What is CTRM Software? - Explainer

CTRM is a term used to describe specialised ERP and risk management software for companies involved in commodity trading. It’s an abbreviation meaning: Commodity Trade and Risk Management. This type of software supports commodity traders, processors and purchasers in the various business processes associated with commodity trading. CTRM software supports deal capture for physical contracts, commodity derivatives, and currencies, the logistics processes and the financial settlement processes, but also risk management, logistic processes and financial management processes. Typical business environments for CTRM are Trading Companies and Commodity Processors.

What makes CTRM different from ERP software?

ERP software has been built to support standardised manufacturing and services environments and to have these environments from a transactional view, integrated with accounting systems. It’s design and architecture is designed to eliminate variance in processes to ensure  adequate production processes , related transaction management and accounting processes. CTRM is designed to cope with variance, since commodities are traded in different markets and currencies while its monetary and trading values differ in different environments. Last but not at least, the quality aspects of soft and agri commodities may vary during the lifetime of these commodities. CTRM should offer its users the ability to maximise the value of variances instead of limiting them or forcing employees into standard transactions and processes. For this reason, CTRM has different architecture requirements, needs to cope with different complexity and a very different scope of functionality than ERP applications.

Can you use CTRM in an ERP environment?

In some manufacturing and/or processing environments there is a need for both types of process support, the ERP type of processes and the CTRM type of processes. Think here, for example, of a beer brewer, a dairy company, a grains and oilseeds processor, a coffee roaster, a miller or a chocolate manufacturer. In these environments, companies are supported best by having their commodity related processes (trading, procurement, hedging, currencies, quality, valuation) supported by a CTRM software application connected to the ERP and/or accounting environment. There are a number of good ERP Applications in the market, but none of these have fully integrated CTRM functionality. Some claim that CTRM software add-on solutions are fully integrated, but in practice these add-ons are different applications. Agiblocks is extremely flexible and can integrate with ERP systems through its integration platform. Integration is performed in a way that transactions do not require multiple entries and the ERP can use real-time data from Agiblocks. This integration can be two-directional; CTRM transactions moved instantly into the ledgers of the ERP and relevant ERP data or transactions move seamlessly into Agiblocks. This bi-directional integration is also possible on other levels of the ERP, for example, with inventory to value stock according to volatile market prices.

Does CTRM take care of Financial Accounting?

A typical CTRM would not support Financial Accounting as the architecture and purpose of Financial Accounting is too different to be within the same software application. There are a lot of very good accounting systems in the market, but none has true CTRM qualifications. Most CTRM systems can be integrated with accounting systems. In the past, this sometimes required manual entry of balances, batch processing of CTRM data and, potentially, double entry of data. Not the most attractive type of integration from the view of an accountant.

Things have changed here, especially for Agiblocks users. Agiblocks is extremely flexible and can integrate with accounting systems though its integration platform. Integration is performed in such a way that transactions do not require double entries and the Accounting System can use real time transactions and valuation data from Agiblocks. This integration can be two sided; CTRM transactions moved instantly into the ledgers of the Accounting System and relevant Accounting data or transactions moved seamlessly into Agiblocks.