Cash Conversion Cycle Calculator: Helping Businesses Unlock Trapped Working Capital and Make Trade Cheaper, Faster and Simpler
Published: June 06, 2025
For many businesses, a significant proportion of their working capital is tied up in inefficient or outdated trade processes. And in today's world, the need to be agile and resilient in pursuit of improved financial performance is essential. The Cash Conversion Cycle Calculator (Calculator) helps businesses identify trapped liquidity and release it by leveraging the financial benefits of digital trade instruments.
The Calculator is simple to use, taking just minutes to help corporate treasurers, accountants and finance professionals measure how quickly their business converts its investments in inventory and other resource inputs into cash flow from sales. Highlighting any bottlenecks, it helps them unlock ‘trapped’ cash tied up in inefficient, paper-based or outdated trade processes such as delays in invoicing, payments, and settlement times.
By digitalising transactions, in line with the Electronic Trade Documents Act 2023 (ETDA), businesses can significantly reduce these delays, free up significant amounts of working capital, drive operational efficiency, and increase their profitability.
The Rt Hon. the Lord Thomas of Cwmgiedd notes: “The ETDA provides the legal foundation for trade digitalisation and the benefits that flow from it. However, the realisation of those benefits can only come when traders actually use digital systems. This tool [the Calculator] is a simple, speedy and helpful aid that will enable traders to make an initial assessment of the benefits that can be realised. I am sure that those who use it will quickly see the benefits and thus contribute to the achievement of the objectives of the Act.”
Chris Southworth, Secretary General, ICC UK adds: “One of the most effective, but often overlooked, digital solutions in the treasury and finance toolbox are negotiable instruments. Traditionally, these instruments (e.g. bills of exchange and promissory notes) have been paper-based, but reborn in digital form thanks to the ETDA, they represent a major shift in how businesses transact and manage their financial assets.”
Digital negotiable Instruments (DNIs), which are securely recorded on electronic platforms, enable faster, more transparent, and cost-effective transactions. By shortening the cash conversion cycle using digital bills of exchange and digital promissory notes, businesses can accelerate cash inflows and streamline their payment processes, thereby optimising working capital and improving liquidity.
This digital approach not only improves the speed of trade and supports ESG goals by eliminating paper, it also reduces the risk of fraud, ensuring that all parties involved in a transaction have secure access to the same information.
The Calculator helps a business to assess just how much of its working capital could be unlocked. If the figures indicate that improvements could be made, making contact could be the first step towards improved liquidity and financial performance.
Our partners at ETR Digital, who developed the Calculator, will kindly donate £5 to our charity of the year – Cancer Research UK – for every business that completes a Calculation cycle and contacts us using a verifiable business email address.