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Opportunity in volatility
Read time: 14 mins Added: 13/05/25
Five ways firms can navigate a volatile landscape
Corporate treasurers are – perhaps now more than ever – facing into an uncertain world. Geopolitical shifts, global conflicts, economic uncertainty, extreme weather and rising prices have all contributed to a volatile and unpredictable business environment.
Despite all of this, businesses remain optimistic. Treasurers see opportunities amidst the volatility – which is likely to persist for the foreseeable future. Given that this is the case, how can treasurers navigate this uncertain landscape, and how can they work closely with their bank for success?
1. Supply chain resilience: From tariffs to tornados
The first three months of 2025 represented an acceleration of a trend we have witnessed since 2020. The successive crises of Covid-19, changing trade relations with Europe and high inflationary pressures have left businesses focusing on preparation in the event of disruption. US President Donald Trump’s drastic trade tariff policy is the latest chapter in a story that has required treasurers to focus on optimising what is becoming an extended working capital cycle. Treasurers are responsible for steering the business through volatility, ensuring the liquidity of the business while releasing cash for growth.
In recent years, many businesses have protected their production from disruption by pivoting from ‘just in time’ – which involved carrying as little inventory as possible to minimise warehouse costs and maximise profit – to ‘just in case’. The ‘just in case’ approach involves storing additional inventory in the event that disruption causes the scarcity of materials or products and halts production.
Stockpiling inventory comes with several knock-on effects for treasurers, such as the need for new financing options to cover higher levels of inventory and the resulting impact on working capital. There may also be costs associated with an increase in warehouse capacity, as well as changes to shipping costs due to fluctuating trade volumes, cargo demand, and market competition. Finally, it can put acute and artificial pressure on the supply chain as a whole, where both parties seek to solve working capital timing issues through further push and pull on Sales Outstanding (DSO) and Days Payable Outstanding (DPO).
Some businesses have reacted to the change in trade conditions by ‘onshoring’ or ‘nearshoring’ production – that is, using manufacturing facilities into the same (or a neighbouring) country – to reduce the risk of disruption. However, the likelihood is that even localised production will still involve an international supply chain that could still be exposed to disruption or the impact of tariffs. On top of this, companies focusing on onshoring could face higher production costs, as well as labour shortages.
Calm before the storm
Geopolitical tensions and trade wars aren’t the only risk to production in today’s climate. The growing prevalence of extreme weather events is likely to cause supply chain disruption. 2025 has already witnessed catastrophic examples of this – from the Californian wildfires to Cyclone Dikeledi – and it’s highly likely that the remainder of the year will bring further challenges.
A recent survey found that 26.6% of organisations experienced the effects of adverse weather conditions and natural disasters on their supply chain over the past 12 months. But despite this, 36.7% of organisations do not currently analyse climate risks.
Whatever the cause of disruption, treasurers should increase their focus on supply chain resilience to not only mitigate risk, but also find new opportunities to grow the business.
Eggs in many baskets
One way to build resilience and adaptability into the supply chain can be found in diversification. Corporates are likely to have a complex global supply chain which may be overly dependent on a small number of countries or territories, leaving them exposed to shortages and disruption.
Committing to mapping and stress-testing exercises can help to reveal the business’ risk exposure, allowing them to take appropriate action to source alternative suppliers from a range of geographies. This can help to both improve the security and speed of delivery, ultimately helping to guarantee the smooth running of production and improving the business’ financial position as a result.
Finding financing
While monitoring supply chain risk exposure and optimising working capital to fund higher levels of inventory can deliver benefits, financing options may also be of use. Such solutions may be able to help treasurers improve the business’ working capital position, manage risk, enhance cash flow and improve relationships with suppliers.
Solutions such as Supply Chain Finance can allow suppliers to leverage the buyer’s credit rating to reduce their cost of funding, hence building more stability and resilience into the supply chain. Similarly, Receivables Purchase allows corporates to accelerate payment for their invoices, providing relevant suppliers with a means to quickly access liquidity while at the same time managing risk within their customer/buyer base.
While corporate treasurers are facing a volatile and unpredictable environment, the current climate offers businesses an opportunity to understand risk exposure, build resilience into supply chains, and optimise and enhance their working capital position.
2. Trading abroad: Building a Transactional FX shield
From economic indicators and market speculation to trade tariffs, sanctions, political instability and conflict, a volatile environment can have a profound impact on exchange rates. This significantly affects the role of the treasurer and the steps they must take to mitigate currency risk.
Mapping foreign exchange (FX) risk exposure across the organisation can assist corporate treasurers in entirely and accurately managing the risk. This exercise also offers the opportunity to drive efficiency by identifying teams within the business that could be paying or generating international invoices in a more cost-effective way. For example, paying invoices in supplier’s local currency – rather than GBP – could be both faster and cheaper, offering businesses more clarity and control over their margins.
