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Cash Conversion
Business
WHAT IS IT?
Cash conversion describes how quickly a business turns its sales and other trading activity into cash received.
IN PLAIN ENGLISH
It is about how long it takes for a sale to become money available to the business.
SIMPLE EXAMPLE
If you invoice a customer today but receive payment 60 days later, the sale has not yet become cash in the bank.
WHY DOES IT MATTER
Improving the timing of cash received can reduce pressure on working capital, although customer relationships and commercial terms also matter.
THE ROCKET TEST
Cash conversion is about how quickly business activity turns into usable cash.
SEE IT IN ACTION
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