Why FX Matters To Your BusinessNatasha Lala, General ManagerSolutions For Business

Klery Fox, Practice DirectorOracle Applications

AGENDA

• What is FX?

• How does it impact businesses?

• Best Practices for FX data

• Global process considerations

• Enterprise-wide technology considerations

• A game plan for strategic change

WHAT IS FX?

Foreign exchange is a 5.3 trillion dollar a day market

Larger than all equities markets *combined*

FX= $5.3 Trillion

NYSE = $26 BillionNASDAQ = $18 BillionTSE = $13 Billion

39%

53%

9%Reporting dealers (in-terbank market, pri-mary market makers)

Other financial institutions (regional banks, hedge funds)

Non-financial customers (corporates)

Source: 2013 BIS Report: Triennial Central Bank Survey

Who are the main participants?

90 seconds of EUR/USDOver 22,000 quotes

Source: OANDA fxTrade tick-by-tick data

OTC-ness leads to rate disparity

HOW DOES IT IMPACT BUSINESSES?

Source: FiREapps 2015 Q1 Corporate Earnings Currency Impact Report

Q1 2015

Q4 2014

Q3 2014

Q2 2014

Q1 2014

0 5 10 15 20 25 30 35

North AmericaEurope

Billions (USD)

31.69

20.18

8.0

3.91

7.45

57% higher than Q4 20144 times higher than Q1 2014

Negative impact to NA/EU corporates $31.68 billion in Q1 2015

Source: www.oanda.com/currency/historical-rates/

Can expect the same in Q2, with “Grexit” creating extreme volatility

Source: OANDA Historical Currency Converter 2015

Where do businesses use FX data?

Reporting• Often only discovered at month-end when distraction of

wrong numbers is most impactful for Finance to correct• Can result in needing to restate financial results

Pricing• Off-market pricing for clients who are savvy about price

checking creates distrust• Potentially leaving revenue on the table

Bad data creates impact

1. Human error– Risk of “cut-and-paste” error

2. Lack of auditability– Not easy to determine source/date– Risk of fraud

3. Lack of consistency– Different rates used by different people

Lack of controls with manual processes

Clients, Sales TeamEURHQ, Clients, Sales Team

USD

€ $ (Jan 1) $ (Jan 16) $ (Jan 31)

Revenues 5,000,000.00 6,071,500.00 5,858,500.000 5,660,500.00

Operating Expenses 2,000,000.00 2,428,600.00 2,343,400.000 2,264,200.00

Operating Cash Flow 3,000,000.00 3,642,900.00 3,515,100.00 3,396,300.00

How do I determine the impact, if any? Follow sales cycle…

BEST PRACTICES FOR FX

• Find FX transactions/translations in financial reporting

• Follow your sales/product life cycle across borders

• Use a reputable source• Reduce cutting and pasting• Consistently apply rates• Create an audit trail

Best practices for FX

• OANDA is trusted by “The Big 4” accounting firms, taxation authorities, and companies worldwide. OANDA Rates® are the globally recognized standard for accurate exchange rates data so you can have complete confidence in your numbers.

• OANDA owns the world’s most comprehensive and flexible FX data that will meet your firm’s accounting needs, with 190 currencies tracked by-the-second over the past 20 years.

Get an accurate data source

Best practices for FX …it starts with good data

• OANDA owns the world’s most comprehensive and flexible FX data that will meet your firm’s accounting needs, choose the periods, values, decimals and standards suited to your business from OANDA and the European Central Bank.

• Easy-to-integrate REST API with CSV, XML, JSON outputs.

Automate your process

Best practices for FX …it starts with good data

FX Transformation Considerations

AGENDA

• Global process considerations

• Enterprise-wide technology considerations

• A game plan for strategic change

Busin

ess

Plann

ing

Transaction

Processing

Reporting & Analysis

Fx

Front-office:• Marketing• Sales• Customer

Mgmt.

Operations:• Manufacturing• Supply Chain• Order

Fulfillment• Service

Delivery

Business Unit:• Vision & Strategy• Product/ Service

Development• Continuous

Improvement

Back-office:• Finance• Procurement• Human

Capital Mgmt.• IT

Global functions and business processes have abundant connections to Fx …

… yet there is rarely a single approach or mechanism in place, and often many layers

of different, enabling technology exist …Why isn’t our enterprise technology already handling this?

1. Lack of Fx standardization mandate or global policy enforcement

2. Frequent M&A w/ lagging post-merger integration efforts

3. Inadequate project team understanding or communication of Fx standards or automation opportunities

4. Innate differences in how different planning, transaction, and reporting tools are selected and/ or structured for Fx mgmt.

Global complexity + fragmentation = reduced efficiency/ effectiveness that can materially distract personnel or misstate results

To develop an effective, sustainable Fx strategy, an organization needs to:

1. Leverage a single, reputable source of truth for Fx rates

2. Centralize and standardize the administration process for Fx rates

3. Standardize how rounding/ precision is applied and calculated

4. Systematically apply and handle multiple acctg./ reporting views

5. Enable leaders and personnel to plan, transact, report and analyze information in their native functional currency

Organizations cannot standardize or automate what they don’t fully understand. - why to focus on it- what to standardize or

automate with technology- how to automate it- which parts of the business to

include- available internal/ external

resources- the delivery model that best

supports the objectives

Let’s get started.

Contact SmartDog:Email: info@smartdogservices.comPhone: (512 279-2524

Q&A

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