When Microsoft's Brazilian subsidiary was offering its price list in U.S. dollars, there was constantly a currency mismatch. During times when the Brazilian real was appreciating, customers would delay purchases. When the real depreciated, they over-ordered. The result: Erratic purchasing made revenue targets hard to hit.

After an unsuccessful attempt to convert the list to reals, Microsoft's treasury began casting around for a new solution. Given the volatility of the real, pricing and currency risk management were analyzed to recognize the risk facing customers as well as Microsoft. Eventually, the treasury developed a system to hedge invoices in dollars with options and forward contracts.

The new system was created in less than three months, and it was then tested in each local business channel, since pricing methods varied. "It was a program that needed to be rolled out in short order," says Joe Matz, assistant treasurer at Microsoft. It also included an IT component to transfer credits and debits to 20,000 invoices annually.