One unit of stock, from the day you pay the supplier’s deposit to the day the customer’s money reaches your bank. Every chapter shortens one bar.
Picture a brand that imports its product. It pays a 30% deposit when it places the order, the balance when the goods ship, and waits for them to cross the ocean. Then it holds them until they sell, and waits for the payout.
DerivedWeighting the deposit and balance by their share of the order, the cash is out for about 134 days on average: 0.3 × 179 + 0.7 × 114. That’s this brand’s cash conversion cycle. The inputs are the defaults in the tool in chapter 3.
| Stage | What sets it | How to shorten it | Chapter |
|---|---|---|---|
| Deposit to shipment | Supplier’s payment terms and production time | Smaller deposit, balance on arrival or later, shorter lead times | 11 |
| At sea | Freight mode and who pays when | Pay against arrival instead of shipment; fewer, faster lanes for fast sellers | 11 |
| On the shelf | Order size, forecast accuracy, catalog breadth | Smaller, more frequent orders; cut slow stock | 10 |
| Waiting for payout | Processor settlement, holds and reserves | Know each processor’s lag; watch holds | 3 |
| Customer pays before you buy | Preorders, waitlists, deposits | Sell launches and restocks in advance, in tranches | 6, 7 |
| Customer pays before you ship | Prepaid plans, gift cards, store credit | Grow float, and account for it as owed | 8 |
| Customer comes back | Repeat rate and replenishment timing | Sell to buyers you’ve already paid to acquire | 9 |
The first four rows are the cycle. The last three are how customers can fund it.
This is one chapter of Cash Before Growth, which is free and readable in full on a single page with no form in front of it.