How Business Central helps CFOs lift cash conversion cycle by 15%

Why working capital matters

• Days Sales Outstanding (DSO): How quickly you collect from customers.
• Days Inventory Outstanding (DIO): How long stock sits before being sold.
• Days Payable Outstanding (DPO): How long you take to pay suppliers.

How Business Central helps CFOs optimise working capital

1. Credit limits and risk management

2. Payment predictions with AI

3. Automated dunning for faster collections

4. Inventory turns and demand-driven replenishment

5. Vendor terms and payment scheduling

Building a simple working capital model

• Step 1: Calculate DSO DSO = (Accounts Receivable ÷ Total Credit Sales) × Number of Days Use Business Central’s receivables reports for accurate figures.
• Step 2: Calculate DIO DIO = (Inventory ÷ Cost of Goods Sold) × Number of Days Pull inventory and COGS data from Business Central’s item ledger.
• Step 3: Calculate DPO DPO = (Accounts Payable ÷ Cost of Goods Sold) × Number of Days Use payables reports for vendor balances and payment terms.
• Step 4: Compute CCC CCC = DSO + DIO - DPO Track this monthly in Power BI for trend analysis and improvement targets.

Practical steps to lift CCC by 15 percent

• Audit current CCC: Use Business Central and Power BI to establish a baseline.
• Prioritise quick wins: Automate dunning and enable payment predictions to reduce DSO immediately.
• Optimise inventory: Review planning parameters and safety stock to improve turns.
• Negotiate vendor terms: Align payment schedules with cash flow needs without harming relationships.
• Monitor progress monthly: Track CCC and related KPIs in dashboards to sustain improvements.

The payoff: liquidity and resilience

• Shorter cash conversion cycles: Free up working capital for growth and investment.
• Improved forecasting: AI-driven payment predictions enhance cash flow planning.
• Operational efficiency: Automation reduces manual effort in collections and payments.
• Stronger supplier and customer relationships: Transparent terms and proactive communication build trust.

Ready to improve your cash conversion cycle?