Case Studies

Accounting software, Xero

Reducing fx volatility, enhancing strategic decision making


Confidence to use options as part of hedging tool-kit. Sharing information with trusted advisor.

Who is Xero?

Xero is a phenomenal success story. From its beginnings in 2006, Xero has grown to a $407 million revenue, ASX listed, global company with offices in New Zealand, Australia, UK, US, Canada, Asia and South Africa. The Xero platorm is available in over 180 different countries and its app market place has over 700 add-ons that have been built by third party vendors. And it all started in Wellington, New Zealand. Leveraging the opportunities presented by cloud-computing, Xero set out to offer small and mid-sized businesses an alternative to traditional, clunky, desk-top accounting software. Xero is the poster child of tech innovation in New Zealand and has smashed the perception of what can be achieved from the bottom of the planet.

Efficiencies And Control

Xero’s growth beyond its New Zealand borders was not without challenges. Rapid growth in overseas revenue and costs gave rise to significant foreign exchange risks. Reducing volatility in NZD cashflows, Xero’s base currency, became an area of focus for the finance team. Tom Robertson, Senior Treasury Analyst, recalls, “We needed a cost-effective tool which would give us efficiencies and control when managing our FX exposures. Hedgebook jumped out as an attractive solution. Hedgebook was a quick win from our perspective and a big step forward. It enabled us to embed deal capture, confirmation, strategy and reporting within a single tool.”

Confidence with FX Options

The increased complexity and quantum of Xero’s foreign exchange exposures required the treasury function to become more sophisticated. Hedging was traditionally transacted in its most basic form — forward exchange contracts — but Xero’s treasury team were keen to explore alternative hedging instruments. Tom continues, “When considering the use of FX options as one of our hedging tools, a key decision was being able to use those sophisticated products with more control. Hedgebook gives us independent valuations and clear visibility of our overall hedging position.

We have board approved risk control limits, so it is critical we remain within these bounds.” A balanced foreign exchange hedge book will consist of a range of hedging instruments, from the vanilla to the more sophisticated. Understanding the mix of the hedging in place and the potential outcomes from future movements in exchange rates is critical to robust risk management. Hedgebook provides this oversight so Tom and the team can be confident that foreign exchange risk is managed within an environment of control and compliance.

Enhanced Strategic Decision Making

Every company is different in its approach to foreign exchange management. Factors such as the ability to pass-through adverse foreign exchange movements to your products selling price, the competitive landscape, the risk appetite of the organisation, etc., all influence hedging. As a progressive company it is no surprise that Xero looks beyond the “vanilla”.

Says Xero’s Senior Treasury Analyst, “Hedgebook allows us to be more dynamic in the way we manage our risk positions. Hedgebook’s strategic decision-making tools play a key part and gives us the ability to roll forward hedging outcomes. We can visualise our hedge position not only today or the end of the month but also where we’ll be in three or six months’ time under different scenarios.

Retrospective Evaluation of Hedging Performance

With a commitment to treasury excellence, critical appraisal of previous hedging decisions is an important aspect of Xero’s approach to foreign exchange risk management. Xero’s treasury team use Hedgebook’s reporting tools to gain insights on rate achieved outcomes when measuring actual performance against alternative, hypothetical hedging approaches.

Sharing Information

An aspect of Hedgebook’s functionality that resonates strongly with Xero is the ease of sharing of information. As Hedgebook is built using cloud technology, Xero can give access to all relevant users, both inside and outside the organisation. Tom picks up the narrative, “The ability for our strategic advisors to be looking at, and talking to, the same information without emailing spreadsheets back and forth is an important attribute. At Xero we are about helping businesses work smarter, so it’s great to work with third-parties such as Hedgebook who share our philosophy.”

Very Good User Experience

At Hedgebook we work hard to provide a treasury platform that is easy to use. Treasury is a complex area. Tom comments, “In terms of support and onboarding I thought it was really easy and supportive, a very straightforward implementation. And it is good to work with people who are genuinely looking to improve their product and listen to their end users. A very good experience.”

