Cash-to-Cash Cycle
Definition
The cash-to-cash cycle measures the days between paying suppliers for materials and collecting cash from customers for the finished product. It equals days of inventory plus days of receivables minus days of payables.
In Practice
Cash-to-cash (C2C) links supply chain operations directly to corporate finance. Formally, C2C = Days Inventory Outstanding + Days Sales Outstanding - Days Payables Outstanding. A 90-day cycle means the company finances three months of operations from its own cash; a negative cycle means customers effectively fund the business before suppliers get paid.
Supply chain planners own the biggest lever: inventory. Cutting days of inventory through better forecasting, shorter lead times, or postponement releases cash permanently, not just once. That is why inventory projects are often justified in cash terms to the CFO rather than in service terms alone. Payment terms are the other levers, but stretching suppliers too far damages the supply base.
Apple and Dell are famous for negative C2C cycles: fast-turning inventory and quick customer collection combined with extended supplier terms mean growth generates cash instead of consuming it, a structural advantage competitors struggle to copy.
Related Calculators
Related Terms
Working capital is the cash a business has tied up in day-to-day operations, calculated as current assets minus current liabilities. In supply chain terms, it is dominated by inventory, receivables, and payables.
Key Performance Indicator (KPI)A key performance indicator is a quantifiable measure used to track how well a supply chain meets its objectives, such as fill rate, forecast accuracy, inventory turnover, or on-time delivery.
Supply Chain ManagementSupply chain management (SCM) is the coordination of all activities involved in sourcing, making, and delivering a product, from raw materials to the end customer. It aims to meet customer demand at the lowest total cost across the entire network.