Lloyds Bank has completed the United Kingdom’s first transaction utilising a digital promissory note purchase. This landmark transaction dramatically increases the speed of payment and paves the way for a significant rise in the use of promissory notes for a broad range of transactions, Lloyds Bank stated in a release.
Under legal guidance, Lloyds Bank developed a digital promissory note – a solution that works within contract law. On 17 August, Lloyds Bank successfully completed a ‘pilot’ transaction, which is the first under the Digital Negotiable Instrument Initiative (DNI) initiative, and a key milestone in the digitisation of trade finance. The transaction was initiated and completed within the day and involved the sale and purchase of land worth £48m between several UK businesses.
Gwynne Master, MD, Lending and Working Capital for Lloyds Bank said: “Promissory notes’ use allows purchases to progress where shortage of cash flow may otherwise prevent them. With this successful UK-first transaction, we have delivered an innovative digital solution that is quicker, less expensive, and more secure. The digitisation and simplification of this solution finally opens this form of payment discounting to potentially millions of small businesses, improving their ability to manage their working capital and the cash flow of their suppliers by fulfilling invoices more quickly.”
