Thought Leadership:
CTRM Integrations
Why Do CTRMs Integrate with Other Systems?
A CTRM platform will be used in nearly every department of a company that buys and/or sells commodities through traders, operators, middle office, trade finance, risk manager, accounting, treasury, to senior management. From trade capture through to taking deliveries and managing payments, a CTRM covers all aspects of the trade life cycle and more.
So, if a CTRM performs all the above why integrate with other vendors’ solutions?
In reality a CTRM does not live alone but is part of an ecosystem containing other software.
This article looks to address this with some common reasons behind why clients require integrations and highlights how it has never been easier for multiple systems to be used together, increasing the efficiency of the organisation.
Reasons for Integration
General Ledger Entries and Payments
A CTRM will be able to evaluate the trade price for the most complex of formulas and display the price exposure which allows the trader to hedge if required. A CTRM allows as well complex logistics to be captured, inventory blending, shipping, purchase trade splitting into multiple deliveries and so forth.
All these CTRM activities will require general ledger entries in an “Accounting system” or ERP and as well, at the time of invoicing when an invoice is raised from within the CTRM system, the invoice details will have to feed the same accounting system.
Payments, for instance, occur outside the CTRM, but the user will want to use the CTRM to manage costs, such as late/partial payments. The payments could be managed by an ERP such as SAP Payment Processing or Microsoft Dynamics. Having an integration from the ERP to the CTRM will ensure the cost status is always in sync. If an integration from the payment system to the CTRM does not exist, a manual process or spreadsheet upload will need to occur, each time a payment is made/received, to update the CTRM.
Deliveries
Depending on the number of deliveries that need to be captured, an integration may need to occur between the system that registers the quantities and the CTRM, such as JD Edwards or other specialised logistics management system. For example, a gasoline retailer, who has 1000s of trucks on the road each day will want to automate capturing within the CTRM, these quantities. Manually entering this data would be prone to errors and not feasible within the required timeframe. The alternative would be to group deliveries together and enter a net figure per day for instance. However, this simplified approach would lose the granularity and the data associated with it, that may be required for cost management, such as payments.
Stock
A user may use an external system to provide real time inventory data. An integration to the CTRM can occur to automate any adjustments required.
Reporting
A CTRM will provide out-of-the-box reporting that will be sufficient for the majority of their clients. However, there may be a need to integrate with external reporting software, such as Power BI or Tableau, which can produce personalised, visual interactive dashboards with alerts, using the large amounts of data stored within the CTRM database, whilst connected to a large number of other data sources. With data shared across these applications, the organisation is able to view, in a single report, all areas of the business which enables quicker and ultimately improved decisions.
Market Pricings
To evaluate trade prices and MTM, the user of a CTRM will need to enter end-of-day prices. This can be achieved by manual entry, excel upload or using an automated integration to the price vendor itself, such as Platts or Argus. Live feeds can occur capturing this market data in real time.
AI
AI will likely be a game changer for most of our clients, as they learn how to better use the data they have. We believe that they will expect their CTRM to play a central role to this, which is why enriching our data extraction offering is an important element of our strategy.
How Does Integration Occur?
Most CTRMS will have a comprehensive list of public interfaces, which allows access to the data contained within the CTRM. These interfaces will be fully documented and are designed with security, resiliency, scalability, and performance in mind. Due to the documented interface, integrations should be easy to use, requiring minimal resources to enable any requests.
There are two common forms of communication that are used by these interfaces which are: REST APIs (Representational State Transfer Application Programming Interface) and Messaging APIs. Typically, REST APIs are used for simple or direct interactions with a 1-to-1 sender/receiver ratio for example, creating a trade or a cost. Messaging APIs are used for complex interactions with a 1-to-many sender/receiver ratio for example, notifying a change to a trade or a cost.
Summary
A CTRM should allow for an efficient method of not only data entry but also data extraction. This is often achieved with APIs that both create/update/delete data into the CTRM but also extract it, to be used in other applications and reports. By integrating, the organisation will improve efficiency, reducing the effort spent on manual data entry, eliminating the inevitable mistakes that occur; ensuring the data is accurate in real-time, across all applications.
Real time commodity trading and risk management software