All Grown Up

Xero has grown into a mature business with shareholders to answer to. Managing financial risks appropriately and smoothing volatility in group cashflows is a fundamental requirement of the treasury function.

Tom sums up, “Hedgebook forms the basis of our monthly and quarterly management and board reporting. Hedgebook improves Xero’s processes, it’s visibility over hedging and, therefore, gives us greater confidence when making hedging decisions, resulting in more effective hedging.”

Founded in 2011, in New Zealand, Hedgebook is a dynamic, international financial software company delivering innovative treasury management solutions to SMEs and their treasury providers – such as banks and foreign exchange brokers.
Its mission is ‘simple’. To provide analytical tools which make life easier for financial professionals. People who otherwise would still be grappling with spreadsheets to shed light on complex financial instruments. It’s a huge market. One that Hedgebook was first to identify, and quick to own.

The new breed of Treasury Management System

Duncan Shaw, APAC Client Relationship Director, explains. “Yes, there are other Treasury Management solutions on the market, catering for the top end of town. With big-business price tags to match. But there was no TMS in the SME space, just good, old spreadsheets…. this is the void that we are filling.”
“We’re not competitors to larger, traditional TM systems. Our competition is the old-fashioned, unwieldy spreadsheet. Finance professionals have struggled to find a viable alternative to spreadsheets, until Hedgebook.”

Ian Ross, Chief Technology Officer (CTO), sums up the Hedgebook approach. “The big thing we have achieved is simplifying the complex. We take technology out of the equation, whilst putting big-business functionality in SMEs’ hands –at a fraction of the cost.”
Since its inception, Hedgebook had been successfully delivering TMS via hosted infrastructure, until its migration to Microsoft SQL Azure in March 2018. So, what precipitated this significant transition?

The relentless quest for performance gains and cost savings

Inherently, Hedgebook is thirsty for innovation, always looking for new ways to improve the functionality enjoyed by its customers. But as Ian Ross describes, it was the specific need to better service its larger clients that led to the company’s move to the cloud.

“For the level of functionality we were planning to introduce for our larger clients and distribution partners – Hedgebook needed to be super responsive and super scalable, without investing a whole lot of money upfront. Microsoft Azure quickly rose to the top of our list of cloud providers because the barriers to entry were so low.”

“We needed a safe environment, ticking the boxes of security, reliability, certification and accreditation. Microsoft gave us the feeling that we could ‘lift n shift’ from hosted infrastructure to the cloud – and quickly start to optimise our presence in that environment.”

“Previously, if I wanted to improve database performance, my biggest pain point was having to migrate from one virtual machine to another – with all the testing and heartache. With SQL Azure I drag a slider to the right, and suddenly I’m dealing with a much bigger database.”

“We migrated to Microsoft SQL Azure – and our customers didn’t notice”

Ahead of any significant shift in infrastructure, common sense dictates consideration to the possible knock-on effect on the end-user experience. Bryn Lewis, a Microsoft Most Valuable Professional (MVP) who has worked with Hedgebook since the early days, describes an initial migration without ‘any disturbance of the force’.

“Migration to cloud required minimal code or database changes, so we didn’t run up costs retesting code modifications. We simply dropped straight into the cloud and were up and running. Now we’re identifying performance improvements, cost reductions and reliability improvements at our leisure – rather than having to do it all up front.”

“We certainly achieved an ultra-responsive system, with far greater visibility and intelligence over the application. Which has allowed us to identify functionality with sub-optimal performance and fix them. Essentially saving money as we go.”

“And the clients scarcely noticed. Yet if they were to look at performance, the average user would notice the software running much faster than before.”

The technical journey behind ‘lift n shift’

Whilst Hedgebook describe the ease of migrating from hosted infrastructure to the cloud, the phrase ‘lift n shift’ perhaps trivialises the complexities behind the scenes. CTO Ian Ross picks up the narrative on the technical journey:
After several weeks’ preparation, we moved the Hedgebook Pro Software as a Service (SaaS) application from four dedicated servers hosted by SingleHop to Microsoft Azure.

