Management ConsultancyService
Shortening the cash conversion cycle
Receivables, payables and inventory, and which of them you can actually move.
Kaelo Global is a Dubai company licensed in Meydan Free Zone, with over 100 clients served so far.
At a glance
What it is
Receivables get most of the attention because they are easy to understand. They are often not the part that is yours to move.
A principal, Kaelo Global management consultancy
Many working capital programmes go after receivables first, because that is the line everyone understands, and many of them stall. The cash conversion cycle has three parts, and they are not equally within reach. One is usually constrained by your customers' payment policies, one by your standing with suppliers and one by decisions your own operation makes every day. Working out which is genuinely movable is most of the work.
Shortening the cash conversion cycle starts with breaking it down into days sales outstanding, days payable outstanding and days inventory outstanding, measured separately and by customer group and product where the mix varies. We then identify the part you can realistically improve, agree a programme with clear owners and set a regular review so the gains last.
This matters especially for trading, distribution and logistics businesses in the Gulf, where long customer payment terms, stock held for regional demand and supplier deposits can tie up a great deal of cash.
What's included
Six areas of scopeBreak it down before setting targets
Receivables, payables and inventory days measured separately, and by customer and product where the mix varies. A blended cycle hides the fact that one part of the business may be funding another.
Receivables: stated terms and actual practice
The gap between agreed terms and actual collection is usually a process issue instead of a credit issue, such as invoices raised late, disputes left open or nobody responsible for chasing.
Inventory: the part you control
Inventory days are the part of the cycle most within your control, and often the part left alone, because improving them means questioning assumptions about service levels.
Payables without damaging supply
Extending payment terms is the easiest lever and the riskiest. When supply is tight, a supplier who moves you down their list can cost more than the cash released.
Billing and collections process
Invoicing on time, clear dispute handling and a named owner for each overdue account, which often releases cash faster than renegotiating terms.
Stock policy by product
Service level targets and reorder rules set product by product, so fast-moving lines stay available while slow-moving stock stops tying up cash.
How the work runs
Breaking down the cycle
The cycle measured properly, by customer group and product.
Finding the movable part
Identifying which part of the cycle can realistically be improved.
A focused programme
Actions with named owners, and the trade-offs stated openly.
A regular review
Progress reviewed on a steady routine, instead of as a one-off project.
When to come to us
- 01Growth is using up cash faster than the business generates it.
- 02A previous push on receivables improved things for a while, and then the gains slipped back.
- 03Nobody in the business can state your cash conversion cycle from memory.
- 04You hold stock for several Gulf markets and suspect too much cash is tied up in slow-moving lines.
What we do not do
- Recommending longer payment terms that would damage supply in a tight market.
- Advising on financing products, invoice discounting or banking facilities. That is regulated financial advice and sits outside our licence.
- Treating a one-off collections push as a lasting fix.
Related reading
Tender design, carrier selection and cost baselining, explained as a practical method.
Whether the business will still be performing in three years.
How the family makes decisions, kept separate from what it signs.
For established owner-led businesses: rebuilding pricing, channels and product mix so turnover grows without losing margin.
Common questions
