Corporate treasurers and CFOs navigate financial uncertainty and transformation in 2025

The last few years have seen high inflation, ongoing conflicts in various regions, and an increasingly complex geopolitical landscape. These macro developments have significantly impacted businesses worldwide, as companies navigate the headwinds of geopolitics, shifting supply chains and market volatility. A fragmented world, coupled with trends such as ‘friendshoring’ and ‘nearshoring’, has disrupted business flows but also opened new trade corridors, presenting fresh opportunities for corporations.

In the lead-up to 2025, inflation and interest rates in the United States (US) and Europe are beginning to fall. However, the threat of additional tariffs by the incoming US administration casts uncertainty on the pace, if not the direction, of interest rate adjustments. Increasing geopolitical fragmentation and supply chain disruptions suggest that corporations face a challenging path in the coming year. Chief financial officers (CFOs) and treasurers are adopting proactive risk management strategies, focusing on digital transformation and preparing for alternate scenarios. Consequently, corporate expectations of banks are evolving, whether in collaboration with fintechs or through the development of compelling sustainability products.

Uncertainty to continue in 2025

The political and economic uncertainty expected in 2025 is unwelcome news for businesses which prefer predictability. Inga Kudzmaite, treasury and tax director, Asia, Carlsberg, one of the world’s leading brewery groups, highlighted that political developments in the US and the global geopolitical landscape are creating uncertainty. Geopolitical tensions do affect local market sentiment, especially in key markets like China. “2025 brings some uncertainty given the political developments in the US and the global geopolitical situation,” she said.

Given the uncertainty, corporates are cautious about growth prospects for the upcoming year and anticipate continued market volatility. Denis Savastano, group treasurer and head of investor relations, Li & Fung, a leading multinational corporation managing complex supply chains for brands and retailers worldwide, noted that moderate global economic growth is likely, driven by geopolitical tensions, ongoing conflicts and persistent inflation. He emphasised that the outcome of major elections in 2024 will shape economic policies, adding another layer of volatility. “The global economic growth in 2025 may be moderate due to various disruptions that the world is going through,” he explained, pointing to geopolitical tensions, ongoing wars and inflation as key factors that could impact consumption.

Inga Kudzmaite, Treasury and Tax Director, Asia at Carlsberg

Denis Savastano, Group Treasurer and Head of Investor Relations at Li & Fung

Asia still offers upside

The macroeconomic environment has slowed demand across industries, as governments, corporations and individuals tighten their belts. Hanno Diehl, CFO, Asia Pacific, Fresenius Kabi, a global healthcare company specialising in pharmaceutical and biotechnologies, explained that China’s macroeconomic situation is putting pressure on healthcare budgets, leading to price reductions through volume-based procurement. To counter this, Fresenius Kabi is focusing on local production and streamlining operations. Although growth is slower than in previous years, Diehl emphasised that Asia-Pacific’s macro trends, including a growing middle class and ageing population, remain favourable. “We continue to introduce new innovative products though the growth is not as fast as in the past years,” he said.

The banking sector echoes this sentiment. Oliver Brinkmann, co-head of global corporate banking Asia Pacific at JP Morgan, anticipates a soft landing for the global economy, though various factors could shape the outcome. “As we look ahead to 2025, we expect the Asia Pacific region to remain a vital engine of global growth,” he noted, highlighting fast-expanding sectors such as digital infrastructure, high-tech manufacturing, energy transition and healthcare as areas of significant expansion and innovation.

Hanno Diehl, CFO, Asia Pacific at
Fresenius Kabi

Oliver Brinkmann, Co-head of Global Corporate Banking Asia Pacific at JP Morgan

Strategic risk management - a key tool to prepare for the future

While preparing for uncertainty is difficult, certain trends are evident. These include diversification, a focus on risk management and leveraging technology to respond swiftly to market changes. Sharon Wang, senior director, group treasury and project finance at CLP, one of the largest investor-owned energy businesses in Asia Pacific, underscored the importance of risk management in navigating market uncertainties and geopolitical tensions. She stressed the need to clearly define risk indicators and develop monitoring strategies to mitigate negative impacts. “A key priority for treasury in the coming year is risk management,” Wang explained, emphasising the interconnectedness of fundraising and capital allocation.

Sharon Wang, Senior Director, Group Treasury and Project Finance at CLP

Diversifying supply chains has become a central risk management strategy, driving demand for financial supply chain solutions that improve corporate working capital. There is also increased interest in trade finance receivable solutions to mitigate payment risks. Savastano highlighted the necessity of updated risk policies to define acceptable risks and mitigate others through credit insurance or external risk management solutions. “It’s better to be cautious given the potential for market disruptions, volatility and risk exposures,” He added.

Volatility in the foreign exchange (FX) market is another critical aspect of risk management. Corporations are mitigating FX exposure by sourcing locally, including volatility clauses in contracts and adopting proactive hedging strategies.

Wang highlighted the importance of maintaining discipline in hedging strategies, ensuring effective planning during budgeting to account for FX volatility. She noted that identifying natural hedges within supply chains can help minimise FX exposure and associated costs. “In a volatile economic environment, it is imperative to maintain strict discipline in your hedging strategies and their execution,” she stated

Managing cash and liquidity in an uncertain world

Geopolitical developments have also influenced how corporations manage cash and liquidity. Real-time cash visibility has become vital, prompting investment in digital tools. Global corporation are increasingly centralising cash at headquarters to enhance liquidity control and management. Diehl explained that Fresenius Kabi is actively pursuing initiatives to centralise cash, even in jurisdictions with restrictions. “We are piloting zero-day payment terms for intercompany payables to expedite cash,” he mentioned.