The application is built using Visual Studio and consists of C/C++/C#/VB.Net code with a rich JavaScript web client. Data was stored in SQL Server 20012 and the core modules interacting via Microsoft Message Queue (MSMQ). (The Hedgebook application was originally developed on Windows Server 2008R2 and SQL Server 2000, but had been migrated to Windows Server 2012R2 and SQL Server 2012 R2.)
The initial focus was migrating the database from a dedicated SQL Server to SQL Azure. We repeatedly migrated the database using the Microsoft Migration Data Migration Assistant. Each migration focused on fixing a class of issues including: SQL ANSI-89 to ANSI 92 Syntax updates and moving off unsupported features.

The fixes were applied to the production database as part of the normal release cycle. Once the database could be migrated without any issues we moved to the application code & plumbing. In the hosted environment, the application was over provisioned to cope with EoM, EoQ, and EoY processing spikes which has significant cost implications.

Concurrently, we constructed a proof of concept (PoC) using an Azure Virtual Machine Scale Set (VMSS) to allow us to scale up & down the number of financial instrument pricing nodes in response to customer demand.

The VMSS nodes are provisioned using scripts based on the Azure VMSS Automation DSC sample. The scripts copy the necessary files from Windows Storage and install our pricing agent (a Windows Service) and dependencies (MSMQ etc.) on the standard Microsoft Windows Server 2012 R2 VM image.

Some of the VMSS provisioning configuration files were stored in Github and this caused us some issues in our trial live deployments. Between our PoC project (Jan 2018) and trial deployments to live Github disabled TLS V1.0 & V1.1 and required V1.2. In a standard Windows Server 2012R2 image V1.2 is not enabled so we had issues with connectivity. Migrating to Windows 2016 or moving configuration to Azure storage fixed were identified and confirmed as viable solutions.

With VMSS and the increased number of pricing nodes, we discovered a previously unknown threading issue in a cache implementation which required remediation. A .Net hash table had been used in a non-thread safe way and was causing application hangs and data corruption (in test), when a number of pricing nodes were running concurrently. Replacing the Hash table with a thread safe implementation and disabling the cache until it could be replaced with Redis were identified and confirmed as viable solutions.

The application has now been running for 18 weeks, during which there have been a couple of minor issues, unrelated to Azure, which we are in the process of investigating. The customer experience has improved with the initial performance testing indicating the pricing of a larger portfolio going from 35 to just under 20 seconds (depending on portfolio).

What’s the bottom line?

With the technical, performance and customer experience aspects of Hedgebook’s migration to Azure duly acknowledged, the company is also enjoying substantial, ongoing cost savings. Matching performance-to-performance on a standard month, Hedgebook reports saving an eye-opening 50-60% of their pre-migration costs for a like-for-like solution. Yet, as Ian Ross keenly observes, cost savings are not the bottom line – because Azure brings a wealth of inbuilt Microsoft benefits.

Microsoft – supporting companies in the post-GDPR world

“One of the first things we did when we got into the cloud was to turn on automated Transparent Data Encryption (TDE) – to take care of GDPR heartaches. Large customers ask all sorts of questions about hosting, and where data is stored (OLTP). These questions just disappear as soon as you say ‘we’re on SQL Azure’ because the platform has all the required compliance in place and is so well thought of by larger clients.”

“And that puts us in a tremendous position,” adds Ian Ross. “We now have the confidence to go after larger chunks of the market, globally, knowing that infrastructure won’t hold us back. With Azure, I’ve got the ability to scale the hardware almost instantaneously.”

A major step change –and the future’s bright

“Microsoft Azure has allowed us to build a product that we can put in front of some of the biggest distributors around, such as banks, FX brokers and accounting firms. The functionality we’re showing them is something they haven’t seen before, so it takes us to the next level. From a selling point of view, it’s really powerful – and I can’t say enough nice things about the amount of support Microsoft continue to give us.”

“Microsoft people are always happy to listen, and nudge us in the right direction. So we look forward to continuing to tie into emerging technology and adopt what we need to innovate as Hedgebook grows.”

