The best companies convert their cash in 24 days. The worst, at 44. How many days does yours do?
A study published this week looked at the cash conversion cycle in midsize companies and the result is clear: those that manage their working capital best convert cash almost twice as fast as laggards
- 78% of CFOs see improving the cash cycle as a strategic priority
- An average CFO faces 14 unexpected cash shortages a year
- 40% of cash flow forecasts are unreliable
And here's what most don't see: Your idle cash isn't a "safety reserve." It's money trapped in slow accounts receivable, inventories that don't move, and payment processes that take longer than they should.
The difference between 24 and 44 days isn't operational efficiency - it's capital available to invest, negotiate better terms with suppliers, or simply sleep soundly.
In our experience auditing costs in the region, we found that most companies have never measured their conversion cycle accurately. They know how much they sell. They know how much they spend. But they don't know how many days it takes for each dollar to come back.
How many days do you convert your working capital?
Write to me. ERA Group optimises working capital and operating costs.
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