The Cash Conversion Cycle (CCC) measures how many days it takes for a koruna put into operations to come back to your account. It is calculated as CCC = DIO + DSO − DPO: days inventory outstanding plus days sales outstanding minus days payable outstanding. A high CCC is the reason a company can be profitable yet still have no cash – the money sits in unsold inventory and unpaid invoices. In the Czech Republic, B2B collection takes 62.3 days on average, one of the longest in the EU, and 69% of Czech companies report difficulties caused by late payments.1 Shortening the cycle frees up capital without a loan.
You know the feeling. The income statement shows record numbers, your accountant congratulates you on the profit with a smile – but when you look at the bank account to pay VAT and suppliers, a cold sweat breaks out. “Where is all the money?”
The answer usually does not lie in the tax return. It lies in a single number that no monthly report shows you: the Cash Conversion Cycle (CCC). It tells you one thing: how many days your money works for someone else before it comes back to your account.
19 million locked up in circulation. An example you will see in a minute.
Take a wholesaler with a turnover of 100 million CZK a year. Goods sit in the warehouse for 40 days on average. Customers pay in 60 days. The company pays its suppliers in 30 days.
40 + 60 − 30 = 70 days.
70 days – that is the period during which the company has its money locked up in inventory and unpaid invoices. At a turnover of 100 million, that means daily sales of roughly 274 thousand CZK. Times 70 days.
Result: more than 19 million koruna constantly “sitting” off the account (illustrative calculation). Dead capital. The company is profitable – and yet has to borrow to run operations.
Now imagine that cycle shortens by 10 days – through more consistent debt collection, faster invoicing, better payment-term arrangements. Result: 2.7 million koruna freed back into the company. Without a loan. Without a bank.
How CCC is calculated – and where to find those days
The Cash Conversion Cycle rests on three figures from your accounting records:
Days Inventory Outstanding (DIO) – how many days, on average, material and goods sit in the warehouse before they are sold. The higher the number, the more money you have locked up on the shelves.
Days Sales Outstanding (DSO) – how long you wait before a customer pays an invoice. The Czech B2B collection average in 2024 was roughly 62 days (62.3) – one of the longest in the EU, above the European average of 60.3 days. (Source: EU Payment Observatory, Annual Report 2025)
Days Payable Outstanding (DPO) – how many days, on average, you take to pay your suppliers. This is the only component that helps you – the longer you pay (within agreed terms), the longer you work with other people's money.
Inventory days
Receivables days
Payables days
Every extra day in this cycle means another roughly 274 thousand CZK (at a turnover of 100M) that you are missing from your account. And if an overdraft at 8–12% a year covers that gap, it quietly eats into the profit you have just congratulated yourself on.
Frequently asked questions
What is the Cash Conversion Cycle and what does it mean?
The Cash Conversion Cycle (CCC) indicates the number of days for which a company has its money locked up in operations before it comes back to the account. It combines three figures from the accounting records: days inventory outstanding, days sales outstanding and days payable outstanding. The lower the CCC, the less capital the company ties up and the less it has to rely on an operating loan.
How is the Cash Conversion Cycle calculated?
The formula is CCC = DIO + DSO − DPO. DIO is days inventory outstanding (how many days goods sit in the warehouse), DSO is days sales outstanding (how long you wait for an invoice to be paid) and DPO is days payable outstanding (how many days you take to pay suppliers). DPO is subtracted because, as long as you have not paid, you are working with your suppliers' money.
Why is a company profitable but has no cash in the account?
Profit arises in the income statement at the moment an invoice is issued, not at the moment of payment. If customers pay late and inventory sits in the warehouse for a long time, the money is tied up in current assets even though the company reports a profit. The Cash Conversion Cycle describes precisely this difference between profit and cash.
What is the average days sales outstanding in the Czech Republic?
According to the EU Payment Observatory Annual Report 2025, in 2024 the average payment time for B2B invoices in the Czech Republic was 62.3 days, the second longest in the EU after Croatia and above the EU average (60.3 days). At the same time, 69% of Czech companies report difficulties caused by late payments, compared with the EU average of 52%.
How do you shorten the Cash Conversion Cycle?
You shorten the cycle with three levers: faster invoicing and consistent debt collection (reduces DSO), optimising inventory levels (reduces DIO) and negotiating longer payment terms with suppliers within agreed conditions (increases DPO). Every day saved frees up cash that an overdraft would otherwise cover.
How much cash does shortening the cycle by a few days free up?
It depends on daily sales. As a rough guide, for a company with a turnover of 100 million CZK, daily sales amount to roughly 274 thousand CZK, so shortening the cycle by 10 days frees up approximately 2.7 million CZK back into the company – without a new loan. This is an illustrative model; the exact figure depends on your specific data.
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1 EU Payment Observatory, Annual Report 2025 (reference year 2024): average payment time for B2B invoices in the Czech Republic 62.3 days (second longest in the EU after Croatia at 63.7 days), EU average 60.3 days; 69% of Czech companies report difficulties caused by late payments (EU average 52%). European Commission, DG GROW. single-market-economy.ec.europa.eu/smes/challenges-and-resilience/late-payment/eu-payment-observatory_en