Grant Thornton Australia Ltd and Grant Thornton New Zealand Ltd

Independent audit validation for client valuations of financial instruments

Hedgebook Audit

Efficient and cost effective solution for complying with audit process

Who is Grant Thornton?

Grant Thornton is the world’s seventh largest professional services network of independent accounting and consulting firms. Working with the Australian and New Zealand member firms, Grant Thornton provides growth advisory services to mid-size business and public sector entities. Grant Thornton Australia has more than 1,200 people working in offices in Adelaide, Brisbane, Cairns, Melbourne, Perth and Sydney, while Grant Thornton New Zealand has more than 250 people across offices in Auckland, Wellington and Christchurch.

Both firms’ approach is to combine service breadth, depth of expertise and industry insight with an approachable “client first” mindset and a broad commercial perspective. Of the firms’ services, Hedgebook works directly with the audit divisions. As part of a global network of more than 40,000 Grant Thornton people, across over 130 countries, Grant Thornton Australia and New Zealand each have access to global resources and methodologies that enable it to deliver consistently high quality outcomes for owners and key executives of clients.

Independent Validation Of Financial Instrument Valuations

For companies that are using financial instruments such as foreign exchange forwards, options and interest rate swaps, there is a requirement to measure these transactions at fair value. Auditors are required to independently check that these financial instrument valuations are reasonable, as well as understand the inputs that went into calculating these valuations. Many auditors do not have access to the tools required to value these often complex financial instruments. If they do have access to these tools it is often a select few members of the firm who understand them and therefore it can be a very inefficient, expensive and sometimes haphazard approach to this audit checking process.

Recognising many of its clients use derivative financial instruments, Grant Thornton felt that it was important to independently verify financial instrument valuations rather than just relying on bank confirmations as bank confirmations are sometimes materially incorrect (e.g. due to data entry errors). Accordingly, Grant Thornton was looking for a cost effective solution and found that Hedgebook met its needs.

Simple & Intuitive

The complexities around valuing financial instruments can be daunting for those not involved with them on a regular basis. Hedgebook is not only a simple and intuitive system to use but also provides the inputs that make up the valuations to help with understanding how financial instruments work.

Siva Sivanantham at Grant Thornton Australia was impressed with Hedgebook Audit’s ease of use, “Understanding financial instruments can be a challenge in practice but Hedgebook Audit is simple to use and very intuitive and has helped to take away some of that mystique around how these instruments work”.
Hedgebook provides the training and support, which is an important aspect of taking on any new system. A review with Grant Thornton is held every six months to ensure that all parties are happy with the relationship. This is also an opportunity for key staff to suggest any enhancements they would like developed within Hedgebook Audit and provide any other feedback.

Cost Effective & Efficient

All audit firms are looking to gain efficiencies in their processes but at the same time keep costs down. Hedgebook Audit ticks both these boxes. Being a cloud based system, Hedgebook Audit can be accessed from anywhere. The auditor can access Hedgebook Audit whilst carrying out the audit at the clients’ premises, replacing the need to bring the clients’ information back to a central place to be checked.

Equally, Hedgebook Audit is a low cost solution and the cost is often passed on to the client as a disbursement. As Siva Sivanantham said “The cost of Hedgebook Audit is compelling and provides great value but at the same time covers all our needs when it comes to independently valuing financial instruments.”


Grant Thornton recognised the importance of independently verifying client prepared financial instrument valuations and was looking for a cost effective solution. Hedgebook Audit has been designed with these issues in mind in terms of giving integrity, control and oversight around the process, but at a palatable cost point. Independent valuations of financial instruments are often a small part of the audit and so the value proposition needed to stack up. As Mark Hucklesby said, “Hedgebook Audit has been an excellent addition to our Audit Team’s toolset.”

