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.
Last updated