It can also be crucial that corporate treasurers have access to a centralised group FX strategy. If this already exists, it’s likely that it will have been formulated when the business determined its risk management policy. This could mean that it no longer reflects current global risks or the evolving financial market. The current environment therefore offers the opportunity to update the FX strategy to reflect today’s economic climate and mitigate relevant risks.
Achieving FX goals
With a complete and accurate overview of the business’ exposure to FX risk, the treasurer can use the tools at their disposal to maximise efficiency. Using a currency account, for example, offers a cost-effective way to hold, pay or receive funds in foreign currencies. Such accounts can be combined with Transactional FX solutions to allow treasurers to control the timing of the conversion and gain clarity and control over margins.
Treasurers can also maximise the use of hedging tools including forward contracts, options and natural hedges to manage currency exposure and protect profit margins.
While currency fluctuations can be seen as a risk, treasurers have an opportunity to take stock of their FX strategy. Taking action can build resilience into their operations, safeguard the business against further risk, and improve overall financial health.
3. Rise of the machines: The automated treasury
While the technological revolution in the corporate treasury is not a new trend, 2025 and beyond reveal new and innovative technological use-cases to drive efficiency and reduce cost. Using technology to evolve corporate treasuries is no longer a differentiator, it is business as usual – and treasurers are constantly striving to stay ahead of the game with new efficiency gains.
Leading treasurers are embracing technology to future-proof their Treasury. This has unlocked new benefits and allowed resource-challenged treasury teams to move away from manual process towards more value-adding forecasting and analysis. They’re starting to get ahead of the game – but it takes time, resources and strong relationships.
Tim Pyecroft Head of Corporate Sales, Transaction Banking Solutions, LloydsA 2024 survey revealed that some of the most significant barriers to implementing technology include cost (21%), limited resources (11%) and integration challenges (35%). Ironically, these are all challenges that can be solved through the implementation of technological solutions – many of which help to reduce costs and free up resources, while seamlessly integrating with existing platforms. Often the critical choice is not about whether to adopt, but the balancing of the timing of priorities – of choosing long-term, sustainable improvements despite more acute cost concerns – that perennial debate of the urgent versus the important.
Engineering efficiency
Technologically-fuelled tools such as Externally Addressable Virtual Accounts (EAVAs) can be a good friend to a treasurer. EAVAs offer the ability to create externally referenceable ‘sections’ within a single physical account, which can be allocated to different customers, suppliers or parts of the business. Not only can this result in faster reconciliation, it also allows for easier management of funds, since they are already mobilised and not subject to physical sweeping and timing cut-offs. Ultimately this allows for a more productive and streamlined treasury experience.
Integrating API-powered Embedded Payment solutions into treasury operations can also boost efficiency. APIs allow treasurers to initiate near-instant payments directly from their internal systems, without the need to log in to a banking portal. These solutions also facilitate automated reconciliation, eliminating time-consuming processes, as well as improving fraud prevention through security-focused tools such as Confirmation of Payee.
Adopting evolving technology may be a challenge for treasurers concerned about barriers to implementation, but embracing new technological tools can deliver otherwise unobtainable improvements. “Technology offers treasurers an unprecedented opportunity to make operations faster and less cumbersome,” said Tim Pyecroft, Head of Corporate Sales, Transaction Banking Solutions, Lloyds. “Leading treasurers are embracing technology to future-proof their Treasury. This has unlocked new benefits and allowed resource-challenged treasury teams to move away from manual process towards more value-adding forecasting and analysis. They’re starting to get ahead of the game – but it takes time, resources and strong relationships.”
4. Quality in, quality out: The need for reliable data
Treasurers now have huge volumes of data at their disposal to be used in decision-making across their operations. Treasurers are expected to not only use this data to analyse past trends, but also to forecast future patterns and stay one step ahead.
To do this, treasurers require the data they use to be reliable, consistent, and interrogatable. Raw data isn’t insightful by itself; and the value stems from the ability to cut and analyse the data to provide genuine snapshots of cash management and payment activity within the organisation. However, obtaining data can be difficult in complex organisations with many different systems, teams and locations. Investing in measures to access and analyse reliable raw data paves the way to producing actionable insights.
Cash management platforms such as Lloyds Bank Gem® have data at the heart of their offering, providing a full suite of analytics solutions. All activity occurs through the single platform, which means the resulting data is consistent and complete. The platform allows treasurers to create dashboards spanning all activity, pull data from accounts with other banks, interrogate data in real time, and run trend analysis and balance forecasts.
