How long do you need to fund your business??

After establishing your operating cycle, it is important to find out how long it takes for the cash to be recovered from the sale of your goods after you have paid for them. This is the cash cycle. The shorter the cycle the less cash you need to run the business. In simple terms, the cash cycle starts when you pay your supplier and ends when your customer pays you. The operating cycle starts with acquiring of inventory or raw material and ends with receipt of payment from your customer.
As an example, if the operating cycle of your business is 80 days (period from receiving the inventory from supplier to  you collecting money for the sale from the customer) and you pay you supplier on average 30 days, it means your cash cycle is 50 days (ie. operating cycle-payment period).

To improve the business, reduce your cash cycle and improve both cash flow and profitability.