What Your Boss Needs from a Treasury Risk Management System

If you are in the process of selecting a new treasury risk system, you probably have quite a few stakeholders to manage. Your colleagues in treasury and accounting will have a long list of desired functionality. This may cause you to conduct a few box-checking exercises to confirm the system will deliver what they need. But what then? You will most likely need to get final approval from an Assistant Treasurer or Treasurer for a multi-year commitment to a Software-as-a-Service (SaaS) platform.

 

Multiple stakeholders have varying requests

During your due diligence process, the treasurer will play some part, but it will likely be at a high level; meeting providers and having general discussions around what the system can do. The details will be left to you and, as we all know, the devil is in the details. In this moment, you have an opportunity to do more than just keep your boss in the loop. Though the treasurer might never log into your treasury system and use it the way you do, he or she can still benefit from it.

Those benefits become apparent when you see the situation through the treasurer’s eyes. For them it is all about the "big picture." But the big picture is multi-faceted and requires a different perspective. It means that they have to stay out of the weeds of the selection process, while still maintaining control over that process. It means that that the treasurer has stakeholders too. Those stakeholders need accurate information from your boss, who in turn needs accurate information from you. That information will largely come from your treasury risk system, so the details you are managing have great importance upstream from your role. Let’s unpack some of these needs so we can uncover what your new treasury system can deliver to your treasurer.

The most pressing need (and therefore highest potential benefit) will likely be the kinds of analysis and information that your treasurer will be able to get out of a treasury risk system. Whatever the format (dashboards, management reports, etc.) high level reporting will be key to the value proposition of your TRM. If you can respond to the latest headlines by telling your treasurer how exposed you are to a given currency, what your cost of hedging is, or where you have unaddressed risk, this will keep your treasurer happy and able to inform his or her stakeholders.

 

How will day-to-day operations be impacted?

The next most important thing the treasurer needs is an efficient operation. If the team can collaborate well with the business units to capture exposure, identify good hedging strategies, execute hedges and quickly manage post-trade activities, then that team will be happy and will also have bandwidth. That means if you and your team are managing an effective workflow and saving time and effort, then you will be able to rise to the challenge of the treasurer’s new initiatives. Those initiatives will provide all members of your team with opportunities to grow and learn new skills.

All of this means you will need a reliable, end-to-end system. Systems that provide analytics only or that can only perform a Critical-Terms-Match on your hedges will not achieve your objectives. Only a full treasury risk platform, that can efficiently capture exposures from either your business units or various ERP systems, integrate with trade portals for execution, provide full automation for all of your post trade processes (hedge documentation, valuations, credit value adjustments, effectiveness tests/measurements and journal entries) and dynamic reporting on your exposures and hedges will both provide the treasurer with the information they need, while enabling your team to operationalize your risk management process to save time and effort.

 

Trust in your solution provider

Lastly, your treasurer needs a safe bet. System selection is no time to go for the cheap newcomer who is trying to disrupt a competitive treasury provider market. They (and you) need a proven system. A system that has properly implemented its clients and enabled them to successfully navigate the disclosure and audit process will be critical to obtaining the treasurer’s blessing. Keep in mind that while you are researching systems for possible selection, your treasurer may be doing the same thing, albeit more informally. Their peers across the corporate treasury landscape, local AFP groups and networking venues, will help them to assess whether or not a specific technology provider is able to deliver on their promises and get the treasury team where they need to be. Make sure your research methods align with your treasurer to ensure you can agree on the right systems to evaluate.

A proven, time tested end-to-end system that is used by some of the largest Fortune 500 companies in the world will both give your treasurer the comfort they need to approve the purchase, as well as providing you and your team the workflow, analytics and automation you need to move beyond “just keeping up."

 


ChathamDirect is a treasury risk management and hedge accounting solution built on the knowledge and experience of Chatham Financial's industry-leading advisors. Chatham's end-to-end solution helps you see your exposure, make good hedging decisions and achieve good hedge accounting. From simple to complex, ChathamDirect provides efficiency and expertise for your hedging program. 

Contact the ChathamDirect team to start a conversation about your FX risk management program.

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