The Context

Manufacturing and engineering businesses often deal with long lead times on multi-year projects, tight production margins, and fixed-price customer contracts. Currency volatility can erode profitability, especially when exposure is poorly tracked or under-hedged. Many firms operate with spreadsheets, making exposure tracking, policy adherence and board reporting slow, error-prone, and reactive.

The Solution

We continued to provide ongoing risk management and execution based support on forward cover, particularly for large USD-denominated raw material / component imports. However, the CFO needed more structure and visibility to back those decisions internally and support his Treasury team day-to-day.

SmartHedge Pro Implementation

Strong buy in from the Treasury Manager on benefit of SmartHedge Pro, how it would streamline his responsibilities, allow him to take a more proactive approach and more quickly, easily and comprehensively keep the board informed.

Key features deployed:

• Exposure Tool: Live snapshot of open currency positions against budget and forecasts
• Contract Management: Automated tracking of all forward contracts, including coverage % and expiry schedules split by hedging counterparties
• Credit Line: Insight into forward facility utilisation, plus alerts approaching thresholds of offside limits / total notional hedged limits
• Stress Testing Module: Simulated market movements to test vulnerability to margin calls & impact on performance vs. budget rates
• Board Reporting: Exportable modules within the Exposure Tool and Stress Testing elements, aligned to internal FX policy. Clear visual breakdown of Mark to Market positions and Credit Limit utilisation

Onboarding Time

A series of meetings with the Treasury Manager (including F2F) to qualify pains, align SmartHedge Pro as a solution, model a portfolio with their data and presentation back to both the FC and CFO to gain approval. The Treasury Manager served as an internal ambassador for Smart based on the real value SmartHedge Pro would deliver him & the wider company. SmartHedge Pro was articulated as a key differentiator from competition and allowed us to negotiate on receiving a defined % of their wallet share at a fair margin.

The Challenge

The FC faced mounting pressure from the board to provide:

• Accurate, up-to-date reporting on FX exposure and hedge coverage
• Clear visibility on adherence to internal budget rates
• Assurance that their FX policy was being followed
• Proactive management of forward contract credit facility utilisation
• Risk assessments to anticipate and avoid potential margin calls at all costs due to bad previous experience

Historically, the company struggled with:

• Deals were booked and then manually recorded in spreadsheets, very time consuming every month for the Treasury Manager
• No easy way to test budget rate adherence and policy conformity
• Difficulty stress testing forward positions against market movements and seeing how credit facilities may be impacted

Why it worked

By combining our wider service offering with technology to aid daily tasks and improve FX visibility, the client was able to:

• Make more confident and timely hedging decisions when maintaining their hedging policy
• Review and assess their current hedging approach clearly alongside a dedicated Account Manager
• Better anticipate margin calls through proactive stress testing and quickly / clearly report back to the CFO
• Strengthen the treasury team’s credibility at the board level
• No additional cost to implement SmartHedge Pro, as it is included as part of our service offering with quick uptake timescales and ongoing support

Key Takeaways for Manufacturing and Engineering Businesses

1. Tech brings structure: Even a small treasury team can manage FX exposure efficiently with the right tech systems and dedicated support.
2. Credit visibility and cashflow matters: Not waiting for margin calls to be a surprise, but staying proactive using analysis tools
3. FX risk is strategic: Policy-aligned action and board-level reporting elevate FX management from admin to advantage.