FINA

ED

NC
I
APPL

IAL
Six times the

DI

S
AG I

C
N OST

horsepower
of a bank treasury

If ... pricing

Optimising pricing for

profit maximisation
IfValue Hexagon

Capital Contract

Finance Value Currency

Hexagon

Commodity Commercial
(Real)
 GIFFNOCK CONSULTING

If Interactive Finance

Business-driven interactive finance

If makes global pricing transparent.

It uses global pricing to increase business profitability and cash flow.

Price IF
F.
.
..
Value Hexagon

Price optimisation using the Value hexagon - six times the horsepower of financial
markets on their own, but simple to use - comparing values, not calculating prices,
in order to add to profitability.
THREE of the six PRICING & VALUATION PATHWAYS

There always at least two ways of pricing or valuing a position or proposal and one will
The Allen Key virtually always be superior (Law of Two Prices). The Allen Key highlights the differential.

Contractual Contract pricing clauses and repricing & value variation clauses. Virtually all
financial contracts can be replicated through commercial contracts

Example: IF

Should the word IF appear in the pricing clauses of a contract, it normally signals the
presence of an embedded financial option.

It is embedded before any purely financial instruments are negotiated so normally, the
legal management precedes the financial management.

The ability to insert contractual options is a key factor when determining the optimal way
to achieve an enterprises desired trade-off between returns and downside risks.

Financial Standard financial instruments plus derived or synthetic financial

engineering

Commercial Real (economic) options. Common often overlooked and potentially highly
valuable

Value optimisation either adds value or confirms best value: it cannot reduce value.

IF advisory: guide dogs, not guard dogs

IF strategy is designed to assist in increasing Enterprises margins and profitability by identifying

international pricing opportunities and reducing the costs of financing capital equipment and financing
(levels, fees, margins and costs).
The emphasis is on reinforcing opportunities and value optimisation rather than identifying and managing
risk.

The Chines calligraphy for CRISIS: Danger + Opportunity

Frequently asked Questions

How are these benefits possible?

Interactive Finance utilises:
The Allen Key makes currency markets transparent
The pricing advantages in contracts

Who wins? Who loses?

Normally, its win/win/win a unique advantage of the If methodology.
The company is the primary focus of increased profitability
Counterparties normally share in the value added
Banks benefit from transactions income, lower misselling risks and
a more creditworthy partnership
If takes advantage of:
Parallel markets & price differentials
The time value in contracts & financial markets
Global volatility.

Why now?

Low and negative interest rates are providing excellent opportunities for importers and
procurement functions. Exporters can remove US Dollar exposures at a benefit of around
$800 per A$1 million per month for Euros the benefits are A$1,500 per month per
A$1M and for Yen A$1,200 per month.

The bottom line: where to now?

Conduct an in-house profit workshop , or

Arrange a review of profit, opportunity and pricing

Dr Richard Allan Web site

giffnock@bigpond.com including examples of adding value
0412 699 992 www.giffnock.net