The cash conversion cycle (CCC) is the number of days it takes a business to turn cash spent on operations back into cash in the bank. It is calculated as days inventory outstanding plus days sales outstanding minus days payable outstanding. Lower is better — a shorter cycle means less working capital tied up in operations and more cash available for growth.
The cash conversion cycle measures the efficiency of a company's working capital management. It captures three timing realities: how long it takes to sell inventory (DIO), how long it takes customers to pay (DSO), and how long the business holds cash before paying suppliers (DPO). A shorter cycle is generally better — it means a smaller fraction of revenue is locked up in inventory and unpaid invoices at any given moment. Service businesses with no inventory often have a CCC equal to DSO minus DPO. Subscription and prepayment models can drive CCC negative — the business collects cash before it has to pay for the work, effectively letting customers finance operations.
Cash Conversion Cycle (days) = Days Inventory Outstanding + Days Sales Outstanding − Days Payable Outstanding
CCC is the single best summary of how hungry your business is for working capital. A retailer with a 75-day cycle needs roughly two and a half months of operating cash sitting in inventory and receivables just to keep the doors open — every dollar of growth requires more cash tied up. A subscription business with a negative cycle grows on customer cash. Most owners feel CCC pressure as a vague "we never seem to have cash even when revenue is up" — and the fix is usually to attack one of the three components: faster collections, leaner inventory, or longer vendor terms.
Fynso reads your accounting and bank data to calculate CCC every week and flags when any component is drifting. If DSO is creeping up because a major customer slowed payments, you see it before it becomes a cash crisis. If DPO is dropping because you're paying suppliers faster than you have to, Fynso flags the opportunity to negotiate longer terms. The daily brief surfaces the dollar impact — "five extra days of DSO is locking up $34K of cash" — so improvements get prioritized like any other revenue initiative.
Professional services
An agency invoicing on net-30 with no inventory has a CCC equal to DSO minus DPO. If clients pay in 42 days and suppliers are paid in 30, the cycle is 12 days — meaning every $1M in annual revenue requires roughly $33K of working capital just to bridge timing.
Restaurants
A restaurant has very short DIO (food turns in days) and effectively zero DSO (customers pay immediately). With supplier terms of net-15 to net-30, CCC is often negative — the business holds customer cash before paying vendors, which is why a healthy restaurant can grow without large cash injections.
Contractors and trades
A general contractor often runs CCC over 60 days — material costs hit immediately, labor hits weekly, and progress billing collections lag 30 to 60 days. Growth requires either a line of credit or aggressive change-order billing because every new job opens another working-capital hole.
Get product updates and access to Fynso features built for appointment-based operators.