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SmartHedge helps travel firms make better decisions, mitigate risk while protecting their budgets
The travel industry has gone through many challenges in recent times. With currency fluctuations, unexpected events, and evolving market dynamics, businesses in this sector find themselves grappling with a range of issues, from decision-making dilemmas to reporting complexities and valuation uncertainties. In this article, we explore evolutions and challenges within the industry, highlighting how our treasury management system SmartHedge plays a vital role in resolving these pressing issues.
Solving the currency puzzle
The travel industry operates on a global scale, making it susceptible to the volatility of currency markets. Travel Weekly found that more than half (51%) of UK travel companies have been adversely impacted by currency fluctuations. Many firms lack the tools for reliable decision-making, often finding themselves over-reliant on lines of credit and exposed to margin calls during times of volatility.
The SmartHedge solution
SmartHedge facilitates informed decision-making by modelling various scenarios at the click of a button. With the ability to access accounting standard compliant valuations held with any counterparty, SmartHedge minimises the time devoted to administrative tasks and increases reliability, in turn introducing more certainty into the decision-making process. SmartHedge not only visualises your forward-looking data through intuitive graphs but also enables you to run informative back tests on performance, historical spot and forward rates and budget rates. The platform’s emphasis on clarity and ease of use rationalises what can sometimes appear complex, making it accessible for businesses of all sizes.
Revolutionising reporting in the travel industry
The reporting challenges faced by companies with foreign currency exposures are a hindrance to growth. Manual reporting, often reliant on outdated tools consumes valuable executive time and increases the risk of human error. The rapid-fire events of the past decade, such as Brexit and COVID-19 have exposed the inadequacy of existing reporting tools, leading to less visibility of potential problems and increased exposure to significant losses.
The SmartHedge advantage
SmartHedge steps in to streamline and enhance the reporting process. With automated reports providing clarity and direct insight into current hedging positions, the platform becomes a central hub for executives. The user-friendly interface allows for quick access to all positions, updated daily to keep businesses ahead of market fluctuations.
Designed specifically for currency market professionals, SmartHedge eliminates the clunky features of traditional reporting tools. The system’s logical approach enables users to select individual reports from a simple dropdown list, saving time and reducing the risk of errors associated with manual spreadsheet updates. Reporting delivery can also be automated to deliver key information at key times directly to your email inbox.
Valuations: mitigating risk and enhancing financial stability
In a fast-paced currency market, companies face the challenge of shifting valuations, impacting profits and cash flows. Smaller businesses often lack the infrastructure to hedge against all liabilities, leading to a significant diversion of time and focus. Gathering, validating, and processing valuations data from different counterparties becomes a compliance risk, and reliance on counterparties for accurate valuations can pose challenges during the financial year-end.
SmartHedge’s role in valuation certainty
SmartHedge addresses valuation challenges by providing independent valuations, mark-to-market assessments, and fair value analysis. In times of volatility, the platform offers 24/7 access to reliable and accurate valuations on hedging instruments, regardless of the counterparty they have been booked with.
As a central source of all hedging information, SmartHedge automates updates and allows users to upload information from other counterparties seamlessly. This ensures 100% accurate valuations across all instruments without the need for manual trawling through individual contracts.
SmartHedge’s ability to anticipate margin call risks and assess credit facility utilisation reduces the impact of black swan events on businesses. By offering a seamless valuations functionality, the platform becomes a first line of defence in protecting cash flow, ensuring businesses are well-prepared for financial year-end challenges.
Conclusion
As the travel industry continues to evolve and align with global market dynamics, the challenges of decision-making, reporting, and valuations persist. SmartHedge emerges as a transformative solution, providing clarity, efficiency, and certainty to businesses, regardless of their size or existing infrastructure. With 20 years of experience in currency markets, SmartHedge stands ready to guide and integrate its solutions into the travel industry’s processes, enabling businesses to thrive in an ever-changing landscape.
Download our brochure for all you need to know about hedging in the travel industry. Click here to download it for free today.
If you think your business could benefit from our integrated fintech solutions, or if you’d like to find our more about the services we provide, give us a call today. Speak to the experts on 020 3949 6821.
To learn more about how Smart Currency Business can help you, give one of our friendly account managers a call on 020 3773 7402 or visit our website for more information.
