TheCashCycleGuide2021SmartCashFlowStrategiesforYourBusiness.Howlongcanyouwaitforcustomerpaymentsuntilyourcompanystartsfeelingcash-strapped?Youbuyinventory,storeit,sellit,payyoursuppliersandthenwait…andwait…andwaittocollectonyourinvoices.Wishyourcustomerswouldpayontime?Wishyouhadafastercashcycle?Everybusinesswantsthatprocesstobeasfastaspossible. Thelongerittakes,themorecapital(oraccesstocapital)youneedtorunyourbusiness.Either you supplythatmoneyoryou’reforcedto borrowit fromsomeoneelse.Andthat’sgoingtocostyou…bigtime.Fortunately,thereareotheroptionsyoumightnotbeawareofthatcancometotherescue.Theycanspeedupyourcustomerinvoicepayments,saveyoumoneyinthelongrunandhelpgrowyourbusinessfasterthanever.TableofContentsSection1:WhytheCashCyclemattersSection2:WhydoesCashFlowmatter?Section3:TheMagicFormulaSection4:HowdoIshortenmyCCC?Section5:FinancialSolutionstoimproveCashFlowFinancialSolution1:TurncustomerinvoicesintocashFinancialSolution2:Leverageyourinventory,equipmentandrealestateFinancialSolution3:Keepsuppliershappy,butthecashstillinyourpocketFinancialSolution4:AquickwaytotakeadvantageofsupplierdiscountsSection#6:WecanpartnerwithyouSECTION1:WHYTHECASHCYCLEMATTERSIfyoubuyandsellinventoryonaccount,thenyou’llneedtoknowhowlongittakestoturnthatinventoryintocash.That’sexactlywhatthecashconversioncyclewilltellyou.It’syourkeytomakingsureyou’reontopofyourcompany’scashflow.WhatistheCashCycle?Thecashconversioncycle(CCC)–or“cashcycle”forshort–followsyouthroughthesupply,salesandpaymentjourney.Gettingpaidandputtingcashbackintothecompanyispriorityone.You’relikelyusedtothisprocess:AcquireinventoryfromasupplierStorethatinventorySellittoacustomeronaccount&invoicethem30,60or90daysPayyoursuppliersCollectonyourinvoicesTheCCCwillgiveyouanindicationofyourcashliquidityposition—anditcanpointyourattentiontowhatishelpingorhurtingyourcashflow.ThethreevariablesDIO(DaysInventoryOutstanding),DPO(DaysPayableOutstanding)andDSO(DaysSalesOutstanding)canallimpactyourworkingcapital.Andyoucantakecontrolofthemtoim