cash conversion cycle

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Cash conversion cycle

The length of time between a firm's purchase of inventory and the receipt of cash from accounts receivable.

Cash Conversion Cycle

The time between an expenditure of money to make a product and the collection of accounts receivable from the sale of that product. Obviously, a shorter cash conversion cycle is preferable. A longer cash conversion cycle may indicate a current or potential problem with cash flow.

cash conversion cycle

The time required for a business to turn purchases into cash receipts from customers. A short cycle allows a business to quickly acquire cash that can be used for additional purchases or debt repayment.
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Firms experiencing a shorter time span of cash conversion cycle will be able to increase the profitability by managing its credit policy and increasing its inventory levels, while firms having a relatively large length of cash conversion cycles should focus on reducing the investment in the components of working capital.
Studies on this relationship have consistently found that more efficient cash conversion cycles lead to higher returns in both large firms (Lazaridis and Tryfonidis, 2006; Deloof, 2003; Wang, 2002; Shin and Soenen, 1998; Jose, Lancaster, and Stevens, 1996) and small firms (Garcia-Teurel and Martinez-Solano, 2007; Padachi, 2006).
A recent study by Aberdeen Group, for example, linked best practices in partner management to business benefits such as fast cash conversion cycles, on-time order delivery from suppliers, and on-time order delivery to customers," said Bill Metallo, Vice President of SEEBURGER Inc.
The webinar is based on a recent Aberdeen study concluding that companies with the fastest cash conversion cycles, highest on-time and complete order delivery from suppliers, and best on-time and complete order delivery record to customers also have strong trading community management initiatives, including trading partner recruitment, enablement, ongoing maintenance, and performance measurement.
By selling their receivables in an open and competitive marketplace, businesses can reduce their cash conversion cycles, gain access to competitively priced capital and reinvest that cash into growing their business.
By selling their receivables in an open and competitive marketplace, Smyth's customers will be able to reduce their cash conversion cycles, gain access to competitively priced capital and reinvest that cash into growing their business.
Sales spends more time counting and less time selling -- Operations lacks accurate data, causing over/under-stocks -- Finance lacks timely cash conversion cycles
By selling their receivables in an open and competitive marketplace, Sellers are able to reduce their cash conversion cycles, gain access to competitively priced capital and reinvest that cash into growing their business.
Clients may integrate directly to other business systems to create faster cash conversion cycles, reduce administrative overhead, and establish powerful business intelligence.
The key steps in the Six Sigma DMAIC Loop (Define, Measure, Analyze, Improve, Control), pinpoint and prioritize defects and errors, with the twin goals of identifying the root causes of defects within cash conversion cycles and eliminating them.
Surely, companies are now looking for quick fixes to accelerate their cash conversion cycles and intervene when important customers change their payment patterns.
As companies search for ways to cut costs and effectively manage fulfillment, this presentation will help them streamline business processes, enhance profit, improve the return on existing information assets, and prioritize initiatives that accelerate cash conversion cycles.