"Profit is an opinion–cash is a fact."
Greg Crabtree
Small Business Accounting Expert
- Date
The Cash Flow Conversion Cycle: The Fastest Way to Create Freedom
posted in Business Coaching
Adam Kreek
How Vancouver Island and BC business owners can stop the cash-flow squeeze and run lighter, stronger companies
If you run a small or medium business on Vancouver Island—or anywhere in Canada, really—you already know this truth: you can be “profitable” on paper and still feel broke in real life.
It’s not because you’re doing anything wrong. It’s because your cash is taking the scenic route through your business, stopping for coffee, going out boating on the Strait, and returning to your bank account whenever it feels like it.
The tool that stops that nonsense is the Cash Flow Conversion Cycle (CCC).
It’s not complicated. It’s not MBA jargon. And it might just become the most liberating number in your entire financial system.
What the Cash Flow Conversion Cycle Actually Is
Plain and simple: the CCC measures how long your money is trapped inside your business before it finally comes home.
It tracks three clocks:
- How long you hold inventory before selling it.
- How long customers take to pay you (the famous “I’ll pay you Friday” that turns into next month).
- How long you take to pay suppliers.
The formula:
CCC = Days Inventory + Days Sales Outstanding – Days Payables
Shorter cycle = healthier business.
Long cycle = the financial equivalent of stepping barefoot on Lego.
Why This Number Should Matter More Than “Profit”
As Greg Crabtree put it in Simple Numbers, profit is an opinion—cash is a fact.
You can have strong revenue, happy customers, and solid margins, yet still lie awake at 2 a.m. wondering how you’ll cover payroll because your cash is stuck in slow inventory or overdue receivables.
The Great Game of Business reaches the same conclusion: if cash is your constraint, make CCC your “Critical Number.” Put it on the scoreboard. Talk about it weekly. Give it the same attention you give weather complaints in British Columbia.
Why Shortening the CCC Creates Freedom
This is where the magic happens. Shortening your CCC gives you:
1. Breathing room.
No more end-of-month anxiety because money is actually, finally, in the bank.
2. Faster, smoother growth.
You can reinvest in marketing, staffing, or equipment without begging the bank for another line-of-credit increase.
3. Stronger resilience.
When suppliers raise prices or customers pay slowly (because… Canada), you stay upright.
4. Lower stress and fewer surprises.
Predictable cash flow = better decisions, fewer emotional roller coasters, and more evenings spent living your life instead of staring at spreadsheets.
How to Shorten the Cash Flow Conversion Cycle
Here are the most practical, non-theoretical moves:
1. Move inventory faster.
Tighten purchasing. Reduce slow SKUs. Sell dusty inventory before it becomes “vintage.”
2. Speed up customer payments.
Deposits. Progress billing. Card-on-file. Automated reminders. (People pay software faster than they pay people.)
3. Slow down payments—strategically.
Negotiate longer terms. Pay on the agreed date, not early unless it benefits you.
4. Track it weekly.
If it’s not on your scoreboard, it won’t change. CCC deserves a permanent seat at the table.
Why CCC Matters Even More in BC
British Columbia businesses—especially on Vancouver Island—face unique pressures:
• Higher labour costs
• Seasonal demand swings
• Expensive inventory carrying costs
• Slower supplier chains
• Higher borrowing costs
A tight CCC helps you offset all of those. It’s the most reliable way to create freedom, stability, and enterprise value in a BC SME.
In BC, you may be eligible to access a training grant to support some training and coaching for your business.
The Real Payoff: More Freedom for You
When cash moves cleanly through your business, you get to:
• Plan instead of scramble
• Invest instead of firefight
• Grow without stress
• And—most importantly—enjoy the business you built
The Cash Flow Conversion Cycle isn’t just a financial metric. It’s a freedom metric.
Shorten it, and everything else gets easier.
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Adam Kreek and his team are on a mission to positively impact organizational cultures and leaders who make things happen.
He authored the bestselling business book, The Responsibility Ethic: 12 Strategies Exceptional People Use to Do the Work and Make Success Happen.
Want to increase your leadership achievement? Learn more about Kreek’s coaching here.
Want to book a keynote that leaves a lasting impact? Learn more about Kreek’s live event service here.