Introduction
No more limits on where you invest globally. With our new Multicurrency feature, you can invest in every currency, and with a click of a button, integrate all your complex ABF transactions into the base currency of your fund. Implementing robust systems, processes, and risk management strategies is essential to mitigate the challenges associated with multicurrency transactions and ensure smooth operations in international markets. Done so free of errors caused by the lack of visibility, and from a single point of view.
What’s in it for you?
Our new Multicurrency feature supports investors manage opportunities beyond borders and diversify their portfolios across various products and regions:
- Increase your Fund’s ROI considerably through centralized management of FX fluctuations and derivatives costs.
- Save up to 30% of time with streamlined currency conversion processes.
- Reduce risk with real-time insights into currency fluctuations, strengthening risk management strategies.
- Improve accuracy in transaction management by automating currency calculations to eliminate errors.
Why does it matter?
Managing Asset-Based Finance transactions in multi-currency can be complicated for several reasons:
- Exchange rates fluctuate constantly in the international currency markets, impacting the value of outstanding balances, interest payments, and cash flows, making it challenging to accurately predict financial obligations.
- Currency markets are exposed to risk, where fluctuations in exchange rates can result in financial losses or gains.
- Accurate accounting is required for currency conversions including translation of financial statements into a single reporting currency and compliance with relevant accounting standards.
- Operational challenges, including managing multiple bank accounts, reconciling accounts in different currencies, and processing foreign currency transactions.
- Compliance and regulatory framework can vary depending on specific currency jurisdiction.
How does it work?
Our Multicurrency feature integrates seamlessly with your existing systems to provide a streamlined approach to managing globally diversified portfolios:
- Automated currency conversion: Automatically converts all transactions to the base currency of your fund at the most current exchange rates, ensuring that financial reporting is consistent and compliant.
- Centralized currency management: Manages all currency transactions from a single platform, allowing for centralized control and visibility, which reduces the time and effort needed to manage multiple accounts in different currencies.
- Risk Management tools: Incorporates real-time monitoring of foreign exchange rates and automated alerts. This enables proactive management of currency exposure and minimizes potential losses due to rate fluctuations.
Use Case
A Credit Fund that manages a portfolio of direct lending transactions needs to manage and monitor PIK interest on its portfolio of loans, ensuring that the interest is properly tracked and reported over time. Our PIK loans solution supports the fund with:
PIK Interest calculation: The solution automatically calculates the accrued PIK interest and ensures the accrual is properly compounded.
Accrual monitoring: The user can view real-time accrual data, including interest added to the loan balance for each calculation period (e.g., monthly, quarterly, annually), and monitor the increased exposure due to capitalization.
Accurate payment processing: The solution updates the interest instalment status based on the PIK component (full PIK, PIK-cash mix, full cash) generating the payment notice and sending the correct information to a payment processing service (where available).
Report generation: The user can generate detailed reports outlining the PIK interest calculations, including the starting principal, interest rate, accrual periods, and the total interest accumulated.
Audit and compliance checks: The solution tracks historical accruals and maintains a log of all calculations, making it easier for the user to audit the interest calculations for compliance with financial regulations or loan agreement terms.
Post-calculation adjustments: If the loan terms change (e.g., interest rate adjustment or early repayment), the user can input the changes into the tool, automatically adjusting the PIK interest accrual calculations.
See how Cardo AI lets you manage globally diversified ABF portfolios from a single platform, in any currency. Book a demo →