PROCESS

Most FX risk management systems available today are intended for use by the largest corporations. They are delivered as Software-as-a-Service (SaaS) - complex software programs residing on a remote server. They make direct connections through the corporate firewall to enterprise resource programs (ERP) such as Oracle© or SAP©, and Treasury Management Systems such as Reval© or Wall St Systems©. This requires IT staff to oversee the complex interactions, and the finance group must learn yet another application. More importantly, the scale and expense is often well beyond what small to mid-sized enterprises (SMEs) desire.

CRM has developed its own solution architecture more suited to the SME. We do not require direct connections to ERP or TMS systems, and no IT support, so your busy finance team does not have to learn yet another complex software tool. CRM's system is cost-effective and easy to implement.

CRM's Solution Architecture

The client sends trial balance data (only items set to remeasure) and revenue/expenses to CRM via a secure file transfer protocol such as DropBox or BitTorrentSync. CRM transmits remeasurement data and trade recommendations to the client. As-executed contract data is then transmitted to CRM for incorporation into the next cycle. The complex risk management application remains within and is operated by CRM.

CRM's architecture shields clients from complexity and lets clients focus on their core business, not on complex hedging structures.

 

Process

In keeping with the philosophy of minimal impact on your staff, CRM's schedule of data transfers is very efficient, requiring either two or three "data days". If you need to determine the upcoming month's cash requirements by mid-month, the process requires three "data days":

  1. On the last work day of the current month, send the prior month's trial balance/net monetary assets (only those set to remeasure) and cash flow forecasts for both the current and next month. If you have a cash flow hedging program, we'll already have cash flow forecasts, and these will just be an update. CRM will return trade recommendations. After execution of the hedges, you (or your bank) then return as-executed contract data. CRM will also inform you of the accounting rate(s) for the next month.
  2. When the prior month is closed, send the actual trial balance/net monetary assets (only those set to remeasure) for the previous month. CRM calculates any "true-up" trades required to accommodate any deviation in forecast revenues or expenses. Then you (or your bank) returns to CRM as-executed contract data.
  3. On the third day (typically mid-month), send local currency cash received or expended, and updated cash flow forecasts for the current and next month. CRM sends trade information, and as before, you or your bank sends CRM as-executed data.

If your cash planning can wait until the last work day of the current month, then the process can be simplified even more by combining steps 1 & 3, requiring just two "data days":

  1. On the last work day of the current month, you send the prior month's trial balance, local currency cash received or expended, and updated cash flow forecasts for the current and next month. CRM forwards trade recommendations to hedge the next month. You (or your bank) then returns as-executed contract data. CRM communicates the accounting rate(s) for the next month.When the prior month is closed, send the actual trial balance and net monetary assets for the previous month. CRM calculates any "true-up" trades required to accommodate any deviation in forecast revenues or expenses. After execution, send to CRM as-executed contract data.

Process for early cash requirement determination

 

Simplified process when cash requirements aren't critical