This refers to the number of days between the payment for raw materials and the receipt of money from the sale of the finished product.
Factors which affect the length of the cash operating cycle can include payment terms for raw materials, the length of the production process, logistics timescales, customer payment terms and compliance with those terms, payment transaction delays etc. The length of the cycle will affect the company’s levels of working capital and, potentially, its need for external funding.
Cash operating cycle is a term normally found in financial management.
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