Discover How to Keep More Cash On Hand to Reinvest or Fund Operating Expenses.

Our handy cash conversion calculator helps you make key decisions. The Cash Conversion Cycle (CCC) measures the time your business takes to purchase raw materials or other inputs, turn them into a product or service, sell them, and collect accounts receivable. The faster you convert, the more cash you have on hand to reinvest back into your business or to fund operations. 

Think of it as a pipeline that follows your cash as it is first converted into inventory and accounts payable, through the sales and accounts receivable cycle, then back into cash. Then think of each factor (inventory, A/R, A/P) as a lever you can press to move cash through the pipeline faster. Any time you can change one of those levers (for example, get invoices paid faster or wait longer to pay for inventory), the better. 

Your CCC time depends on vendor payment terms, how you allow customers to pay (credit and the collection period), and how long it takes to collect. Using our funding solutions to impact those levers can help you keep more capital in your control for longer. 

How to Measure Cash Conversion Cycle

The overall formula is calculated by adding the days your inventory is outstanding to the days your sales are outstanding and subtracting the days your payables are outstanding. Simply plug your numbers into the calculator below.  

You can use this metric to guide you in which funding strategies to use to improve the time it takes to sell your inventory or services, collect on receivables, or pay your bills. Use our cash conversion calculator below. 

  • Average Inventory over the last 12 month

  • Average Accounts Receivable over the last 12 months

  • Average Accounts Payable over the last 12 month

  • Cost of Goods Sold (Annual)

  • Revenue (Annual)

  • Days of Inventory Outstanding (DIO)

  • Days of Sales Outstanding (DSO)

  • Days of Payables Outstanding (DPO)

  • Cash Conversion cycle (dio + dso - dpo)

(Model Assumes 365 period)

DIO (Days of Inventory Outstanding): The average number of days needed to clear the inventory.

DSO (Days of Sales Outstanding): The average number of days needed to collect payment from a customer after a sale.

DPO (Days Payables Outstanding): The average number of days it takes to pay a vendor.

CCC Example

Joanne’s Cable is a manufacturer that specializes in cable and harness assembly. Joanne buys inventory from one main vendor and pays her accounts within 10 days to get a purchase discount. She has a fairly high inventory turnover for the industry, and can collect accounts receivable from her customer within 45 days on average. So, her CCC is:

  • Days inventory outstanding: 60 days
  • Days sales outstanding: 45 days
  • Days payables outstanding: 10 days

60 days + 45 Days – 10 Days = 95 Days

This means it takes Joanne 95 days from paying for her inventory to receive the cash from its sale. By using funding solutions to change any one of these inputs, she can see where she can improve her cash conversion cycle.

After Using the Cash Conversion Calculator: Tips to Optimize Your Cash Conversion Cycle in the Staffing Industry

After using the cash conversion calculator, the next step is figuring out how to improve your CCC within the context of your staffing business. Optimizing CCC can significantly impact your ability to meet payroll, manage client billing cycles, and invest in growth opportunities like talent acquisition or technology upgrades. 

Manage Payroll and Bill Rates Strategically

In staffing, payroll is often your largest expense — and it's usually paid out before client invoices are collected. Improving CCC might mean: 

  • Offering clients weekly or biweekly billing instead of monthly. 
  • Aligning pay periods with expected receivable collections. 
  • Reviewing bill rates and markups to ensure they account for payment timing and funding costs. 

Learn how payroll funding (also known as invoice factoring) helps you overcome cashflow challenges. 

Accelerate Client Payments

Because staffing agencies often face 30, 60, or even 90-day payment terms from clients, reducing Days Sales Outstanding (DSO) is critical. Tactics to consider: 

  • Implement client onboarding processes that clarify payment expectations. 
  • Use factoring or payroll funding solutions to bridge the gap between payroll and receivables. 
  • Offer discounts for early payments, especially with high-volume clients. 

Leverage Vendor Terms and Workforce Management Tools

Though your vendors may not always be able to accommodate, consider: 

  • Negotiating extended terms with technology platforms, insurance providers, or recruiting services. 
  • Using workforce management platforms to forecast placements more accurately, helping you match supply with demand and reduce overhead. 

The Encore Funding team can help you make key business decisions. Learn about our strategic consulting solutions. 

Why CCC Matters for Staffing Firms 

In the staffing industry, where cash often flows out before it comes in, a well-managed Cash Conversion Cycle is more than a metric — it’s a lifeline. Improving CCC can help you: 

  • Ensure timely payroll without taking on excessive debt. 
  • Scale confidently when onboarding large clients. 
  • Weather seasonal dips or client payment delays. 

With the right strategies and financial tools in place, you can keep cash flowing smoothly and focus on what matters most: placing the right people in the right roles.