Michael Harte, head of receivables finance and interim co-head of trade finance, transaction banking products, at Lloyds Corporate & Institutional Banking, explores how geopolitical disruption and supply chain uncertainty are reshaping corporate working capital strategies – and why integrated financing tools are becoming central to resilience, liquidity and growth.
The global trade environment is being fundamentally reshaped. Heightened geopolitical uncertainty is reconfiguring supply chains, sanctions and regulatory regimes are becoming more complex, and recurrent shocks – from energy markets to shipping routes – are testing the resilience of businesses operating across borders.
As this article is being written, a lasting diplomatic solution to the conflict in Iran, and the full reopening of the Strait of Hormuz, has yet to be agreed. Even if conditions begin to normalise, a return to pre-conflict levels is likely to take time.
With uncertainty becoming the new normal, corporates are rethinking how they deploy and manage working capital. But what does an integrated working capital toolkit look like – and how is it playing a unique role in strengthening resilience, liquidity and growth?
For corporates, uncertainty hasn’t reduced the need to trade, but intensified the need for confidence in counterparties, risk mitigation and reliable access to working capital. The role of financial institutions is becoming even more critical, with banks such as Lloyds supporting UK businesses in navigating complexity, continuing to trade internationally, and adapting to a world where the rules, routes and risks of trade are changing.
“Effective finance conversations should focus less on individual instruments and more on the benefits of taking a holistic approach to the end-to-end trade cycle.”
Michael Harte, Lloyds
In April, the Lloyds Business Barometer revealed an 11-point drop in overall business confidence to 44% as firms responded to global conditions and cost pressures. Yet despite this decline, sentiment remains above the long-term average, and businesses’ own trading outlook has proven more resilient than their view of the wider economy. Nearly two-thirds of firms still expect stronger output over the year ahead, indicating a more cautious, selective approach to growth – where businesses are actively building contingency, protecting margins and prioritising flexibility.
The working capital toolkit: From isolated products to integrated systems
Effective finance conversations should therefore focus less on individual instruments and more on the benefits of taking a holistic approach to the end-to-end trade cycle. Questions should focus on how corporates can optimise the full cash conversion cycle, from procurement to collection, while remaining resilient to disruption. This includes how they release trapped cash, achieve greater certainty in cash flow, support supplier stability and flex terms without destabilising the supply chain.
To reflect how working capital is managed in practice, it is useful to view open account products (solutions that support trade transactions where goods are shipped and delivered before payment is made) not as isolated solutions but as an integrated working capital toolkit – financing the interdependent parts of the trade cycle.
Here’s how this works in practice.
1) Procurement and payables: Protecting supply while preserving liquidity
Relatively small upstream disruptions are increasingly triggering disproportionate downstream impacts, amplified by higher energy and operating costs that strain margins and reduce the tolerance for payment delays. Although supply chain resilience has long been a strategic priority for corporates, the more recent shift has been towards flexibility: the ability to adapt payment structures and liquidity deployment in response to changing conditions.
Supplier finance therefore remains a key mechanism for strengthening critical suppliers by aligning payment practices and commercial arrangement in a fashion that supports the needs of both buyer and their suppliers. Dynamic discounting complements this by allowing surplus liquidity to be deployed selectively, converting early payment into a risk adjusted return while reinforcing supply chain stability.
2) Inventory: Mobilising value from this strategic asset
Changes in trade agreements, operational disruption, geopolitics and a retrenchment of globalised supply chains have all impacted just-in-time procurement models. Persistent disruption to shipping routes and schedules has reinforced this shift, extending lead times and prompting firms to hold buffer stock to protect fulfilment. Businesses are responding to increased uncertainty, modifying their needs to reflect just-in-case requirements – holding more inventory and pre positioning stock across regions.
Inventory finance increasingly sits alongside payables and receivables solutions, helping prevent longer lead times and stock build ups from trapping liquidity and allowing working capital to flex with operational reality rather than constrain it.
3) Receivables and distributor finance: Where cash, risk mitigation and growth intersect
As customers adopt a more cautious, ‘wait and see’ approach amid ongoing uncertainty, cash inflows can be delayed even as costs continue to rise. Receivables purchase continues to play a central role in bringing cash forward and improving predictability in the cash conversion cycle. Receivables, and distributor finance, can sustain momentum where downstream liquidity becomes a constraint to growth. For firms trading into unfamiliar markets, Lloyds’ receivables purchase solution combines funding with credit risk mitigation, supporting growth under open terms while preserving risk discipline.
Taken together, these structures also give buyers the flexibility to accept optional, extended payment terms to support continuity of supply and commercial resilience. Used selectively, this can help strengthen trading relationships, improve alignment across the value chain and reinforce trust without compromising credit discipline.
Risk mitigation as an enabler, not a constraint
While the benefits of integrated working capital solutions are clear, trading on open account terms is often considered higher risk in times of economic stress or geopolitics compared to using documentary trade instruments, such as letters of credit. But in the context of a decade of sustained market shocks, open account solutions are increasingly embedding risk mitigation by design, helping to safeguard businesses without losing flexibility.
Working alongside the trade insurance sector, we can reduce single name exposure as volumes scale, while portfolio-based approaches allow exposure to be managed across pools rather than transaction-by-transaction. At the same time, data led monitoring – drawing on payment behaviour, dispute patterns, documentation quality and performance trends – can enable earlier intervention and more confident risk management.
The practical effect is not simply lower risk; it can also provide greater freedom to trade with new and existing partners, as well as into new markets. Corporates gain the ability to flex terms, diversify markets and adjust supply chains without destabilising their balance sheets, turning open account trading from a position of vulnerability into a basis for growth.
The right tool, at the right point
As risk mitigation becomes embedded, the focus shifts from managing risk itself to optimising how and when different solutions are deployed and combined. This is where businesses need an integrated working capital partner with the scale, international reach and capability to support their working capital needs holistically.
In practice, the ‘right tool, right time’ approach means adapting structures dynamically. For example, supplier finance or dynamic discounting can play a key role where supplier resilience is paramount. Inventory finance offers support where stock or lead times absorb liquidity. Receivables finance can be especially effective where days sales outstanding constrains growth, and distributor finance offers a solution where downstream liquidity limits sales. Finally, insured receivables can play a role where expansion requires both funding and risk transfer. In essence, the value lies in matching the tool to the need – precisely when it matters most.
Integrated working capital solutions as a resilience strategy
In a world where uncertainty is the new normal, CFOs increasingly need a provider that can connect supplier finance, inventory solutions and receivables purchase and help them deploy the right working capital tool at the right moment in the trade cycle. Lloyds brings these capabilities together by combining deep expertise with an integrated working capital toolkit – underpinning adaptation, optimisation and growth in an increasingly complex trading environment.
