The unprecedented Covid-19 pandemic, like many other industries, also affected the metal traders and the broaders commodities trading industry in general. While metal traders had already been facing many years of declining margins- a report from 2019 suggests that margins would continue to shrink by about 15% over the next five years, the brand new struggles brought by the pandemic further aggravated the situation.
For the metal trading sector, the need of the hour is to explore new solutions for increased profitability. Traders need to maintain better controls on risk and liquidity, and as EY’s 2019-20 report on top business risks facing mining and metals states, going digital across the entire value chain is the key to increased productivity and margin improvements, as well as efficient risk management. This is where metal trading CTRM software – or commodity trading, transaction, and risk management software, comes in.
Why is CTRM Software Needed For Metal Trading?
- The Ever Changing Positions and Exposures: As the prices of commodities change, metal trading companies need to know how exactly the changes will affect operating margins to maximize their profits. Metal trading CTRM software brings the opportunity to run real-time scenarios for trading strategies, which also provides users a competitive advantage over similar companies.
- Strike and Report a Precise Metal Balance: For metal trading organizations to streamline all operations and reduce metal losses, it is important to determine a timely metal balance and report it across the workers. CTRM software helps achieve this with ease.
- Supply Chain Management: With metal supply chains, managing all commodities throughout the chain can be quite an error-prone process if done manually. CTRM software integration will lead to the accurate tracking of quantities and costs, on the other hand.
- Assay Management: Capturing and tracking assay finalization rules throughout the stages of delivery and various kinds of assay is something CTRM software can do in an error-free way.
- Record of Charges: CTRM software can help with recording the multiple complex charges metal trading companies need to keep track of, including those of treatment, sampling, refining, penalty, price participation, and more.
- Quotational Periods: The accurate price management of the several payable elements is quite complex as the pricing is based upon quotational periods that can range from a day to multiple weeks or months. Again, metal trading CTRM software can handle this with significant ease.
Advantages of Metal Trading CTRM Software
Traditional, on-premise CTRM software makes it easier for metal trading companies to capture information and report on the actions the organization has undertaken, as well as the associated risks. However, the on-premise solutions are restricted to particular locations (like an office space), and they do not really contribute much to making the procedures of day-to-day trading easier and faster.
The complexities and challenges of the metal trading industry in today’s low-margin environment call for cloud commodity management. Benefits of cloud-based metal trading CTRM software include:
- Acceleration of the functions an on-premises CTRM can carry out.
- Automation of time-consuming business procedures like creating contracts and shipping documents.
- Precise, real-time calculation of pricings based on factors like different assays, FX, interest charges, and composite curves.
- Logistics automation, leading to time-consumption.
- Complete position visibility, so the risk of outstanding actions being forgotten for a particular contract is practically zero.
- Advanced risk management; for instance, pre-trade checks are both sped-up and kept more secure. The team under you can evaluate individual counterparties against your risk management KPIs, and assess their available credit. Plus, they can also pull up any payments overdue, or the payment timelines at any given moment, so they can always make knowledgeable choices regarding their impression on the overall cash flow.
- The risk management controls can be integrated with existing finance and accounting software to bring complete data visibility to all parties involved. This helps you comprehend whether contracts will meet financial approval or not, and allows for the company to make informed decisions quickly.
- This goes without saying, but the biggest advantage of cloud-based CTRM is that you can access it from anywhere with a decent internet connection, without requiring any additional software installation. There is very little risk of data being lost, and a lot more cyber security measures in place than an on-premise solution. With many employees working remotely and hybrid work culture firmly in place in the post-Covid times, cloud-based commodity management is more important than ever.
With the Covid-19 pandemic having compounded many of the challenges metal traders were already dealing with, to stay ahead of their competitors, metal trading companies need the faster, automated operations and the opportunities to make better-informed decisions CTRM software can offer. At Robosoft, we have years of experience supporting multiple commodity traders to optimize business procedures with our commodity trading software. To find out how your metal trading business can implement CTRM software, you can contact us today!