The accordion effect: bringing new sources of capital closer to corporate treasury - Trade Treasury Payments

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The accordion effect: bringing new sources of capital closer to corporate treasury

Millions of pounds sit trapped in working capital cycles – just out of reach. A new initiative from The International Centre for Digital Trade and Innovation (iC4DTI) and ETR Digital helps treasury teams pinpoint where cash is stuck, benchmark their performance, and unlock rapid access to new sources of capital, using trusted digital instruments.

It’s not every day you hear a musical analogy in the corporate treasury world. But Roger Hynes, Co-Founder and COO, ETR Digital, describes the gap between businesses and the capital they need for growth as a stretched-out accordion: “expanding, awkward to manage, and increasingly difficult to close.” 

That funding gap isn’t theoretical. Before the pandemic, the global trade finance gap was estimated at $1.5 trillion. By 2022, it had exploded to $2.5 trillion. For many companies, especially those lower down the credit spectrum, the story is familiar: they can move goods and generate revenue, but securing the right funding, at the right time and price, is the real choke point.                           

The bottleneck stems largely from a mix of chronic friction and systemic hesitation, including risk-averse banks, regulatory complexity, and a painful reliance on paper documents, wedged in global trade and supply chains. 

“Finance hasn’t kept pace with the business models it’s meant to support,” explains Hynes. “We need new approaches to compress that accordion and get corporates closer to pools of capital without going through a labyrinth of intermediaries.”

Identifying pain points

This is exactly what ETR Digital and iC4DTI have been working on, starting with a diagnostic tool called the Cash Conversion Cycle (CCC) Calculator. 

Simple and fast to use, the calculator helps companies assess how quickly they convert their resources into cash – and how their performance compares to industry peers, according to PwC sector benchmarks. By pinpointing how long cash is tied up in inventory, receivables, or payables, it reveals trapped liquidity that could be put back to work. 

“The calculator output is simple but powerful,” notes Chris Southworth, Secretary General of ICC United Kingdom. “Companies can see, in black and white, whether their working capital cycle is aligned with industry norms or whether they’re lagging behind.”

All that’s needed to use it are a few simple numbers:

• Gross sales
• Cost of goods sold
• Inventory
• Trade receivables
• Trade payables
• Weighted average cost of capital (WACC)

Hynes explains: “While most treasury teams are tracking key metrics, not everyone has a clear sense of how those compare across their industry or how much working capital is actually trapped. Seeing those numbers in context, compared to peers, is what creates urgency – and makes the business case for change much clearer.”

Wayne Mills, Chief Product Officer, ETR Digital, says: “The calculator shows exactly how much working capital you could be unlocking. That data is also a gateway to funding conversations that go beyond the traditional banking model. Because once a company understands where liquidity is trapped, the question becomes ‘what can we do differently to release it?’ And this is where digital negotiable instruments [DNIs] come into play.”

Not reinventing the wheel

As the name suggests, DNIs are digital versions of promissory notes and bills of exchange – long-standing trade finance instruments – which were made legally enforceable under the UK’s Electronic Trade Documents Act (ETDA) in 2023. They can be issued, transferred, and enforced digitally, within minutes.

As such, they provide a structured, efficient way for companies to raise short-term liquidity without relying on complex receivables finance or lengthy credit approvals.

“Unlike some innovations, DNIs aren’t a futuristic solution looking for a problem,” says Mills. “They’re practical, recognised, and trusted instruments that can be deployed today, in a way that’s faster and more efficient than paper.”

And, more importantly, says Hynes, they open up a new, accessible pool of capital. Traditionally, corporate funding has been tightly linked to the banking sector, but that model doesn’t always work for mid-sized, fast-growing, or non-investment grade firms. Risk appetite has narrowed, timelines have stretched, and many businesses are left navigating long approval cycles for relatively short-term needs.

At the same time, private credit markets have expanded rapidly. Private credit funds, family offices, and alternative lenders are actively looking for ways to deploy capital, but they want clear, short-term, and enforceable assets.     

Hynes comments: “We’ve seen strong interest from non-bank lenders. They’re looking for straightforward, low-friction assets. DNIs give them precisely that.”

So, in effect, he explains, DNIs act as a bridge. “They connect businesses in need of working capital with a growing group of investors actively looking to fund the real economy. Without the baggage of legacy systems or restrictive eligibility criteria.”

What makes this different?

Plenty of treasury tools promise transformation, though. Treasurers have seen many digital ‘game-changers’ come and go, so some scepticism towards DNIs is understandable.

But as Southworth points out: “The real power of DNIs isn’t their digital nature, it’s what they enable. Faster liquidity. Direct access to new pools of capital. And a toolset that aligns with how treasury actually works.”

Mills agrees: “We’re not asking treasury teams to adopt a whole new model. We’re simply removing the friction from one they already understand.”

Ironically, it’s often this simplicity that catches people off guard, Hynes believes. “Treasurers and CFOs often expect something complicated when they hear [the term] ‘DNIs’. But this isn’t a digital transformation project. It’s a new route to finance. And the Calculator tool is the gateway to that. Run your numbers on Monday. Get matched with a capital provider by Thursday. It’s as simple as that.”

Plugging the gap

In short, DNIs represent next-generation access to finance. But, as Hynes notes, “you don’t need to be a tech-savvy treasurer or CFO to use them. You just need to be open to the idea that there’s a better way to unlock working capital.”

Southworth agrees: “This is not innovation for its own sake. It’s about making finance work better for the businesses that need it most.”

So, the tools are in place, the legal framework is there, and the capital is ready. What happens next depends on whether companies are willing to try something new and finally start to close the accordion.  

Calculate how much you could unlock

If you’re experiencing a sluggish cash cycle or looking for a new source of funding that doesn’t take months to arrange, take five minutes to assess how much capital your business has waiting to be unlocked.

Try the calculator for free, and we will donate £5 to Cancer Research UK (for every calculation accompanied by a verified work email address): https://ic4dti.org/getting-started-ccc/