Cash conversion cycle calculator: DSO, DIO, DPO, and CCC
Calculate how many days your capital is tied up between paying suppliers and collecting from customers. DSO, DIO, DPO, and total CCC. The working capital metric that determines whether you can scale.
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How to read this calculation
DSO (Days Sales Outstanding) = (Accounts Receivable ÷ Annual Revenue) × 365
DIO (Days Inventory Outstanding) = (Inventory ÷ Annual COGS) × 365
DPO (Days Payable Outstanding) = (Accounts Payable ÷ Annual COGS) × 365
Cash Conversion Cycle (CCC) = DSO + DIO − DPO
Shorter CCC = less capital tied up = easier scaling.
Cash conversion cycle measures how many days your capital is tied up between paying suppliers and collecting from customers. Shorter is better. A 30-day CCC means $1M of growth requires roughly $82K of additional working capital. A 90-day CCC means the same growth requires $246K. The math compounds dramatically as you scale.
Negative CCC is the holy grail. Amazon, Costco, and Dell operate with negative cash conversion cycles — they collect from customers before paying suppliers, which means suppliers effectively fund their operations. Negative CCC businesses can grow without proportional working capital investment, which is a massive structural advantage.
The fastest CCC improvement comes from reducing DSO. Cutting DSO from 60 to 30 days on $2M revenue frees up $164K of working capital — typically through deposits at order, automated invoicing on completion, automated dunning, and Net 15 (not Net 30) on smaller customers. DPO extension to 60-90 days is the second lever but limited by supplier relationships. DIO reduction (less inventory) is the third, limited by stockout risk.
Frequently asked questions
The questions operators most commonly ask about cash conversion cycle and working capital.
What's a good cash conversion cycle?
Depends on industry. Service businesses with deposits can run 0-30 days. SaaS with annual prepayment can run negative. Distributors typically run 30-60 days. Manufacturers run 60-90 days. The relevant benchmark is your industry — and your own trend over time. A CCC that's increasing means working capital is consuming more of each dollar of growth, which constrains scaling.
How does Amazon have a negative cash conversion cycle?
Amazon collects from customers at checkout (DSO close to 0) and pays suppliers Net 60-90 (DPO 60-90 days). Inventory turns quickly. Result: DSO 0 + DIO 25 − DPO 75 = −50 days. Negative CCC means suppliers fund Amazon's operations. Costco runs similar dynamics. Subscription SaaS with annual prepayment can also achieve negative CCC. The structural advantage is enormous — growth requires no working capital investment.
How do I reduce my DSO (days sales outstanding)?
Five high-impact levers: (1) collect deposits at order, (2) shorten terms — Net 15 instead of Net 30, (3) automate invoice delivery at completion, (4) automate dunning workflows, (5) offer early-payment discounts. Cutting DSO from 60 to 30 days on $2M revenue frees up $164K of working capital. DSO reduction is typically the fastest CCC improvement available.
Can I extend DPO without damaging supplier relationships?
Yes, with discipline. Negotiate Net 45 or Net 60 with new suppliers from the start. Don't extend payment unilaterally on existing relationships — that damages trust. Pay early-payment-discount terms only when the discount exceeds your cost of capital. Track DPO trends — DPO that gets longer without negotiation often signals stretched supplier relationships about to break.
Find the working capital you can unlock
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