How do you reduce the cash conversion cycle?

To reduce the cash conversion cycle, a company can streamline inventory management by optimizing stock levels and implementing just-in-time practices to minimize holding costs. Improving accounts receivable processes, such as offering discounts for early payments or tightening credit policies, can accelerate cash inflows. Additionally, negotiating better payment terms with suppliers can extend Accounts Payable, allowing the company to hold onto cash longer. Together, these strategies enhance liquidity and improve overall cash flow efficiency.