Cash Conversion Cycle (CCC)
Quick answer
The number of days cash stays locked in operations: inventory + receivables - payables to suppliers.
Key takeaways
- DIO - reduce locked stock (better turnover)
- DSO - collect faster from customers
- DPO - negotiate better supplier terms
What CCC is
Cash Conversion Cycle (CCC) = DIO (days of inventory) + DSO (days sales outstanding) - DPO (days payable outstanding). It measures how long from paying for goods to collecting money from the customer.
Why it matters to the board
CCC is the ultimate measure of working-capital efficiency. A lower CCC frees cash without external financing. Every day cut from the cycle means money available for growth.
The three levers
- DIO - reduce locked stock (better turnover)
- DSO - collect faster from customers
- DPO - negotiate better supplier terms
How CRMconnect helps
CRMconnect acts on DIO: through forecasting, correct reorder points and dead-stock reduction, it lowers days of inventory and thus CCC, freeing working capital.
Real-world example
Cutting dead stock from 9% to 5.8% of revenue lowered DIO by several days, trimming CCC and freeing over €280,000 of locked cash.
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Frequently asked
Is a low CCC always good?+
Generally yes - it means cash freed faster. Some models (retail) can even have negative CCC (you collect before paying the supplier).
Which lever does CRMconnect act on?+
On DIO (days of inventory): through forecasting and correct replenishment it reduces locked stock, the operational component of CCC.
Where CRMconnect fits
Related terms
DSO (Days Sales Outstanding)
Average number of days from invoice issue to cash collection. Key cash-flow indicator.
FinanceDPO (Days Payable Outstanding)
Average number of days from supplier invoice receipt to actual payment.
FinanceWorking capital
The difference between current assets and current liabilities - the cash a company has to fund daily operations. A key financial-health indicator.
LogisticsInventory turnover
How many times stock is fully sold and replenished in a period - a measure of capital efficiency.