19 November Documenting FX Cash Flow Hedges November 19, 2019By FX Initiative Hedging FX Transactions #ASC815, #ASC830, #FAS133, #FAS52, accounting, cashflow, CPE, currency, derivatives, documentation, economics, education, expense, finance, forecasted, forex, forwards, FXCPE, fxinitiative, hedging, learning, management, revenue, risk, strategy, training, transactions, treasury 0 Documenting FX Cash Flow Hedges (Video): Discover the details of FX cash flow hedge documentation and recognize how underlying exposures impact the financial statements. This video is a preview of FX Initiative’s Hedging FX Transactions course as part of Learning Objective #1. To learn more, start your FX risk management training today, which provides 24/7 365 access to our complete suite of foreign exchange (FX) continuing professional education (CPE), examples & events at FXCPE.com. Start FX Training Related Posts CPE Webinar Invite: Cash Flow Hedging Program Overview FX Initiative cordially invites you to attend our webinar titled “Cash Flow Hedging” on Thursday, March 25th at 11AM Pacific / 2PM Eastern. Join us for a continuing professional education (CPE) program and earn CPE credit as we learn how to how to hedge and account for forecasted foreign exchange (FX) revenues and expenses. We will begin by defining the concept of a cash flow hedge, and how companies incorporate this type of hedge into a larger FX risk management program across the enterprise. We will then examine how FX revenues and expenses impact the financial statements with a focus on the limited visibility into a transaction’s FX gain or loss to date. From there, we will explore hedging FX revenues and expenses with forward contracts, and address the impact on cash flows as well as the options that are available to account for derivative instruments and hedging activities. Lastly, we will identify best practices for hedging forecasted FX transactions and emphasize how public and private companies prioritize their foreign exchange hedging objectives in order to achieve their desired risk management results. Learning ... Attend the Cash Flow Hedging webinar! You're invited to the Cash Flow Hedging webinar! Thursday, October 18th | 2PM Eastern | 1 CPE Credit Program Overview Join us for a live webinar and learn how to hedge and account for forecasted FX revenues & expenses. This 1-hour session covers 4 key learning objectives: Discover the concept of a foreign exchange (FX) cash flow hedge. Explore how FX revenues and expenses impact the financial statements. Recognize the cash flow and accounting implications of cash flow hedges. Identify corporate best practices for hedging forecasted FX transactions. Who Should Attend New and seasoned finance, accounting, treasury, and related professionals (CPA, CIA, CRMA, CFE, etc.) interested in international business. Join Us Cash Flow Hedge Considerations Are you curious about “cash flow” hedge considerations? FX Initiative’s Cash Flow Hedging webinar covers corporate best practices and case studies on hedging forecasted FX transactions, and walks you through pros and cons public and private companies can consider when deciding whether or not to elect “cash flow” hedge accounting treatment. Get started with our foreign exchange risk management training, which provides 24/7 365 access to our complete suite of foreign exchange (FX) continuing professional education (CPE), examples and events at FXCPE.com. Start Training > Download the PDF Webinar Series: Multilateral Netting Program Overview FX Initiative cordially invites you to attend our webinar titled “Multilateral Netting” on Thursday, December 10th, 2020 at 11AM Pacific / 2PM Eastern. Join us and learn the fundamentals of multilateral netting for intercompany cash flows. This Multilateral Netting webinar will help you learn the fundamentals of multilateral netting. Multilateral netting, also referred to as intercompany netting, is a process in which a group of cashflows between a defined set of entities are offset against each other such that just a single cashflow to or from each entity takes place to settle the net result of all cashflows. When a multinational company has divisions in a number of countries, direct billing in many currencies can lead to excessive foreign exchange (FX) trading, resulting in both buying and selling the same currencies many times over. This educational program will help participants learn the concept of multilateral netting for managing intercompany cash flows, how netting operations are centralized and cyclical, how netting can reduce payment volume and save FX costs, as well as several key treasury related benefits of deploying multilateral netting. Learning ... Identify the Top Two FX Hedge Objectives Companies that hedge foreign exchange must establish clear objectives in order to gauge the efficacy of their FX risk management program. While the priority of hedge objectives can vary between public and private companies, the same two overarching goals apply: (1) minimizing earnings volatility and (2) preserving cash flows. Gaining a better understanding of these two objectives can help organizations better decide how to allocate resources to achieve their desired economic and accounting results. First, minimizing earnings volatility means neutralizing to the greatest extent possible the Income Statement impact of fluctuating foreign exchange rates. At the highest level, this requires aligning the accounting treatment for the derivative with the accounting treatment for the underlying exposure to achieve equal and offsetting gains and losses at the same time and in the same geographic area of the financial statements. When hedging forecasted transactions that do not impact the Income Statement on a current basis, minimizing earning volatility often involves the use of elective “cash flow” hedge accounting treatment, which provides the timing benefit of deferring derivative mark-to-market gains and losses in equity during ... Learn How to Test FX Transaction Hedges Do you test the economic and accounting implications of your FX hedge strategies prior to trading? Testing by definition involves checking the performance of something before putting an idea into practice. This is a prudent and practical step to take when managing foreign exchange risk across the enterprise. When it comes to hedging specific foreign exchange transactions, companies can benefit greatly from testing the most common derivative strategies such as forwards, options, and collars, stress testing the economic scenarios, and comparing the accounting treatment available. By employing this approach, companies can more reliability predict both the cash flow and financial reporting implications of a hedged FX transaction. FX Initiative’s FX Transaction Simulator allows companies to input their ”assumptions" such as exchange rates, interest rates, and market volatility, as well as company specific variables such at the transaction dates, the amount of the transaction, and the desired hedging strategy. Correspondingly, these assumptions are reflected in our proprietary risk analysis model which visually charts the payoff profile of the selected hedge strategy, ranks the economic performance of the alternative spot, forward, vanilla ... Comments are closed.