How do you improve the cash operating cycle?

The cash operating cycle is a function of how quickly you pay your Accounts Payable, how quickly you sell your inventory, and how quickly you collect your sales (accounts receivable):

Cash operating cycle = Average days' inventory + Average days' accounts receivable - Average days' accounts payable.

To reduce the cash operating cycle:

• sell inventory more quickly,
• collect sales/accounts receivable more quickly or
• pay accounts payable more slowly.