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The Importance of Managing Your Cash Conversion Cycle

  William K. Thorpe, Partner, CFO Edge, LLC  
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  Article Summary  
For many Los Angeles and Southern California business leaders, cash flow challenges occur in spite of signs of an economic recovery.

Improving management of your cash conversion cycle is a best practice for accelerating cash flow, and a first step is an easily-computed mathematical exercise to determine cycle time.

This article discusses the five primary stages that determine the length of your current cash flow cycle, the cash flow cycle calculation, and four critical actions to take to more quickly convert cash paid out to receivables collected.

Improved cash conversion cycle management delivers a number of benefits that can include greater operating capital and a reduced need for external funding.

A formerly-seated chief financial officer delivering on-demand CFO services can leverage deep and broad cash conversion cycle expertise to make the needed calculation and implement actions to accelerate cash flow.

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