to take the lead and turn the digital treasury into a day-to-day reality. Thanks for tuning in. If you enjoyed this video, make sure to like, share or subscribe to our channel so that you can keep up to date with upcoming episodes.
.png)
