Profit Is Vanity, Cash Is Sanity: Meet the CCC

(CCC) shows how long your dollars are tied up from buying inventory to getting paid.
Simply, it tracks how fast inventory turns into cash through sales and collections while leveraging vendor payment timing.
The formula is straightforward: CCC = DIO + DSO − DPO (Days Inventory Outstanding + Days Sales Outstanding − Days Payable Outstanding).

A longer CCC often signals working-capital drag from slow inventory or delayed collections, while a shorter CCC means cash is cycling faster and funding growth.

Improving CCC typically comes down to three levers: tightening inventory management with data-driven forecasting, accelerating collections through better billing practices, and strategically negotiating vendor payments. Even small improvements in any one of these areas can unlock meaningful cash flow.

If you’re not tracking CCC monthly, you’re flying blind on liquidity—and likely leaving cash flow improvements on the table.