The transaction assumptions
Cycle = inventory days + receivable days − payable days
Timing requirement = max(cycle, 0) × daily outflow
ILLUSTRATIVE SCENARIO
Editable example inputs are assumptions. This simplified timing model excludes growth, taxes, minimum cash, seasonal peaks, defaults, financing costs and actual facility terms. A negative cycle is shown with zero modelled funding need. Delay is capped so the total receivable period does not exceed 180 days. It is not a USD2 cash-flow forecast.
What the model shows
A transaction occupies capital between the payment of costs and the collection of proceeds. The model separates the commercial cash cycle from the effect of an additional buyer delay.
Cash conversion cycle equals inventory days plus receivable days minus payable days. A nonnegative cycle is multiplied by daily cash outflow to estimate a simplified timing requirement. The delayed scenario increases the receivable period.
Read the assumptions
The model assumes steady expenditure and one currency equivalent. It excludes deposits, taxes, interest, growth, minimum cash, losses and actual facility terms. It does not establish a financing commitment.
The transaction cycle