Treasury Case StudyQUANTUM

Since September 2015, materials producer Covestro – formerly known as Bayer MaterialScience – has been an independent company. Its products and application solutions are nearly everywhere in modern life. With its innovative strength, the company is constantly coming up with new developments which benefit society and the environment. Headquartered in Germany, Covestro generated sales of €11.9 billion in 2016 and has 15,800 employees.

Transform Your Treasury

A New Path Forward – Covestro Utilizes Treasury Management Solution to Drive Visibility and Control around Cash and Risk

Embarking on a treasury management solution project

In September 2014, Bayer announced its intention to carve out the MaterialScience business into a separate group, which was later branded as Covestro group. In this regard, Covestro had to establish a new Treasury department until the date of separation on September 1, 2015. The new Treasury department consists of four teams: Corporate Finance, Market Risk and Liquidity Management, Corporate Financial Controlling and Insurances. Michael Gerhards first worked as an independent consultant and project manager with the task to evaluate and implement a new Global Treasury System in order to help Covestro effectively and efficiently manage cash and risk.

Together with FIS, we were able to quickly implement a treasury

management solution in FIS’ secure, private cloud hosted environment

on time. If I had to select a treasury management solution again today,

I would select the FIS Quantum solution.

MICHAEL GERHARDSHEAD OF CORPORATE FINANCIAL

CONTROLLING, COVESTRO

Treasury

Covestro had a number of requirements which needed to be achieved, such as:

● Manage cash, foreign exchange, money market, securities, risk, reporting, etc.

● Easy to implement within a short timeframe

● Up-to-date system architecture

● Ability to interface with other systems including trading platforms and SAP

● Global access by local treasures, accountants and controllers across approximately 50 entities

● Administer with a small team

● Hosted by the provider in a secure environment

Given the experience of the Bayer/Covestro team with other FIS solutions and the best performance in the beauty contest, Covestro decided to implement the FIS treasury management solution (Quantum). In June 2015, Michael Gerhards joined Covestro as Head of Corporate Financial Controlling. In this new role, Michael in parallel had to implement the Quantum system and to build up the Corporate Financial Controlling department. This included hiring a team of experts in order to achieve operational readiness within only 8 months. Together with his team, further treasury colleagues and a set of consultants from FIS, Michael managed to achieve the ultimate goal of going live with Quantum by September 1, 2015.

Simplifying the consumption of treasury technology

Given Covestro was creating new departments and hiring new staff across the organization including the whole treasury department, the company opted to have FIS host the Quantum solution in a secure, private cloud environment. This also played a factor in helping to get the system live in a short time-frame and freeing up the treasury staff to focus on managing cash and risk.

In a changing market environment, the Covestro team also recognized the importance of remaining on the latest version of the Quantum solution to gain from new functionalities. Therefore, the company signed up for FIS’ managed upgrade service which reduces the effort per upgrade for the customer and keeps the company on a continuous upgrade path.

The FIS Quantum solution gives us visibility and control around our cash

and risk management processes. It also integrates with SAP and easily interfaces with other solutions including our trading

platforms so that we can manage our trades and accounting entries.

MICHAEL GERHARDSHEAD OF CORPORATE FINANCIAL

CONTROLLING, COVESTRO

Treasury

Effectively interfacing with trading partners and SAP

One of the key requirements Covestro had of a treasury management solution was its ability to integrate with SAP as well as interface with other solutions and services. The team leverages Quantum to help manage the entire front-to back-office lifecycle. The majority of the money market and FX trades are executed in the 360T solution which interfaces with Quantum. The Quantum solution then creates an MT message that flows into its MISYS solution for confirmation, back into Quantum which then triggers the approvals for the trades. Daily cash flows and accounting entries are triggered and the accounting entries are posted in SAP from the Quantum solution. The company is also looking to interface Quantum with the Depository Trust and Clearing Corporation (DTCC) in order to submit reports tied to regulatory requirements.

Driving further results

Covestro’s treasury team is utilizing the Quantum solution to help it manage cash and cash flow forecasting, FX and money market trades, external financing, intercompany loans and in future interest rate swaps and cross-currency interest rate swaps. Additionally, the team is using Quantum to help manage risk – in particular – mark-to-market and profits and losses realized or not realized. Covestro’s treasury team also uses several of the solution’s day-to-day reports for visibility into cash and risk and to help keep the team on track.

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Treasury

About FIS’ Corporate Liquidity Solutions FIS offers a leading liquidity and risk management solution for corporations, insurance companies and the public sector. The solution suite includes credit risk modeling, collections management, treasury risk analysis, cash management, and payments system integration. The solutions help consolidate data from multiple in-house systems, drive workflow and provide connectivity to a broad range of trading partners including banks, SWIFT, credit data providers, FX platforms, money markets, and market data. The technology is supported by a full range of services delivered by domain experts, including managed cloud services, treasury operations management, SWIFT administration, managed bank connectivity and bank onboarding. FIS’ solutions can be deployed in SaaS, public cloud or on-premise environments.

About FISFIS is a global leader in financial services technology, with a focus on retail and institutional banking, payments, asset and wealth management, risk and compliance, consulting and outsourcing solutions. Through the depth and breadth of our solutions portfolio, global capabilities and domain expertise, FIS serves more than 20,000 clients in over 130 countries. Headquartered in Jacksonville, Florida, FIS employs more than 55,000 people worldwide and holds leadership positions in payment processing, financial software and banking solutions. Providing software, services and outsourcing of the technology that empowers the financial world, FIS is a Fortune 500 company and is a member of Standard & Poor’s 500® Index. For more information about FIS, visit www.fisglobal.com