Cash Conversion Cycle - Ways to reduce

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by a professional from University of California, Berkeley
in Sacramento, CA, USA

1yr ago

Cash Conversion Cycle - Ways to reduce

When going into a deal, as a redacted, I think it's always important to look at cashflow. Namely, map out their Cash Conversion Cycle and find ways to how to reduce it.

The Cash Conversion Cycle (CCC) = time it takes to convert your investment to cash from customer.

In a NEGATIVE CCC scenario, customers are pre-paying before you spend money on delivering their services. Of course, that's not always possible. So.. how can a redacted partner with an Acquisition Entrepreneur to reduce CCC and increase cashflow?

Here are some strategies.

- Faster collection

- Increase prices

- Increase sales volume

- Reduce COS

- Reduce Overhead

- Delay paying bills

Which ones do you think is the most effective? Which one gives you the heartburn? Sometimes, the strategies seem mutually exclusive.... how do we balance it all?

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