CASH FLOW CYCLES

All businesses have operating cash cycles that define their business operation. These cycles typically measure the time it takes to procure inventory or perform a service, bill for revenue, convert revenue into cash and pay for inventory purchases and operating expenses.

Most businesses are skilled at activities they can control, such as product pricing, purchasing inventory and supplies and the delivery of products and services to customers. The key for any business is to accelerate their cash cycle to the extent possible by collecting sales accounts faster and holding no more inventory than is necessary to operate effectively.



When short on capital, a business faces a real challenge when it comes to collecting for services rendered or products sold. In effect, they are often held hostage to whether their customers pay on time or not. The payment policies of some companies are simply outside the control of those providing them with goods and services. This is precisely where CFR adds value.