Cash conversion cycle
The time it takes to turn money spent on stock and supplies back into cash collected from customers.
What it means
The cash conversion cycle measures how long, in days, it takes a business to convert money spent on inventory and supplies into cash received from customers. It combines how long stock is held, how long customers take to pay, and how long you take to pay suppliers.
A shorter cycle means cash returns to the business faster; a longer cycle ties up more working capital.
Why it matters
Slow-paying customers lengthen the cycle and strain cash. Reducing debtor days is often the quickest lever a business controls. You can explore how faster collections shorten your cycle using our free calculators, and see working capital for the broader picture.
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