From the November 2009 issue of Treasury & Risk magazine

Gold AHA Winner in Solution of the Year

FXpress, the Bala Cynwyd, Pa.-based provider of risk management and accounting software that was acquired by Reval over the summer, upgraded the intercompany loan module of its Web-based solution, FIRST, to give companies more flexibility and control in tracking their loans. The module tracks external loans as well as those transacted between different units of the same company.

Perhaps most importantly, unlike FIRST's legacy loan module or competitors' products, the new module provides reporting and general ledger posting from dual views, letting each subsidiary see both its borrowing activity and its lending activity, as well as its net position.

"In the past, we would only track one side of the transaction. Everything was tracked from the borrower's perspective and that's how everything would flow through to company reports and the general ledger," says Stephanie Swanton, product manager at Reval. "Now all your subsidiaries can get their view." That not only provides greater visibility for everyone, but allows subsidiaries to be more self-sufficient, Swanton says, by letting them analyze the bank fees for their external debt or check interest calculations on floating-rate debt. When Wm. Wrigley Jr. Co., the Chicago-based candy company, selected the FIRST loan module in early 2009 to replace the manual processes it had used for managing its loan portfolio, the dual posting to the general ledger was one of the features it liked. FIRST's Web-based system lets Wrigley's treasury and affiliates worldwide pull balance confirmations and get accurate loan calculations while saving time and money. The new module was also designed to provide more flexibility. With FIRST's legacy loan module, as well as many competitors' products, "you could set your initial terms and conditions and chug along," Swanton says. "But if you made a mistake along the way--say you didn't track a payment from three months ago--users were forced to rebuild that loan from the beginning."

That flexibility was achieved by separating interest calculations on a loan from the actual payments. So, for example, if a subsidiary is due to pay $300,000 of principal and $20,000 of interest, and it pays only the $300,000 principal, the $20,000 shows up as accrued interest, rather than forcing the rebuilding of the loan, she says.

FIRST's increased flexibility means that if market conditions or company needs change, and the parties to a loan decide to change the interest rate or alter the fees, "it allows you to easily, effective this date, apply a whole new calculation," Swanton says. That can come in handy if, for example, the bank's calculation of a payment due is slightly different from FIRST's figure, she says. "You want to track the actual payment that was made. We allow you to put that in, and you can modify the accruals as well as the payments." The flexibility also means a customer can track a loan either from its inception or from some other point, like the end of the previous fiscal year.

"It's just really much more responsive as a contract," Swanton says. "It gives them more control over the whole process." The new loan module also lets customers track the foreign exchange rate on each payment or transaction, Swanton says. Reval and FXpress have said that they will combine their products. Darren Greway, a vice president of product management at the merged company, says the intercompany loan module "would be one of the major features that would be a selling point for the merged product. The future for the functionality is actually pretty bright. It's definitely something that has value in the marketplace and Reval saw that."

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