Why Successful Treasurers Integrate FX Risk and Cash Management
This article is written by Kantox As treasurers watch global equity, credit, and FX markets wobble on each utterance from U.S. President Donald Trump, they quietly prioritise cash and liquidity management tasks. Meanwhile, recurrent episodes of financial volatility are putting the spotlight on the multifaceted interactions between FX and capital markets. Whether FX liquidity falls on “tariff volatility”, CHF reaches record highs across the board, or DKK weakens against EUR, you get the point: currency markets considerations are top of mind as treasurers beef up their cash and liquidity management capabilities. We can only expect more such episodes going forward. Micro-hedging and cash flow forecasts Amidst the flurry of reactions to Mr Trump’s tariff measures, Shopify, the U.S.-based e-commerce platform, is decidedly embarking on a policy to sell in more currencies. Although we are not privy to any information on the matter, the firm’s Form 10-K says it loud and clear: “We have launched localised pricing plans in select countries where we bill in local currency in order to reduce friction and attract more merchants to our platform. As our operations continue to expand internationally, we may observe additional risk in other foreign currencies” — Shopify As the treasury team updates its 30, 60 and 90-day cash flow forecasts, the FX element coming from foreign sales will introduce an added element of instability. While textbooks suggest hedging the transaction cash flow exposure, things are more complicated in real life. To begin with, the relevant data may be located in different company systems: ERP, TMS, and spreadsheets. On top of that, a rule for aggregating exposures is needed. And what about forward points management? CHF trades at a forward premium to USD, but BRL does so at a deep discount. This requires different approaches. There is a way out of these practical dilemmas. Micro-hedging programs provide finance teams with the flexibility to remove any FX-related uncertainty in their cash flow forecasts. This is because they rely on API connectivity to capture the exposure from any company system, delaying hedge execution when needed. The ‘cash flow moment’ of FX risk management In the magic world of textbooks, there is no time lapse between the settlement of a commercial transaction and the corresponding FX derivatives instrument. But real-world treasurers know it too well: most of the time, a lot of swapping is required. Time and again, we encounter situations where members of treasury teams manually execute the time-consuming transactions needed to perform early draws on existing forwards, or to rollover existing forward positions (much more on this specific topic in our next blog). The good news is that relief is at hand. Swap execution that comes with Currency Management Automation frees up resources and removes operational risks and costs. Whether they anticipate or roll over FX derivatives transactions linked to payments / collections, treasurers can execute the process in just one click. With complete visibility and control, the finance team obtains: A liquidity management upshot As they embark on the journey to sell in the currency of their clients and buy in the currency of their suppliers, firms like Shopify are in for a pleasant surprise. The decision is likely to yield benefits that go beyond the aims of “reducing friction and attracting more merchants to our platform.” The strategic orientation to use more currencies in commercial operations also produces a number of liquidity management and working capital-related benefits. In this age of Trade Policy Uncertainty, these advantages seem compelling enough: Ensuring liquidity at all times Now consider the case of the global pharmaceuticals, biotech, healthcare, and cosmetics company Gerreshimer. (Again, we are not privy to any information on their FX policies). In the 2024 Annual report, we read that the German group’s finances are: “… controlled and optimised centrally […] Our primary goal is to ensure liquidity at all times by procuring funding on a centralised basis and actively managing foreign exchange risks and interest rate risks” — Gerresheimer This is a model for a well-organised treasury governance setup. Here, again, we can report good news from the treasury technology front. Scalable tools that were once exclusive to large enterprises make it possible for any firm with foreign subsidiaries to implement solutions like Kantox In-House FX. The main benefits include: Conclusion: numerous and meaningful touch-points By introducing a neat distinction between tasks, most treasury surveys enumerate sets of priorities that are seemingly separated from each other. Courtesy of various crises, cash and liquidity management issues have consistently claimed a top position in most rankings. But are these treasury surveys taking the right approach? This blog showed that a clear separation of treasury tasks does not correspond to the real world. The touch-points between FX risk management and cash and liquidity management are too numerous and too meaningful to ignore. It is only when we abandon the siloed approach between tasks that we realise how much technology is bridging the gap between FX risk management and cash and liquidity management, to the point of making them virtually inseparable. Also Read Join our Treasury Community Treasury Masterminds is a community of professionals working in Treasury Management or those interested in learning more about various topics related to Treasury Management, including Cash Management, Foreign Exchange Management, and Payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.