Case study image Shotover_Jet,_Jet_Boating_the_Shotover_River_Canyons,_Queenstown,_New_Zealand

Iconic Kiwi exporter, HamiltonJet

An easier, safer way to manage FX derivatives


Ability to make better hedging decisions

Iconic Innovator and Exporter

HamiltonJet ( is an iconic New Zealand company with typically Kiwi-inspired beginnings. The founder, Sir William Hamilton, developed a ‘jet’ boat in the 1950s that could be used to navigate the shallow rivers near his home in New Zealand’s South Island. Sir William’s waterjet propulsion system is now found in over 50,000 water craft around the world, including recreational, search & rescue, military and passenger ferries.

Global Exposure

HamiltonJet’s waterjet system is exported globally, giving rise to foreign exchange exposures that have a material impact on the financial performance of the company. Like many exporters, HamiltonJet enters financial instruments to hedge unwanted foreign exchange volatility, utilising vanilla instruments such as FX Forwards and FX Options to do so.

Simon Boyd, HamiltonJet’s Chief Financial Officer, was becoming frustrated with the inefficiency, inaccuracy and potential data security risks of using Excel spreadsheets to manage FX derivatives, and sought out an alternative. After evaluating a number of potential options, he decided to use Hedgebook’s online solution.

Better Visibility to Optimise Pricing Decisions

The waterjet propulsion market is niche, with a limited number of suppliers (one supplier/competitor is a household name, Rolls Royce). When quoting for new business HamiltonJet’s FX hedging plays a significant role. If outstanding FX contracts are favourable then HamiltonJet can quote a superior price in foreign currency terms without compromising NZD profitability. Hedgebook quickly and clearly shows the amount of hedging in place versus cashflow forecasts, as well as the weighted average exchange rate of the hedging. Knowing his FX position allows Simon to be better informed when setting rates for the purpose of quoting sales.

Understanding Margin Impacts of FX Fluctuations

With any company involved in exporting or importing activity, FX fluctuations can have a material impact on profits. According to Simon, Hedgebook “. . . summarises the data in a more meaningful way. Not only does Hedgebook provide  useful reports on the current position but also allows for “what if” analysis based on higher or lower exchange rates i.e. the impact on profits of unhedged foreign currency cashflows. Such reporting tools allow for deeper conversations when deciding whether to take more cover or not, or what level of compliance versus our policy limits, is desired.”

Board Reporting Clarity

Like most companies, Simon has to report to his Board on a regular basis. Says Simon, “By having relevant, accurate information the Board is fully informed of HamiltonJet’s FX position and can take comfort that this important financial risk is being appropriately managed. Conversations between Board and management on FX related issues can be targeted and focused.”

Stronger Bank Relationships

As CFO, Simon has Board approval to hedge foreign exchange cashflows over multiple years. Committing the company to long-term financial contracts has implications from a bank funding perspective as out-of-the-money contracts can impair the credit appetite of the bank. For Simon, Hedgebook enhances the transparent and open relationship he has with his bank. Simon says, “The visibility over cashflows and hedging that Hedgebook brings to the company, and the ease of sharing this information, means HamiltonJet can form a stronger partnership with the bank; the better they know your business, the more they can help you.”

Administrative Ease

As part of a global exporter Simon’s role takes him out of the country for a number of weeks of the year. As a cloud-based system, Hedgebook is always available. Managing maturing contracts, ensuring cash is available in the correct currency when it is needed, pre-delivering or rolling over contracts, answering Director’s questions, understanding the company’s FX position and making important hedging decisions can all be easily managed while on the road.

Simpler Compliance Reporting

For the most part HamiltonJet reports under the reduced disclosure framework of IFRS so faces somewhat less onerous compliance requirements than some Hedgebook clients. However, Simon Boyd comments that, “To do year-end accounts has become a very easy exercise”. Derivative valuations and sensitivity analysis are designed to keep the auditors happy.


HamiltonJet is a successful New Zealand exporter and foreign exchange fluctuations impact the company’s financial performance. HamiltonJet recognised that relying on error-prone excel spreadsheets was inadequate. Simon comments, “Relying on Hedgebook to streamline the management of its foreign exchange instruments has helped the company make better hedging decisions due to the representation of the financial information. Hedgebook is more than just a valuation tool, it’s a day-to-day management tool helping engage the Board and the bank in a more meaningful way.”


