From the February 2010 issue of Treasury & Risk magazine

Digging for FX Positions

Dealing with foreign exchange risks has become even more critical given the volatile market conditions. But it's hard to hedge positions if you can't quantify them, and many companies find it a challenge to ferret out that data from their ERP systems. That's where FiREapps comes in. The latest release of its foreign exchange exposure management platform gives companies a more powerful tool for aggregating and understanding information about their FX positions.

Agilent, a $4.5 billion manufacturer of scientific instruments, started using FiREapps recently as part of a makeover of its treasury technology. The Santa Clara, Calif.-based company previously employed spreadsheets to pull together data on its FX exposures, and Dawnette Blake, Agilent's treasury manager for FX and pensions, expects FiREapps to make it simpler to find the information she needs.

Instead of having to hunt through multiple spreadsheets, "with FiREapps it's all there," Blake says. "It's all logical and it's all in one spot."

At Agilent, the FiREapps platform pulls in general ledger data from Oracle, combines that with information from Agilent's treasury workstation on its existing hedges, and makes the necessary calculations.

While the previous version of FiREapps' software-as-a-service platform could interface with all of the major ERP platforms, "we're now able to work with virtually any accounting system," says Andrew Gage, vice president of sales and marketing at Scottsdale, Ariz.-based FiREapps. "And once you've got data in the FiREapps environment, we've really increased the level of sophistication companies can use for analyzing that data." For example, Gage says, companies can use forecast-to-actual analysis, scenario analysis, or value-at-risk metrics.

FiREapps has made a business of correcting the shortcomings of ERP systems in dealing with the revaluation of foreign currencies, says Jeffrey Wallace, managing partner of Greenwich Treasury Advisors, who consults with companies on FX risks. The latest release takes FiREapps to the next level, Wallace says. "FiREapps not only helps you know what your balance sheet FX exposures are, they are now providing tools to help you hedge it."

The roughly 300 FX hedging transactions Agilent does each month involve multiple subsidiaries and currencies, Blake says. "Multiply each of those entities and how many reporting lines there are, and it's a needle in a haystack sometimes," she says. "The more you can get an organization set that makes it easier to pull that data, the better off you are."