Cash Conversion Cycle Calculator
How many days is my cash stuck?
Days customers take to pay, plus days stock sits, minus days you take to pay suppliers. In the sample that is 52 + 34 − 30 = 56 days, which keeps $214,935 of cash tied up in the business — about $25,792 a year at 12.0%. Collecting 10 days faster would free $39,452.
A business can be profitable on paper and short of cash in the bank because its money is waiting: in unpaid invoices, on the shelf, or already paid to suppliers. The cash conversion cycle counts those days. This page turns them into money — how much is tied up, what it costs you, and how much each 10 days you win back puts in the bank.
TightYour cash is stuck for 56 days between paying for what you sell and being paid for it: $214,935 of working capital, costing about $25,792 a year at 12.0%. Collecting 10 days faster would free $39,452.
| Cash conversion cycle | 56 days | 52 days to collect + 34 in stock − 30 you take to pay |
|---|---|---|
| Cash tied up | $214,935 | unpaid invoices + stock − unpaid supplier bills |
| In unpaid customer invoices | $205,151 | a year of sales × 52 ÷ 365 |
| In stock | $83,165 | a year of direct costs × 34 ÷ 365 |
| Owed to suppliers (works for you) | $73,381 | a year of direct costs × 30 ÷ 365 |
| What the tied-up cash costs a year | $25,792 | at 12.0% a year |
| Freed by collecting 10 days faster | $39,452 | a one-off gain in the bank, not a yearly one |
| Freed by paying suppliers 10 days later | $24,460 | the same effect from the other side — if your suppliers agree |
| Customers pay in | Cycle (days) | Cash tied up | Versus now |
|---|---|---|---|
| 15 days | 19 | $68,962 | -$145,973 |
| 30 days | 34 | $128,140 | -$86,795 |
| 45 days | 49 | $187,318 | -$27,616 |
| 60 days | 64 | $246,496 | +$31,562 |
| 90 days | 94 | $364,853 | +$149,918 |
Runs in your browser with fixed, tested formulas — the same exact arithmetic as the Business X-Ray. Nothing you type is sent or stored.
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This page tests one thing with a few monthly numbers. The Business Decision X-Ray runs your whole business through the same engine, day by day: nine tests, the exact breakpoint, the smallest repair and a dated action plan. Open demo of every section, no sign-up.
How this calculator works
The cycle in days is the time customers take to pay (DSO) plus the time stock sits before it is sold (DIO) minus the time you take to pay suppliers (DPO). Each piece is also an amount of money: a year of sales × DSO ÷ 365 is waiting in unpaid invoices; a year of direct costs × DIO ÷ 365 sits on the shelf; a year of direct costs × DPO ÷ 365 is money suppliers have lent you by waiting to be paid.
Cash tied up is invoices plus stock minus what you owe suppliers. It is money the business needs just to keep running at its current size — and it grows with sales, which is why fast-growing businesses often run short of cash. Its yearly cost is that amount at your cost of money.
The label is a rule of thumb, not an industry benchmark: Pass up to 45 days, Tight to 90, Fail above. What is normal differs hugely between a café and a distributor; the money figure matters more than the label.
The formula
Cash conversion cycle = DSO + DIO − DPO.
Cash tied up = sales × 12 × DSO ÷ 365 + direct costs × 12 × DIO ÷ 365 − direct costs × 12 × DPO ÷ 365, where direct costs = monthly sales × (1 − gross margin). Yearly cost = cash tied up × cost of money.
Freed by 10 days faster collection = sales × 12 × 10 ÷ 365.
Worked example
The sample distributor sells $120,000 a month at a 38% gross margin. Customers take 52 days to pay, stock sits for 34 days and it pays suppliers in 30. Its cycle is 56 days: $205,151 is waiting in invoices and $83,165 sits in stock, less $73,381 owed to suppliers — $214,935 tied up, costing about $25,792 a year at 12%.
Getting customers to pay 10 days sooner would put $39,452 in the bank once; paying suppliers 10 days later would free $24,460. The table shows the whole range from 15 to 90 days.
What this calculator does not do
- It uses averages. A single large unpaid invoice or a seasonal stock build can tie up far more cash for a few weeks than the average shows.
- It assumes purchases equal direct costs; if you are building or running down stock, supplier bills will differ.
- It does not know when individual invoices are due — the Business X-Ray follows each one by date. It is not accounting or financial advice.
Questions people ask
What is a good cash conversion cycle?
Shorter is better for cash, and a negative cycle — customers paying before you pay suppliers — is the best position of all. What is achievable depends on your trade: shops that are paid at the till can be negative, while manufacturers and distributors often run 60 days or more.
How do I find my DSO, DIO and DPO?
DSO ≈ unpaid customer invoices ÷ yearly sales × 365. DIO ≈ stock value ÷ yearly direct costs × 365. DPO ≈ unpaid supplier bills ÷ yearly direct costs × 365. Your accounting software’s aged receivables and payables reports have the balances.
Is freeing cash the same as making profit?
No. Collecting faster moves cash into the bank once; it does not add profit, except for the cost of money you no longer pay on it. It can still be the difference between making payroll and not.
Should I just pay my suppliers later?
Only by agreement. Paying late without one costs goodwill, early-payment discounts and sometimes late fees — often more than the cash is worth.
Related decisions
- Payment Terms Cash Flow Calculator — What Net 60 or Net 90 does to your cash — before you agree to it.
- Cash Runway Calculator — How many months your cash lasts — now, with no sales, and if sales fall.
- Deal Safety Calculator — Whether a big order keeps your cash safe until the customer pays.
- What if my biggest client pays late? Net 30 to Net 60
- Boutique inventory by size and colour, not just by style
Formulas reviewed 26 September 2026
