Cash rules everything around me (or in this case CPG brands)…C.R.E.A.M.…get the money…dollar dollar bill y’all! Confused? That's likely because you aren't a classic hip-hop fan or ever heard the 1994 record C.R.E.A.M. by the Wu-Tang Clan. What I'm talking about from a CPG business strategy perspective is that cash conversion cycle, which is a measure of how many days it takes for a business to turn invested cash (usually purchased inventory) back into cash in its bank account.
Why is this so important? Cash rules everything around CPG brands! If you are a growing business cash is king and the better cash position you have gives you an incredible amount of optionality. Anyone running a CPG business knows what rapid growth can do to your cash balance. As you pay down suppliers and order more inventory, in a blink of an eye, your cash can drain to zero. Optimizing your cash conversion cycle can be the difference in your business continuity.
In this podcast episode, I'll go through the cash conversion cycle, provide some application to a few well-known businesses, and also give you some practical advice on how to improve your cash conversion cycle in your business.
Interested in watching the YouTube video with accompanying slides that show the calculations and equations? Click ➡️ https://youtu.be/vmTmUY55HqY
