Cash-To-Cash Cycle Time (C2C) Definition
The cash-to-cash cycle time (C2C) is the duration of time between a company’s receipt of cash from its customers and its payment of cash to its suppliers. The C2C cycle measures the speed at which a company converts its receivables into cash. A shorter C2C indicates that a company is effectively managing its working capital and generating cash quickly.
A company’s C2C begins when it sells goods or services on credit and ends when it pays its suppliers for the inputs used to produce those goods or services. The C2C metric is important because it directly affects a company’s ability to generate cash. A longer C2C means that a company is taking longer to convert its receivables into cash, which can strain working capital and limit growth.
There are a number of ways to reduce the C2C cycle time, including:
Extending payment terms with suppliers
Offering discounts for early payment
Investing in technology to streamline invoicing and collections
Improving communication between sales, accounting, and accounts payable departments
