Step-3 Forex Proses
Another important STP incentive for Juniper or any other growing company is the need to institute processes that are scalable, but that do not require a commensurate scaling up of headcount. The ideal situation is to be able to accommodate expanding transaction throughput without expanding payroll. Furthermore, given a certain amount of planning, achieving this scalability through FX STP is not extortionately expensive.
The Starting Point
Juniper’s existing FX hedging process involved a large number of manual steps. FX exposures were manually aggregated from spreadsheets e-mailed into treasury, before being manually rekeyed into the cash forecasting and balance sheet modules in the treasury workstation. Grouping and netting of these exposures were also done manually, as were the actual resulting trades – which were transacted over the phone, with the resulting trade details also being manually keyed in. Trade confirmations (phone and e-mail) and settlements were also manual, as were the recording and posting of the resulting accounting entries.
Obviously, a process as manually intensive as this had a number of major drawbacks. Firstly, it was extremely slow, with month end hedging typically taking three days to complete. It was equally error prone – perhaps unsurprising when you consider that data entry involved no fewer than six keying in activities. The energy expended on this inefficient process (and related corrections and reconciliations) could instead have been applied to the far more important task of determining a strategy for dealing with long-term FOREX economic risks.
Apart from absorbing too much of the time of a leanly staffed treasury team, knowledge of this type of manual process is not easily transferred to other personnel. This inevitably created problems around holidays, sickness, or personnel moving to other jobs. Finally, the existing process was simply nonscalable and would have been unable to accommodate the company’s global growth and expansion.
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