# How To Calculate Cash Conversion Cycle in SYSPRO | Arithmix

Learn how to calculate cash conversion cycle in SYSPRO with this comprehensive guide. Improve your financial management skills and optimize your cash flow with these step-by-step instructions.

Calculating the cash conversion cycle is an important aspect of financial management for any business. It helps to determine the efficiency of a company's cash flow and the amount of time it takes to convert inventory and receivables into cash. In this article, we will discuss what the cash conversion cycle is, when it is valuable to calculate it, and how to calculate it in SYSPRO.

## What Is Cash Conversion Cycle?

The cash conversion cycle is a financial metric that measures the time it takes for a company to convert its investments in inventory and accounts receivable into cash. It is calculated by adding the number of days it takes to sell inventory and the number of days it takes to collect accounts receivable, and then subtracting the number of days it takes to pay accounts payable. The resulting number represents the number of days it takes for a company to convert its investments into cash.

The cash conversion cycle is an important metric because it helps to determine the efficiency of a company's cash flow. A shorter cash conversion cycle means that a company is able to generate cash more quickly, which can be used to invest in growth opportunities or pay off debt. A longer cash conversion cycle can indicate that a company is experiencing cash flow problems, which can lead to financial difficulties.

## When Is It Valuable To Calculate Cash Conversion Cycle?

It is valuable to calculate the cash conversion cycle for any business that sells products or services on credit. This includes businesses that sell to other businesses (B2B) as well as those that sell to consumers (B2C). By calculating the cash conversion cycle, businesses can identify areas where they can improve their cash flow and reduce the amount of time it takes to convert investments into cash.

Calculating the cash conversion cycle is particularly valuable for businesses that operate in industries with long lead times or high inventory turnover rates. These businesses may have significant investments in inventory and accounts receivable, which can tie up cash and create cash flow problems if not managed effectively.

## How to Calculate Cash Conversion Cycle in SYSPRO

SYSPRO is an enterprise resource planning (ERP) software that can be used to calculate the cash conversion cycle. To calculate the cash conversion cycle in SYSPRO, follow these steps:

1. Run a report that shows the average number of days it takes to sell inventory. This report should include the beginning and ending inventory balances, as well as the cost of goods sold for the period.
2. Run a report that shows the average number of days it takes to collect accounts receivable. This report should include the beginning and ending accounts receivable balances, as well as the total sales for the period.
3. Run a report that shows the average number of days it takes to pay accounts payable. This report should include the beginning and ending accounts payable balances, as well as the total purchases for the period.
4. Add the number of days it takes to sell inventory to the number of days it takes to collect accounts receivable.
5. Subtract the number of days it takes to pay accounts payable from the result of step 4.
6. The resulting number represents the cash conversion cycle for the period.

By calculating the cash conversion cycle in SYSPRO, businesses can identify areas where they can improve their cash flow and reduce the amount of time it takes to convert investments into cash. This can help to improve financial performance and support growth opportunities.

## How Do You Calculate Cash Conversion Cycle in SYSPRO

SYSPRO itself isn’t naturally geared towards letting you calculate complex metrics like Cash Conversion Cycle. As an alternative, teams typically use products like Arithmix to import data from SYSPRO and build out dashboards.

## What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like SYSPRO, combine it with data from other systems, and create calculations like Cash Conversion Cycle.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.