Cash Conversion Cycle: The KPI eCommerce Owners Must Know

The Cash Conversion Cycle (CCC) tells you how long it takes to turn a dollar spent into a dollar back in your account. For eCommerce businesses, this is the silent killer – or secret weapon.

Why It Matters

Every time you buy inventory, your cash is tied up. The longer it takes to sell that inventory and collect cash, the more pressure you put on your business.

Here’s how CCC is calculated:

CCC = Days Inventory Outstanding (DIO) + Days Sales Outstanding (DSO) – Days Payable Outstanding (DPO)

In simple terms:

• DIO = How long stock sits before being sold
• DSO = How long until you get paid (for most eCommerce, this is short)
• DPO = How long you can wait to pay suppliers

The shorter your CCC, the more agile and cash-efficient your business is.

How to Improve It:

• Negotiate better payment terms with suppliers (extend DPO)
• Use demand planning to optimise inventory levels (reduce DIO)
• Automate and speed up your payment processing (minimise DSO)

When you shorten your CCC, you free up working capital – fuel for growth without raising money. If you’re scaling, this is the role you’re missing.