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Open Banking: A Missed Opportunity for Corporate Treasurers in the UK and EU?
By Treasury Masterminds Open banking, heralded as a transformative force in financial services, has yet to deliver its full potential, particularly for corporate treasurers in the UK and EU. While the concept promises enhanced data sharing, streamlined financial processes, and improved efficiency, the reality has been marred by slow adoption, regulatory challenges, and technical complexities. Slow Adoption: A Global Perspective In the UK, open banking’s journey began with regulatory mandates aimed at fostering competition and innovation. However, consumer adoption has been tepid. For instance, in March 2025, open banking payments totaled just 27 million, a stark contrast to the 1.92 billion card transactions in February. This disparity underscores the challenges in shifting established payment behaviors. Similarly, across the EU, the implementation of open banking has been inconsistent. Countries like France and Spain have made strides, but others lag due to varying regulatory approaches and market readiness. As adoption remains slow in both regions, businesses—including corporate treasurers—find it difficult to justify the investment in open banking systems without a proven, widespread user base. Challenges Hindering Adoption Several factors contribute to the sluggish uptake of open banking: 1. Lack of Consumer Incentive While open banking offers numerous advantages—such as enhanced control over payments, greater transparency, and better access to financial products—the incentives for consumers to adopt it have not been compelling enough. Corporate treasurers, too, face challenges as businesses are often risk-averse when adopting new technologies without clear, measurable benefits. Despite regulatory efforts, adoption remains slow. Without a strong consumer push to adopt open banking services, businesses find themselves unable to leverage the full potential of the systems. 2. Security and Privacy Concerns Security remains one of the most significant barriers to the adoption of open banking. For consumers and businesses alike, trusting banks and fintechs with sensitive financial data is no small matter. The idea of open APIs that allow third-party providers access to banking information raises serious concerns over data privacy, identity theft, and fraud. 3. Fragmented Standards Open banking, as it currently stands, is far from a one-size-fits-all solution. In both the UK and EU, there is no uniform technical standard across financial institutions. Different banks have adopted different API frameworks, authentication mechanisms, and data-sharing protocols. This fragmentation means that businesses and treasury teams have to deal with varying levels of integration complexity when trying to connect with multiple financial service providers. 4. Regulatory Complexity Open banking is heavily regulated, with different requirements and standards across countries. The EU’s Revised Payment Services Directive (PSD2) governs the open banking landscape, but its interpretation and enforcement differ from one country to another. Similarly, the UK has its own regulatory framework post-Brexit, which complicates cross-border adoption. 5. Lack of Readiness Among Banks and Fintechs While the regulatory environment may be pushing for open banking, many banks and fintechs have been slow to fully embrace and implement the necessary systems. Many banks still operate with legacy technology, which makes it difficult to integrate open banking APIs into their infrastructure. Additionally, fintechs, while innovative, often lack the resources or expertise to develop secure, reliable APIs that comply with all relevant regulations. 6. Adoption Costs Implementing open banking can require a significant upfront investment. While it promises cost savings and efficiencies in the long run, many businesses—especially SMEs—are deterred by the initial costs of setting up the necessary infrastructure. For corporate treasurers, investing in the technology to integrate open banking systems into their TMS (Treasury Management Systems) may seem like a luxury if they are not convinced of the short-term returns. Looking Ahead Despite these challenges, there is cautious optimism. The EU’s proposed Financial Data Access (FIDA) regulation and the UK’s Data Use and Access Bill aim to standardize data sharing practices, potentially paving the way for more cohesive open banking ecosystems. For corporate treasurers, staying informed about these developments and actively engaging with industry initiatives will be crucial in leveraging the benefits of open banking as they materialize. Conclusion Open banking holds significant promise for corporate treasurers in the UK and EU. However, realizing this potential requires overcoming existing barriers related to adoption, integration, and regulation. With concerted efforts from regulators, financial institutions, and businesses, open banking can evolve from a concept to a cornerstone of modern corporate finance. Also Read Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. 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