Finance
Cash Conversion Cycle (CCC)
How many days between paying for inputs and receiving cash from customers: Days Inventory + Days Sales Outstanding − Days Payables Outstanding.
CCC measures how much working capital your business needs to finance daily operations. A shorter cycle means less cash tied up in inventory and receivables; longer means you're financing growth out of the owners' pockets or short-term debt.
Critical for e-commerce, manufacturing, distribution, and any business with inventory. Service businesses without inventory still track DSO − DPO as a simplified version.
Lenders use CCC to size working-capital lines of credit.
Common pitfalls
- Optimizing inventory and DSO but ignoring DPO; paying vendors too fast wastes free financing
- Forgetting that supplier credit terms can be negotiated; net-30 isn't a law
- Not measuring CCC by customer segment; large-customer DSO can hide concentration risk
Related service
See fractional CFO servicesHave a Cash Conversion Cycle (CCC) situation in your business?
One team covering bookkeeping through fractional CFO, so the figure you just read about comes out of a ledger you can stand behind.