Do you find it near impossible to get an up-to-date view of P&L across your business? Are you still waiting around for end-of-day (EOD) reports to spot errors and get an estimate of P&L gains or losses? If so, you may be missing potential opportunities and unexpected risks. When changes to P&L are captured in real-time, companies are better prepared to take advantage of significant moves in market prices or unplanned trade opportunities. (See "Gain a Consolidated View of Real-Time P&L with Commodity Analytics.") Read on to learn four of the top reasons why real-time P&L analysis is essential to enable your organization to make optimized, fact-based decisions.
1) Easily spot errors before running EOD reports
In the energy trading business, running EOD reports is a critical process, however it can take several hours, typically overnight, for these reports to run. The reports require data to be consolidated from multiple different systems and are therefore prone to errors and anomalies.
Companies need to be able to check P&L data throughout the day to identify any potential errors quickly and ensure that no data is missing/incomplete before the time of market closure. The ability to catch mistakes prior to running the EOD improves efficiency and overall data accuracy, and eliminates having to re-do reports multiple times. Since accurate P&L is a key requirement for meeting corporate governance standards, it is crucial to be able to count on accurate data.
2) Take immediate action in response to market changes
Traders, risk managers, and executives need the ability to run P&L at multiple times throughout the day. Management needs timely estimates of P&L gains or losses in order to take appropriate actions in response to changes in the market. They need up-to-date information to better plan, monitor, and execute trade strategies.
Additionally, risk managers require the ability to identify any unwanted exposures at the earliest possible time to see when risk thresholds are met. If these numbers are not available until the following day, then you may be missing critical information to manage unexpected risks.
3) Gain more visibility into global P&L across businesses
For commodities companies managing businesses in different parts of the world, each having a different end-of-day time, it is difficult to get a current view of the overall global P&L. Traders need a global view across all books based on the latest available market prices, instead of having to use different end-of-day results being aggregated at different times.
Companies that rely on market prices from exchanges that fall outside their time zone (e.g. Australian companies relying on CBOT market prices), can only finalize the P&L computations at the close of the exchange. If this does not correspond with the day closing for them, it is difficult to get up to date P&L.
4) Assess impact of stress scenarios across portfolios
Energy businesses need to be able to simulate future scenarios such as crisis, market up, or market down scenarios, to see the impact on their current positions before finalizing a strategy. Most companies do not have the capability to use stress scenarios based on historical market data performance to assess the impact across multiple portfolios. They need the ability to get a better understanding of historical P&L in order to better analyze future scenarios and make the most profitable business decisions.
Analyze P&L with advanced predictive analytics
Eka’s P&L Analysis App is part of the Commodity Analytics Cloud platform which provides apps specifically designed for commodities companies to better manage in today's complex and volatile business environment.
With the P&L Analysis App, you can:
- Revalue P&L in minutes to gain a real-time view for intra-day analysis
- Simulate your portfolios to see the effect of changing markets
- Make the most profitable trading decisions
- Minimize losses with historical trends and comparisons analysis
- Determine areas of the business that need management focus
