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Multilateral Netting Programs to Mitigate FX Risk

Aug 3, 2022

By Logan Wacker, Director, Finance Automation, RSM US LLP

With currency volatility on the rise, organizations are looking to improve the efficiency and visibility of their foreign exchange (FX) programs. For companies with global operations like Wahl Clipper Corporation, a proven method for mitigating the impacts of FX volatility became increasingly important to protecting stranded cash balances held by local in-country subsidiaries. Delivering an intercompany netting solution to better manage Wahl’s global FX exposure, while building a cost-effective way to move cash, became a key pillar of Wahl’s long-term financial strategy.

As part of a multi-year corporate-wide transformation, Wahl’s Corporate Finance and Treasury function was challenged to reimagine every step of its cash and liquidity management program — including foreign exchange — and identify how it could lower currency risk while significantly reducing bank fees.

A key focus area was to leverage the new technology adopted during Wahl’s transformation journey. By implementing a multilateral netting model through its TMS and building a new streamlined external account structure, Wahl centralized the flow of funds in and out of a U.S.-based netting center. This initiative consolidated Wahl’s intercompany invoice collection, automated currency calculations across global entities and aggregated FX trading. The result produced significant cost savings through the reduction of FX spot trades and the identification of better pricing.

Modernizing Wahl’s FX operation led to additional benefits, including the implementation of a FX trading execution platform, that allowed Wahl to capture more competitive pricing and reporting on spreads to measure historical execution. Looking forward, Wahl aims to complete an accounting integration that will automate entry creation and the approval process tied to the netting cash flows.

During the AFP 2022 session, “Multilateral Netting Programs to Eliminate FX Risk and Reduce Cost,” I will be joined by panelists Frank Bukowski, CTP, from Wahl, and Bob Stark from Kyriba to talk about the technology that enabled Wahl’s journey into multilateral netting. We will discuss how this effort fits into the overall modernization efforts, and how these results set Wahl up for long-term success. We will concentrate on how we:

  • Removed disconnected FX settlement processes and delivered significant visibility gains to management by consolidating FX exposure reporting into a single platform.
  • Increased efficiency by providing structure and automation for Wahl’s netting and downstream accounting processes.
  • Enhanced internal controls by implementing strict roles, responsibilities and segregation of duties, which helped to reduce errors and fraud in financial statements.

Join us as we take you through the journey that helped Wahl realize the maximum value from its treasury technology. See how Wahl turned a vision into practice while on the quest for a more strategic treasury operation.

Register for AFP 2022 by September 16 to save $350.