Arqit, a quantum encryption provider, wants centuries-old trade finance products like bills of exchange and promissory notes to make a comeback in the digital era.

The Nasdaq-listed company has launched a free liquidity calculator on its website, which is designed to show corporates how they can improve their cash conversion cycles by using digital negotiable instruments (DNIs) to pay suppliers or get paid by buyers.

Promissory notes and bills of exchange are still used as trade instruments in some regions and industries, but their popularity has eroded in recent decades as more companies adopt supply chain finance.

The adoption of laws recognising digital versions of paper trade documents, especially the UK’s Trade Documents Act, opens the door for virtual versions of negotiable instruments to stage a return.

“Now that they’re recognized in digital form, that the utility for your average treasury team is just going to be dramatically enhanced because of the time and speed and ease with which these can be created in a much more secure way than writing up an instrument and popping it in a courier and sending it across to your counterparty,” says Arqit’s senior vice president of working capital technology Dominic Broom.

“Digitalisation of that process greatly enhances the use case.”

The liquidity calculator allows companies to input a handful of key metrics to calculate the length of their cash conversion cycles and then identify how much liquidity could be unlocked by using a DNI. Broom says he hopes the tool will raise awareness of DNIs in the market.

The concept of suppliers bringing forward payments and buyers extending them is not new, acting as the conceptual basis for supply chain finance programmes.

But Broom sees DNIs as having an edge because once such instruments are agreed and issued, the issuer or accepter is obliged to honour them. Regular SCF, however, is based on approved invoices, which are easier to dispute.

Arqit offers a platform called TradeSecure that generates secure DNIs and which can be integrated with banks and SCF platforms.

In 2020 the International Trade and Forfaiting Assocation (ITFA) launched a DNI initiative using electronic payment undertakings, because electronic trade documents were not yet recognised in English law.

In 2021 Swiss start-up FQX launched a product based on digitalising a promissory note on blockchain.