Recently, Jon Vincent, Tennant Company’s Senior Treasury Analyst, spoke at an industry conference describing how Tennant, a multinational corporation with manufacturing operations in the US, Brazil, The Netherlands, Italy and China, reduced its foreign exchange (FX) exposures by $25m. According to Vincent, a key part of their success was Tennant’s decision to create an internal Foreign Currency Risk Management Committee to help develop an effective currency risk-management roadmap, in turn ensuring a robust FX programme.
Hearing about Tennant’s success with this approach came as no surprise to me – after more than 14 years of advising corporations on currency risk management strategies, I have seen first-hand the effectiveness in building a currency committee – or roundtable – to provide insight into currency exposures, lessen FX impacts on earnings, while strengthening inter-department relationships between stakeholders.
In the case of Tennant, stakeholders from various departments were called upon to form the committee, with members from tax, accounting, legal, financial planning analysis (FPA) and treasury. Collectively, Tennant’s currency committee is in charge of providing oversight and support of their automated FX programme and continue to assess programme needs quarterly.
Seeing their success, the question of what an effective currency roundtable looks like arises. Although every company has unique needs, currency roundtables should include representation from the following groups to deliver maximum results:
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