This article is written by ETR Digital
Like every corporate treasurer, one of my main jobs is to make sure there’s enough liquidity to keep the business running smoothly, support growth, and give us the financial flexibility we need. But that’s often easier said than done!
Lately, I’ve been exploring some different tools for unlocking working capital. And with everything going on in the digital trade space, I figured I’d take a look at Digital Negotiable Instruments (DNIs). Because they can help speed up payments and receivables processes, unlocking significant amounts of liquidity and improving cash flow management.
Wait, what are DNIs?
Good question! And I only discovered them through a session at an industry conference, so you’re not alone in never having come across them. In a nutshell, DNIs are essentially the digital version of old-school paper trade instruments like bills of exchange and promissory notes. But instead of dealing with stacks of paperwork and slow manual processes, everything’s securely handled on a digital platform. So, it’s nothing totally new and risky, it’s an innovative way to approach an age-old challenge.
In practice, DNIs mean faster, clearer transactions – and much less waiting around. Where paper-based instruments might take days or even weeks to settle, DNIs can be wrapped up in a fraction of the time. That’s a big win when you’re trying to unlock liquidity.
How DNIs helped us release trapped cash
Before using DNIs, we were facing a pretty common issue: too much working capital was tied up in slow trade cycles. We had payables and receivables stuck in the system, delaying access to cash we could’ve been using elsewhere in the business. I’m sure that feels like a familiar frustration.
Then we decided to start using DNIs (it wasn’t a tough switch). And the difference was like night and day.
Take our cross-border transactions. They used to be really paper-intensive, taking weeks to finalise payments and get funds moving. But with DNIs, we’ve cut down the processing time dramatically. That’s helped us speed up cash inflows and bring down our DSO.
We also brought DNIs into our supplier financing programme. Again, easy to do. And it meant that suppliers got paid faster, we improved our own cash conversion cycle, and we could even extend our own payment terms without damaging supplier relationships. A win-win (yes, it might sound a bit clichéd but it’s true).
Finding the hidden liquidity
Those few switches have made all the difference already. And it was easy to know which working capital ‘levers’ to pull because I used the ICC’s free Cash Conversion Cycle Calculator – and it showed me exactly where our cash was getting stuck.
So, I encourage you to check it out https://ic4dti.org/getting-started-ccc/ It’s super easy to use, anything you plug in is private, and it will give you a clear picture of where your working capital could be improved. For us, unsurprisingly, a lot of the inefficiencies were from outdated trade processes. But digitalising them has made a huge difference almost immediately.
Seeing is believing
If, like me, you’re a corporate treasurer looking to make your cash work harder, I can’t recommend DNIs enough. They’ve helped us streamline operations, reduce delays, and unlock liquidity that was previously gathering dust in slow-moving processes. They’re essentially just a better version of what was there before. Like upgrading from a landline phone (or carrier pigeon in some instances!) to the latest smartphone.
And if you’re not sure where to start, give the ICC’s Cash Conversion Cycle Calculator a try. It’s a quick way to spot opportunities to improve your cash flow – and helps put you in control.
Also Read
- Cash Conversion Cycle Calculator: Helping Businesses Unlock Trapped Working Capital and Make Trade Cheaper, Faster and Simpler
- Operationalising AI in Treasury: From Experiment to Execution
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