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What are examples of ways to shorten the cash conversion cycle?

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Mizdee | Student, Undergraduate | Valedictorian

Posted April 24, 2013 at 5:56 PM via web

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What are examples of ways to shorten the cash conversion cycle?

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sciencesolve | Teacher | (Level 3) Educator Emeritus

Posted April 27, 2013 at 4:59 PM (Answer #1)

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Since a short cash conversion cycle permits the business to produce cash that can be used to get extra aquisitions, the shortening process can be realized if the payments to suppliers are delayed and the payments from customers are accelerated.

If the company has an important position on market, then it can influence the terms of aquisitions, hence, it can impose new favourable terms and it can delay the payments, creating an advantageous, negative cash conversion cycle.

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