Does Your Firm Own Too Many Yen?

Are you exposed to too much foreign exchange risk? Most companies don't know the answer to this question, according to executives at FiREapps, who released version 3.5 of their eponymous corporate foreign exchange management software today. The software sends queries out to a company's financial systems and analyzes its corporate-wide foreign exchange exposures, based on real-time currency data.FiREapps codifies a company's own risk policy to provide rules that help determine and fix foreign currency risks. For instance, a company may own too many Korean won because it made a big sale there. Or a firm may acquire a bank in Japan just before a major drop in the value of the yen - the value of the Japanese bank could rise 10%, but if the yen drops 15%, your firm would not be ahead. The FiREapps software provides a dashboard view of every foreign currency exposure and whether or not the company has sufficient hedges or countermeasures to make up for it. It also produces a list of recommendations to decrease the risk, such as executing an intercompany funds transfer or a hedge.

The new features in the 3.5 version of FiREapps include automated web-based analytics, web-based portal access and decision management workflows, drill-down exposure analysis and FAS 52 compliance reporting.

The hosted or "Software as a Service" model is tremendously popular among the prospects he calls on, says Wolfgang Koester, FiREapps CEO. "CFOS say, 'The minute I invoke IT it's six months and $2 million,'" he says. "Or, 'If I need IT, I have to get in line.' They're tired of waiting for IT." He also says FiREapps consultants stand behind the hosted software, helping companies set it up and use it properly.

One early customer, Paxar Corporation (a merchandising systems provider), says it used to spend weeks making many calls to subsidiaries and entities to understand its foreign exchange exposures. Now, "we aggregate our foreign exchange exposures from around the world and load them into the FiREapps system," says Timothy Winston, Paxar's vice president and treasurer. "Of particular focus for us is the ability to drill into and resolve the exposures resulting from our inter-company relationships and transactions." He says the software has let Paxar more easily identify true currency exposures and manage them in a more timely manner.