“Data is intrinsically important in the treasury’s digital transformation journey, now providing treasurers with extraordinary levels of financial insight,” said Tim. “By recognising data’s intrinsic value in the future of operations, treasurers can reach new levels of efficiency and performance.”
5. Underpinned by experts: Strengthening the relationship with your bank
Over the past 15 years, global events have driven the role of the treasurer to broaden markedly. There is now renewed expectation of treasury and finance teams adopting an even more strategic and commercial outlook in managing cash flow and working capital, being a centre of excellence around payments technology, and using data insights to help shape the business.
With their broader remit and perspective, expectations of treasurers as drivers of value-adding initiatives have also increased in tandem. Alongside having a broader range of tools at their disposal – both technological and financial – we see a lot of expectation around these teams being tasked with doing more with less.
This expectation, coupled with the uncertainty of the modern business landscape, underlines the importance of a closely woven relationship between the corporate treasurer and their bank. Based on extensive experience with clients across all sectors of the UK economy, banks can provide informed and detailed insight into enhancing and optimising business operations, offering new and potentially undiscovered routes to improvement.
“Treasurers are being asked to reduce costs – and faced with a lot of technical and operational choices on how to try and realise these benefits. There are a lot of data sources available to do this, but they naturally seek expertise concerning which ones will be the most impactful in solving challenges specific to their business,” said Tim.
“When we see recurring themes across industry and geography, that’s often where we can help, bringing other ideas and best practices to the discussion. At the centre of this is a process of discovery – really thinking through the problem to understand rather than pre-empting solutions.”
Facilitating discovery to unlock the full potential
An external perspective can be transformational in terms of enabling the treasury to probe areas that could contain opportunities for improvement, efficiency and performance enhancement. The volatility of the current environment means that this external expertise is more important than ever.
At Lloyds, we feel it is important to be sitting beside our clients and doing the practical work together to explore and shape the optimal set-up for treasurers, helping them to deliver on their strategic and commercial responsibilities.
A discovery-led approach
“The first step of the process with our clients is discovery and consultation from a commercial standpoint,” said Tim. “In that sense, as bankers, we need to adopt the role of product-agnostic ‘General Practitioners’ – taking the time to understand our clients’ businesses before recommending solutions that could unleash new potential within the treasury.”
This approach is possible because we’ve connected our key products, meaning that our experts have access to all of our knowledgeable product specialists. As a result, our clients only need to explore the challenges and opportunities they face with us; from this conversation, we’ll be able to devise a suitable and effective solution based on the issues raised during the discovery process with them.
We are helping to redefine the relationship that a business can have with its bank. At Lloyds, we work closely with our clients, offering them consultation and discovery to find the right approach. By doing this, we’re ensuring that the solutions that we ultimately provide are intelligently tailored to maximise the potential of each business.
Tim Pyecroft Head of Corporate Sales, Transaction Banking Solutions, Lloyds“Our experts have access to specialist insights across cash management, payments, Transactional FX, data, commercial cards, and trade finance. For our clients, these are all business-as-usual services, and we recognise that businesses will – more often than not – consume a combination of these services when servicing their clients’ payment requirements,” explained Mansour Davarian, Head of Transaction Banking Solutions, Lloyds.
“By connecting these solutions, we’re ensuring that as a bank, we can be an essential asset to the treasury. Using our consultative approach, we can closely examine the functioning of the business and offer suggestions for performance enhancement across the broad spectrum of transaction solutions.”
“The role of the treasurer has evolved, and they’ve now got a more commercial expectation on them from the rest of the firm,” said Tim. “We can help translate those commercial goals then unpack the right tools to bring efficiencies they may not have seen before. The best part is that we’re doing this all the time with other clients so we can share those success stories from other companies trying to solve the same problems and apply relevant insights and solutions to their situation.”
Our experts have access to specialist insights across cash management, payments, Transactional FX, data, commercial cards, and trade finance. By connecting these solutions, we’re ensuring that as a bank, we can be an essential asset to the treasury.
Mansour Davarian Head of Transaction Banking Solutions, LloydsOffering optimisation and insight
At Lloyds, we understand that treasurers are now facing into a new and evolving world with more responsibility placed on their shoulders than ever before. Our approach means that we can be an ally to treasurers, working alongside them to identify opportunities for optimisation and implementing the most suitable financial solutions to deliver maximum effect.
“We feel it is important to be sitting beside our clients and doing the practical work together, not just advising from afar or in abstract,” said Tim. “You learn a lot from better conversations – including how clients intend to use the solutions – to shape and advise more specifically along the way to ensure the right outcomes.”
For more information on how Lloyds can support your transactional requirements, get in touch.
Lloyds Bank Gem® is a registered trademark of Lloyds Bank plc.
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