International outdoor adventure retailer, Kathmandu

Simplifying regulatory reporting and helping merchandisers negotiate with suppliers


Streamlined audit process and improved product margins

International Adventure Retailer

Kathmandu has revolutionised the outdoor clothing and equipment market over the last 30 years. By taking advantage of lightweight and quick-dry materials, spending time in the great outdoors has never been more enjoyable or accessible. From one store in Melbourne in 1987, Kathmandu has grown to over 100 across NZ, Australia and the UK.

Foreign Exchange Risks

Kathmandu has a team of merchandisers securing the latest materials and products for their designers and customers. Kathmandu’s FX hedging plays a key role in the negotiations with these suppliers. Chris Kinraid, Group Financial Controller, says, “One of the challenges a retail business such as Kathmandu faces is securing the supply chain. Much of our products and materials are sourced in Asia, paid for in USD and imported into our various markets. Our buyers need to know the exchange rate on which to base negotiations. Hedgebook is a very intuitive and user friendly system for capturing our FX transactions. We know with confidence our FX position which, in turn, allows our procurement team to negotiate with confidence. Reports on our FX exposures versus our future cashflows, both known and forecast, means we have oversight on the P&L implications of fluctuating exchange rates.”

Control and Compliance

Kathmandu recognised the need for a Treasury Management System to manage both the FX and interest rate exposures. Chris comments, “As a publicly listed company it is important that we operate in an environment of control and compliance. A Treasury Management System helps us achieve that goal. We have used other TMSs in the past but Hedgebook gives us all the functionality we need to capture, value and report our treasury exposures and at a fraction of the cost.”

Streamlining the reporting process means Kathmandu can spend less time with the auditors and more time on value-add aspects of the business. Chris says, “We are in an environment of increased regulation and this does not appear to be changing anytime soon. Independent valuations and disclosures such as sensitivity analysis have been a mainstay of financial reporting but we continue to see further requirements. Credit Valuation Adjustments are an example of this. To try and achieve this level of compliance by relying on banks and spreadsheets, when low cost tools like Hedgebook are available, does not make sense.”

Saving Administration Time

There is always the day-to-day administration of FX contracts to manage. In Kathmandu’s case this is across two entities. Maria McGoldrick is Kathmandu’s Banking & FX Manager, “A focus for my role is ensuring cash is appropriately managed. This means cash is available at the right time, in the right currency, in the right place. Kathmandu’s international presence makes this task multi-faceted and relying on error prone spreadsheets is not an option. Hedgebook’s email notifications of maturing transactions is a feature of the system that ensures I do not get any surprise phone calls from the bank about settlements. The Hedgebook system is super easy to use and makes my job easier.”

Naturally, timing of the physical movement of cash may not line up with hedging contracts so there are regular pre-deliveries or rolling over of contracts. Such activity results in adjustments of the contract rate due to the FX forward points. Maria comments, “Hedgebook provides live FX rates, both spot and forward, so when I transact with my banks I have the visibility over the FX market to know the quoted rate is fair and reasonable.”

Better Hedging Decisions

Month-end and management reporting is fundamental to any well run organisation particularly one that has compliance commitments for two stock exchanges. Leveraging technology allows the reporting to be timely and accurate. Reviewing the performance of past FX hedging decisions helps with making better hedging decisions in the future. Chris says, “Hedgebook reports our matured deals and clearly shows the financial impact of our delivered FX contracts when compared against a “no hedging” approach. To not hedge is not a viable approach as we need a degree of certainty around FX rates for the season ahead to give our buyers confidence, but we still want to know the impact from our decisions. Hindsight is a wonderful thing but it is another piece of the FX hedging jigsaw that Hedgebook helps us with.”


Kathmandu is a publicly listed international retailer with significant foreign exchange exposure. Having clear visibility over FX hedging puts the buyers of materials and products in a stronger position when negotiating with suppliers. Hedgebook provides this visibility in a simple and intuitive way. As a publicly listed company Kathmandu has regulatory compliance requirements regarding financial instrument fair value and disclosures. Hedgebook streamlines this process in a cost effective way.