Cash conversion cycle (CCC) measures the days between when a brand pays suppliers for inventory and when the customer’s cash lands in the brand’s bank account. It is the working-capital cycle expressed in days, and it tells an operator how many days of float they must finance per dollar of sales.
CCC nets three days-denominated sub-cycles. Days Inventory Outstanding = (average inventory / COGS) * 365 is how long inventory sits before it sells. Days Sales Outstanding = (accounts receivable / revenue) * 365 is how long after the sale the cash arrives. Days Payables Outstanding = (accounts payable / COGS) * 365 is how long the brand defers paying suppliers. The formula: CCC = DIO + DSO - DPO.
For a pure-DTC brand on Shopify Payments, DSO collapses toward zero because card-on-checkout settles in roughly 2–3 business days, so CCC simplifies to DIO - DPO. That simplification breaks once wholesale, retail, or marketplace channels are added: those receivables typically run net-30 to net-90, and an omnichannel CCC can extend past 120 days.
The number translates to dollars by (CCC / 365) * revenue. A 90-day CCC at $10M revenue ties up roughly $2.5M of working capital — cash the business cannot redeploy into marketing, hiring, or new SKUs. Shortening CCC by 15 days at $20M revenue frees roughly $820k without changing revenue, margin, or headcount.
Three operator levers sit on the CCC dial. Pushing suppliers for net-60 expands DPO. Accepting a 2/10 net-30 early-payment discount shortens CCC but eats gross margin one-for-one. Doubling inventory for a Q4 push expands DIO before any customer cash returns. CCC is the single number that explains how a brand “growing well” on the top line can still run out of cash mid-quarter: the growth itself consumed the working capital.