How can I easily calculate my cash cycle or cash conversion cycle?

It measures the days that pass from when you pay one euro to your suppliers until you recover that euro after collecting from the customer. It is calculated using the following formula:

• Cash Cycle = Inventory Days + Average Collection Period – Average Payment Period

The goal of any SME should be to reduce this cycle as much as possible to avoid having to self-finance daily operations over a prolonged period.

Don’t hesitate, request advice from our experts.