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financial

Cash-to-Cash Cycle

Days between paying suppliers and collecting from customers.

Definition

Days between paying suppliers and collecting from customers.

Why it matters

It is the working capital consequence of every supply chain decision.

Formula

DIO + DSO - DPO

Example

91 + 45 - 60 gives a 76 day cycle.

How to interpret it

Improvements that simply push payment terms out move cost rather than removing it.

How to improve it

Reduce inventory days and receivables friction before renegotiating payables.

Common mistakes

Optimizing one component in isolation and worsening the others.

Related KPIs

Related SupplyChain.tools

Run the numbers on SupplyChain.tools - this page covers the management decision.

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