However, cash centralisation is not always straightforward due to capital controls in some jurisdictions. Kudzmaite acknowledged that ownership structures and capital controls present limitations, but Carlsberg is exploring options to optimise liquidity. This year, the company increased dividend payouts in China to semi-annual intervals, ensuring faster cash returns to shareholders. “We are constantly reviewing our options as cash repatriation is high on the priority list,” she emphasised.

In markets with restricted cross-border flows, corporations must balance cash repatriation with local operational needs, sometimes maintaining buffers in local currencies. Kudzmaite emphasised the need to ensure local liquidity while repatriating cash where possible. “It’s often a balance between repatriation and local business liquidity needs, in both local and hard currency sometimes, aiming to ensure that our business has what it needs to operate locally without interruptions,” she explained.

Diversification emerging as a key theme

As companies re-evaluate funding strategies in the current environment, diversification has become an essential approach Wang emphasised the need to maintain access to a wide range of liquidity sources. “In uncertain times, it is essential to diversify and ensure access to various liquidity sources. This includes maintaining cash reserves, securing credit facilities with banks, and ensuring easy access to money and capital markets,” she explained. From a liquidity risk management perspective, balancing liquidity, yield and cost across operating cash, reserve cash and strategic cash, as well as for committed and uncommitted credit facilities, is crucial. Wang highlighted that establishing a medium-term note programme and maintaining commercial paper programmes can further enhance financial flexibility.

Diversification is not limited to liquidity but extends to investment options and banking relationships. Savastano noted the shift towards reduced globalisation, which has benefitted local banks. “Domestic banks in markets such as India and Turkey can now compete the international players, providing corporations with localised knowledge and advantages in payment processing,” he said He added that having a mix of international and local banks ensures backup options and enhances resilience in emerging markets.

Focus on digital transformation

In an increasingly challenging business environment, digital transformation has emerged as a key priority for treasurers looking to drive efficiency, manage risk and support growth. However, implementing digital initiatives is not without hurdles. Diehl highlighted that legacy systems and uneven information technology (IT) adoption across regions can slow down progress. “There is significant interest in further digitalisation, but the rapid growth of the company has outpaced the development of IT systems. We are now focusing on standardising processes and expanding shared service activities,” he explained. Initially driven by labour arbitrage, the shift towards process standardisation aims to facilitate greater automation and enhance overall operational efficiency.

Corporations that have laid the groundwork for digital transformation are beginning to see the benefits. Savastano noted that Li & Fung has developed artificial intelligence (AI) supported dashboards for treasury, offering real-time cash visibility and dynamic scenario analysis. “We have implemented a treasury management system that prioritises liquidity management through cash forecasting, allowing us to adjust strategies based on market conditions,” he mentioned.

Investing for the future

Looking ahead to 2025, balancing investments in capacity expansion, research and development (R&D) and digital transformation remains critical for corporations. Diehl outlined Fresenius Kabi’s approach, prioritising capital expenditure (Capex) in growth areas with a focus on Asia. “Asia is and remains a region where we continue to invest. R&D is critical to fill the pipeline as the product lifecycle is getting reduced and the window for commercialising new products is also getting shorter. We also have an allocation for digitalisation with multiple projects ongoing. The biggest project in this regard is our SAP transformation as we are migrating to the next generation of SAP, S4 Hana,” he elaborated. Digital transformation is also part of the investment strategy, with the company modernising its enterprise resource planning (ERP) systems.

Evolving corporate expectations of banks

The changing macroenvironment is reshaping the expectations corporations have of their banking partners. Kudzmaite highlighted the increasing importance of fintech collaborations, particularly in payments and collections. “There are fintech solutions that digitalise payments and collections, often starting on the B2C (business to consumer) side. Banks can play a more active role in scaling them into their corporate offerings at a competitive pricing,” she said. Additionally, she stressed the need for more international banks to cover some of the lesser developed Asian markets such as Cambodia, Laos and Myanmar to address corporate needs and help develop the local financial infrastructure.

Wang added that banks should not only innovate new solutions but also improve existing offerings. “Banks can leverage fintech and the latest technologies, including APIs (application programming interfaces) and generative AI to provide plug-and-play solutions that enhance corporate operations,” she explained. Innovations such as blockchain for KYC (know-your-customer) or tokenised bonds can further streamline processes.

Sustainability is also becoming a focal point, with corporations increasingly turning to sustainable financing and investment solutions. However, the financial benefits of sustainable products remain limited. The marginal financial benefit offered by sustainable products often fails to offset the additional compliance and administrative costs. Greater incentives or subsidies could drive higher adoption rates. In this regard, banks could also add value by providing relevant advisory services and capacity building on sustainability initiatives.

Banks are beginning to align with evolving client requirements. Brinkmann highlighted the importance of innovation and collaboration. “Banks must prioritise digital transformation, tailored solutions and sustainability strengthen relationships and drive mutual growth,” he said. By partnering with fintechs and focusing on sustainability-linked products, banks can better meet corporate ESG goals and long-term strategies.

 Importance of a proactive and forward-thinking finance function

The ongoing economic and geopolitical uncertainty underscores the need for forward-thinking finance functions. Brinkmann emphasised the critical role of proactive treasury and finance teams in ensuring resilience and optimising cash and liquidity. “Leveraging technology and data analytics, these teams can provide valuable insights for strategic decision-making, enabling swift responses to market changes and opportunities,” he said. Such teams can also enhance risk management and optimise capital structures to align with strategic objectives

As corporations prepare for 2025, fostering resilient systems, enhancing risk management and embracing digital and financial innovation will be essential for CFOs and treasurers to navigate uncertainty and drive sustainable growth.