Cash conversion cycle calculator
How many days pass between paying your supplier and getting the money back from customers, how much cash that ties up, and what different payment terms would free up.
How it is calculated
Everything is measured in days from the day goods arrive at your warehouse. The deposit is paid at the start of production, so it lands production time plus transit time before arrival. The balance is paid at whichever point your terms say. On the other side, an average unit sells halfway through the sell-through period, and the payout lands a few days later.
The cycle is the gap between the weighted average day you pay and the average day cash comes back. Multiply your daily purchases by that gap and you get the cash your business needs to fund inventory at any one time.
Which terms actually help
Paying against a copy of the bill of lading gives you proof the goods have shipped, but only moves payment a few days. The real cash gains come from paying the balance on arrival or on net terms, a lower deposit, and selling through faster.
For the background, read Payment terms and cash flow.
Frequently asked questions
What is a good cash conversion cycle for an ecommerce brand?
Brands that import usually run 60 to 120 days. Anything you can do to get under 60 makes growth much easier to fund.
What are standard payment terms with overseas factories?
30% deposit and 70% before shipment is the most common starting point. With volume and history, many brands move to balance against bill of lading, then on arrival or net 30.
Why does the calculator use half the sell-through period?
If a batch sells evenly over 90 days, the average unit sells on day 45. Using the midpoint gives the average time your cash is in stock.
Is my data stored?
No. The calculation runs in your browser. Nothing is sent anywhere unless you choose to download the spreadsheet, in which case only your email address and the headline result are sent to us.