Cash-Conversion Cycle: Read It Like an Investor
Investors love businesses that turn cash quickly. The Cash-Conversion Cycle (CCC) reveals how many days pass between paying for inventory and collecting customer cash.
CCC Formula Reminder
CCC = Days Inventory Outstanding + Days Sales Outstanding – Days Payables Outstanding
Benchmark Snapshots
| Sector | Healthy CCC | Warning Light |
|---|---|---|
| F&B | < 60 days | > 90 days |
| Fashion | < 90 days | > 120 days |
| SaaS | < 30 days | > 60 days |
Three Levers to Shorten CCC
- Receivables – Offer early-payment discounts or use invoice financing to get cash inside 48 hours.
- Inventory – Shift slow movers to consignment or drop-shipping.
- Payables – Negotiate net-60 terms with suppliers who value repeat orders.
If your CCC drops by even 15 days, you free up the cash equivalent of half a month’s sales—often cheaper than raising a new round.
Keywords: cash conversion cycle UAE, working-capital efficiency, invoice finance, SME cash metrics
Hashtags: #KlubAI #CashConversion #WorkingCapital #InvestorReady #FinanceBasics
Disclaimer: Metrics and sector benchmarks are approximate; use your own statements for exact calculations.
